How the electricity industry is blocking solar in Australia

The “green rhetoric” from electricity utilities has slowed in recent years with most utility websites telling you how solar is great and they can offer a solution, but only if you really want it.

One I read had gems like: “But before you invest in an expensive solar system, what do you need to consider? Is it the right choice for you?” And: “Are you still in? If solar panels still seem like a good option, do the maths one more time.”

However, in the background, the day-to-day reality for solar consumers and installers is that right across the country the majority of incumbent electricity companies are subtly implementing policies and procedures that slow the uptake of solar – and it's getting worse.

The fact of the matter is, the electricity industry has taken its battle for dominance underground and into the murky world of service rules, incomprehensible retail tariffs and “different rules if you have solar”. Connection rules have become so complicated and variable around the country, the APVI released a 35-page report on the issue to assist industry to understand what's going on.

We recently spoke with installers and consumers across Australia and have compiled this list of recent examples and evidence of where and how solar is being slowed in Australia. On their own, they seem like irritating but small issues. When viewed together it becomes clear that it's nothing short of an underground campaign designed to keep things just the way they are, instead of embracing change.

There are so many, I've had to split this story into two parts*.

1. Export control, because we can

Although it happens in other states, Queensland has become the main battleground for export control.

On the surface, there is a logical case for distribution network owners to argue that they can't have too much PV being injected into their networks or it can push voltages up and cause problems. However, they took a wonky sledgehammer to the issue and have created cost imposts that are simply stopping solar in its tracks in many cases.

One installer I spoke highlighted that in other parts of the world major PV and inverter manufacturers have products already approved and in use. These products can typically control power within a range of 10 per cent of nominal PV capacity and react in a maximum of 14 seconds. However, in Queensland the distribution networks have decided they need five-times better control (2 per cent compared to 10 per cent) and 30 per cent faster reaction time (under 10 seconds).

What this means is if you install a 10kW solar system, not more than 200W can ever flow out. Ironically, you can pull energy in until the cows come home (causing voltage droop) – but not out. You can switch massive, distorting loads on and off at will but you can't inject 200W of solar power.

This excessively rigorous standard simply makes solar more expensive; a utility compliant export control box costs around $6000-$10,000 installed; adding more than 30 per cent to the cost of a 10kW solar system and completely blowing out the cost of anything smaller. There are a bunch of alternative export control devices on the market but the utility approval process is long-winded, expensive and almost impossible to recover the costs.

Because they can, Queensland's (government-owned) utilities have set a ridiculously high and expensive standard which only applies to solar.

2. Please use as much electricity as you want, when you want.

The issue of variable versus fixed chargers is a rapidly changing issue and one of the really perverse challenges that solar and electricity users face.

In simple terms, commercial users of electricity pay for electricity, their demand level and a daily cost to be connected. By way of comparison, a home typically pays around 50c-$1 per day to be connected. In NSW (according to some offers I have checked) commercial users pay around $150 per day.

However, as of July this year if you are a large user in Queensland, you are no longer charged for demand (except beyond prescribed limits). It seems they don't care enough about network demand enough to bill you based on your actual impact on the network. Instead, they simply slug every big user and assume you'll just “use it till you drop”. If you are a big user, you'll pay an astounding $537 per day on Tariff 46 for the privilege of being connected, irrespective of whether you use energy or not, or when – that's $196,074 a year.

NSW utilities have come under fire for this in the past too, from the Australian Energy Regulator no less. When I read its 2013 report, I thought I was reading the data wrong when it comes to ramping up fixed charges. But I wasn't. In the worst case, Ausgrid increased their fixed charges to business customers by an astounding 471 per cent in 2012-13 (see page 111), and many of their other tariff changes aren't far behind. This is despite the fact that demand across the network fell and, yet, the distributors actually recovered more revenue than forecast. Fancy that.

The big issue here is that by switching energy and demand charges to fixed charges, solar cannot reduce the cost of the bill. Moving to fixed rather than consumption or demand related tariffs is a tactic that has been openly discussed by utilities but is irrational if you are thinking “how do I incentivise my customer to reduce their consumption and their peak demand with price signals”. Fixed charges hide the signal and is only rational if you are targeting a slowdown in solar.

3. Billing; confusion is profit

Anyone who has tried to understand an electricity bill knows what I'm talking about; the way they are constructed and the national inconsistency makes knowing what you are paying for so complicated that most people just give up and pay. If you have solar as well you have no hope and no signals that are meaningful at all.

