Solar customers need a better deal

There are now more than one million households with solar photovoltaic systems in Australia, with numbers continuing to increase on the back of falling technology prices and in spite the reduction of incentives such as feed-in tariffs and Solar Credits.

With the winding back of government-mandated feed-in tariffs, electricity retailers in some states are now themselves determining feed-in tariff rates and other contract conditions for both the export of solar electricity and import (i.e. the purchase of electricity) from the grid.

It is becoming increasingly clear that there are problems with this situation. Lack of information about consumption tariff changes when installing solar, including changes to time-based tariffs and potential loss of existing discounts, means new solar customers may not be much better off than before installing their system.

Solar customers need to navigate the retail market just like everyone else, but market transparency and the information provided by retailers is less clear when it comes to solar compared to regular electricity retail offers.

The Alternative Technology Association commissioned Alviss Consulting to produce the report, Retail Offers & Market Transparency for Solar Customers. The purpose of the study was to analyse all aspects of the various retail offers available to new solar customers, both for feed-in to the grid and electricity consumption, and their effects on annual bills for solar owners. The study covered retail offers in South Australia, New South Wales, Victoria and Queensland.

It also looked at the adequacy of information available to households wanting to install solar and the transparency of information about those aspects of solar deals that can have an impact on electricity bills.

The key findings include that there are enormous differences in money terms between the best and worst solar retail offers, and that there is little difference in annual bills between the worst retail market offer for solar customers and the best for non-solar customers.

It also found that the public focus on feed-in tariffs may be counter-productive for consumers given retailers can determine all other aspects of a retail offer; and people wanting to install solar need more detailed information beyond simply the feed-in tariff rate. Existing and new solar customers therefore need to be careful to shop around for the best retail deal possible.

Perhaps the greatest potential for solar customers to be ripped off exists in Victoria, the most deregulated electricity market in Australia. The report found ‘pay-on-time’ discounts for non-solar customers were often either reduced or completely removed for solar owners. There is also evidence of fixed supply charges being increased once a household installs solar, by up to 40 cents per day extra.

On an annual basis, a 40-cent-per-day increase is about as much as a household with a 3-kilowatt solar system in Melbourne, exporting about 50 per cent of its solar electricity, can expect to earn from an 8-cent feed-in tariff – thereby negating the value of the export of solar electricity. Increased network and fixed charges to solar owners is also an issue in WA and Queensland.

A growing and deregulated solar market will require more specific tools and information sources for customers than currently provided – the risk being that deregulation continues without appropriate levels of transparency and information, which may result in less competition and worse outcomes for the growing number of solar customers.

In response to the report’s findings, the ATA is keen for the Australian Energy Regulator to review its approach to consumer information for new and potential solar customers. The report demonstrates that new or potential solar customers need to take a abroad approach to their assessment of retail offers, an approach hindered by the current channelling of solar customers through narrow search criteria (i.e. ‘solar offers’) on consumer/comparator websites.

As a starting point, the Regulator should develop fact sheets for solar customers, similar to the Shopping Around fact sheet for non-solar customers, to highlight that retailers may offer a feed-in tariff in ‘exchange’ for higher consumption charges, supply charges or lower discounts.

The Regulator and state authorities need to ensure that retailers provide information about solar offers to the same standard they provide information about other retail offers. Easy access to price and product information statements is critical for any consumer to compare multiple deals. There is a general understanding that calling around to various retailers to obtain such information is too burdensome for consumers.

The ATA also believes the Regulator should conduct a review into the exclusionary nature of retail solar offers in the National Electricity Market. This review should consider the restricted range of retail offers that are currently available to solar customers, as distinct from non-solar customers, and ensure a level playing field whereby the full range of all retail offers available to non-solar customers are equally accessible to solar customers.

Damien Moyse is the Alternative Technology Association’s energy projects and policy manager.

The report is available here.