How the electricity sector killed gross metering

Having unmasked the profound threat of gross metering to the solar industry in Queensland, leaders of the sector rallied with calls to significant electricity sector players. Now, only the government networks that stand to benefit are in favour.

Something inspiring happened one month ago. A group of leaders in their sector rallied around a common cause, driven by passion, commitment, and ideals. A few calls to sector leaders multiplied into dozens of calls to those holding significant influence in the electricity industry, and seems to have shaped electricity retailers’ submissions on the topic.

No, this was not a lobby group paid by polluters’ profits, nor a collection of blog commenters with questionable links to said polluters and too much time on their hands. This was a volunteer effort from a group of leaders of solar power businesses and organisations, many of whom were already busy with a submission defending solar in the review of the renewable energy target. More than one took time from their day off, such was the dedication level and passionate commitment to Australia’s solar future, and to protecting consumers’ ability to reduce their electricity bill.

For a profound threat to the solar industry was unmasked, found buried deep in an issues paper about the value of solar electricity in Queensland. But this threat was not just to the solar industry, but also to people’s right to compete with electricity networks, for (without awareness of irony) the Queensland Competition Authority believed there was merit in forcing people to sell all of their generated solar electricity at near-wholesale rates, only to buy most of it back immediately at retail prices – like being forced to sell home-grown veggies to a food wholesaler only to buy it back at highly-inflated prices from the supermarket. All in order to protect the revenue of government-owned networks, which co-authored regulations that allow them to profiteer at constituents’ expense. Does the QCA regulate for, or against, competition?

Thankfully, the efforts of a small group of solar leaders galvanised some strong arguments against gross metering, which should steer the QCA (and others nationally) away from such an absurd concept.

Submissions to the issues paper demonstrated near-consensus from the electricity industry: that net metering was far more desirable than gross metering. Even the Electricity Supply Association of Australia was quiet on the topic, leaving only the government-owned generator Stanwell (who last week closed down part of its generation) arguing for gross metering. But its voice was drowned out by submissions by Energex, Ergon, AGL, Origin, TRUenergy and others (in addition to the all of the solar industry associations). Their arguments against gross metering are summarised below, and should discourage any other jurisdiction or regulator from considering gross metering.

One can only hope the Productivity Commission pays attention, and also takes note of its own analysis on the falling cost of emissions abatement from solar PV. If they did so, they’d find that the still-decreasing cost of the SRES is less than the benefits it brings by reducing wholesale electricity costs, and that the cost of emissions abatement from net-metered residential PV is already effectively zero. As one commentator put it: until the Productivity Commission gets its head around solar PV, we cannot rely on them to make sensible recommendations.

Meanwhile, across the other side of the world, another inspiring thing was taking place. Former US President Bill Clinton was addressing another group of solar leaders: “You represent the future,” he told the audience, stating that in his view people working in the solar industry are lucky that they get to get up every day, look in the mirror and say ‘I’m going to make something good happen today.’ The solar industry is in the "future business" according to the former president, saying “You are going to win this battle, the question is when and where and how,” and “just when you least expect it, you reach a tipping point.” 

Electricity Industry arguments against gross metering

TRU Energy: “TRUenergy does not see merit in moving to a regulated gross FIT... Our strongest reason for opposing a move to a gross FIT is customer equity.”

Other reasons raised included:

-- Householders’ expectation that PV will help them “consume less grid energy, and thereby gain a sense of control over their costs.”

-- “Customer confusion and discontent that they can’t use their own generation to reduce exposure to retail prices and must ‘sell’ all generation back to the grid at a much lower price than they buy it.”

-- Metering complexity and additional costs.

-- “Potential for network reinforcement costs to be higher with gross metering as all generation is exported to the grid.”

Origin: “It is unclear to Origin why solar PV customers alone should be required to compensate for what is fundamentally a phenomenon driven by the framework for the economic regulation of distributors,” Origin said.

Other reasons raised included: the higher cost of physically installing gross metering, the precedence of existing net-metered customers, and the benefit of nationally consistent approaches.

Ergon: “Ergon Energy supports customers having a choice of energy source and considers that a net metering arrangement best provides this choice for small scale solar PV.” 

Other reasons include the costs of changing meters and the network benefit from reduced exports under a sub-retail export tariff.

Energex: “Energex consideres that the current net metering approach is preferable... Net metering should result in lower costs to the solar PV owner and lower administration and metering costs to network businesses.”

“Energex does not see that the introduction of gross metering arrangements for feed in tariffs is more efficient for the market,” the group added.

Energex also said solar PV shouldn’t be singled out as a problem for network revenue but that network reform is required instead; the cost of more-expensive gross metering “would be passed through to other customers through higher network charges”, and “would be inconsistent with established practices for embedded generation in the market” because “customers have always had the opportunity under the rules … to offset internal consumption.”

AGL: “Any move to a gross metered FiT in Queensland could impede the transition to a nationally consistent FiT approach... AGL does not consider it should not be the role of a retailer-funded solar FiT premium to address non cost reflective network pricing.”