Personally, I think the retailers are blatantly and deviously misleading customers on this one and it's utterly outrageous.

I spoke to the owners of a commercial system recently who are based in NSW. They added a sweet 40kW solar system a year ago and recently asked for my help to interpret their bill. Why? Because to them it implied that their solar system wasn't working like they expected and the savings they had hoped for were non-existent. That's pretty much what the bill said.

In most parts of Australia you get little if anything for exported solar energy. However, my friends negotiated a deal that gets them 8c per kWh on their exports; better than nothing. It took some work, but in this case we moved some loads to optimise the self consumption and match this typical multi-meter site. So we rang the retailer and asked for some clarification. The load seemed wrong. The solar generation seemed wrong. After some discussion it turned out that of course all we could read off the bill was (a) the net consumption after solar generation and (b) the next exported solar energy after self-consumption.

Now this might seem logical and intuitive given we have net metering but for a consumer it's nothing short of meaningless, deceptive drivel. It tells them absolutely nothing and once again disguises the signals that allow them to act. When challenged, the retailer simply said “It's not our responsibility to monitor your solar and because you have solar, we only report net consumption. If you want to know what your solar system is doing, you have to install your own meters.” My friends logically asked the question “WTF was the $5000 in metering cost for, if it wasn't to allow us to know what we have used and what you are billing me for?”

At the time of installation it's worth noting, the distributor insisted on a new set of three-phase meters at a cost of almost $5000 which is an outrageous con in itself when you consider what you can get for that sort of money. Did they install interval meters to collect meaningful data? No. Did they install smart meters that could save money by remote or web based access ? No. They installed 1920s era dumb meters that only tell you a cumulative result.

In this case, I was able to extract the generation data from a separate system, export a CSV file, average the net consumption and net exports to a daily level (by reading off paper bills) and combine them all together in a spreadsheet to confirm that they are actually saving around $3800 a month through self consumption, that the solar system was working and also determine that there were more savings to be had if we shifted some loads. Can or should they or any average punter do this? Very unlikely.

The result for these owners is nervousness, anguish, frustration and over a beer I reckon the conversation about solar would be “cost a lot, heaps of hassle and can't really tell what it's doing”. Nice result if you are a retailer.

Of course, it can get even worse if your retailer (or mine) can't read the meter for some reason. Then, they can guess and charge you what they think is reasonable, ad infinitum, it turns out, And charge you for a reading they don't actually do. And they can also charge you above the published regulated rate. And they don't have to comply with Australian Consumer Law. In my case, it's about a gas bill but the same rules apply which you can read about here. (BTW, since I published that story more than a month and a half ago, the retailer still hasn't worked out what to do).

4. The magical mystery of tariffs

It's simply impossible to compare tariffs in a simple and meaningful way because they are impossible to compare against each other in a time effective way. One retailer recently told me that utilities count on this and the fact that saving a few bucks here or there simply isn't worth the effort, so people just cop it sweet.

The world of retail contestability, discounts for switching and such all sound nice, but the reality is you don't get anything for free.

Discounts as it turns out aren't necessarily discounts, except on the day you swap. Let's swallow the assumption (and advice from government) that we will save money by switching. You'll theoretically knock 10 or 15 per cent off your bill. Terms and conditions? Yep, read all 279,621 tiny little words of your terms and conditions after following 10 links on your website (lie). Didn't understand a word (true). Yes, I'll sign your contract because I'm Australian, you're Australian and a deal is a deal. I'd spit and shake on it if you weren't in Bangalore.

Now as it turns out, the totally awesome discount you just got is actually pretty ‘fluid'. Turns out current laws allow the retailers to increase the price they charge you for electricity at any time during a contract. And damn right they do.

And then of course at some point they will ask you if you have solar. One consumer I spoke to was merrily negotiating a 14 per cent discount on their bill recently and when they disclosed they had solar the price went up by 50 per cent. So, if I get solar you'll increase my (discounted) electricity price by 7 per cent, install a dumb meter that disempowers me, charge me extortionately for the privilege and then, at any point, you have the right to remove the discount altogether? Ripper.

To the uninitiated, this might all seem like just a few isolated people I've spoken to who have had a bad run of luck. Except of course that on Monday it was revealed that only 9 per cent of consumers trust their utility according to a new survey and, that a Royal Commission into “gold plating” has been called, thanks to the revelations of an electricity insider.

*This article is part one of a two-part series. The second part will be published in coming days.

Nigel Morris is director of Solar Business Services.