The network lobby is demonising solar, but missing the point

The logic surrounding across-the-board network capacity charges is seriously flawed. But instead of addressing this absurdity, the electricity network lobby just complicates the mess with its cross-subsidy cherrypicking.

The network lobby – the Energy Networks Association – has moved into defensive mode with a new report titled, 'Value of a Grid Connection to Distributed Generation Customers' as it dawns on its members that millions of customers might choose stand-alone solar and storage over a grid connection in the near future (collectively reducing our dependence on the grid).

Let’s put aside for a moment the fact the report and its sponsor have made some serious errors of technical fact that act to make disconnecting from the network look more difficult and costly then it really is (which necessitated its own article). Instead, let’s focus on what the report is really intended on doing which it to demonise solar customers as cross-subsidised and freeloading off non-solar customers. This is based on a single simulated, theoretical “case study” household owner of solar system.

But in order to make this claim, the report's authors ignore the fact that cross-subsidies are flying in every direction within the electricity consumer base. 

The report (along with the entire electricity industry) relies on a thing called ‘Network System Load Profile’, or NSLP, to determine each individual small customer’s load during the maximum network (power use) peak. This occurs at around 4:30pm due to air-conditioner use. Therefore those customers who tend to use little or no power during peak load events unfairly pay peak power use prices, even though they are not responsible for the peak power use event.

So, let’s say we look at another 'case study' of a solar consumer who installed a new 7.5kW solar system on their roof oriented to the northwest or west, and used none of the output onsite during the system peak. They would be generating enough power for another average NSLP customer. The ENA report, using its particular case study, suggests however that only $10 a month should be attributed in value to that solar customer even though they:

a) are using no electricity from the grid during a peak event; and

b) providing another customer with 100 per cent of their power needs.

If the ENA’s claims to be properly investigating cross-subsidies were to be believed then you’d think that it'd be telling us that a customer using no network capacity during peak events should pay very little of the $677 in annual network costs the report estimates the average customer incurs.

Crucially, based on the report’s logic, this solar owner should also receive a significant proportion of the $677 annual network charges for capacity sold onto the customer(s) who used their solar power during the peak.

Jumping to an extreme, the report authors seem to suggest that the only way a solar customer could be considered to not be cross-subsidised is by leaving the grid altogether.

By using a single theoretical case study to imply that all solar owners are major freeloaders when in fact there is huge diversity in how much strain (or assistance) they and users of other kilowatt-intensive equipment place on the grid during peak periods, completely misses the main game: how grid capacity can be rationed and priced in a cost reflective manner for all electricity consumers. With the way network capacity is charged at the moment it’s like all customers are compulsorily charged a toll for using the cross-city tunnel during the morning peak, even if they’re leaving their car at home and taking the train to work. Meanwhile, others pay the same fee but run a courier fleet of multiple vehicles down the tunnel right in the middle of peak periods. A solar customer can be like a helicopter taxi service, totally avoiding the cross-city tunnel (but being forced to pay the toll regardless) and being unable to collect the fare for their neighbour passenger that they carry (who also has to pay the toll).

Why they do not question the logic of needing to charge all customers the same network fees, even if some use tiny amounts of power during a peak while others ‘blast AC’ and strain the network to its limit, smells of an anti-solar agenda. It’s fair to conclude that they are interested in targeting customers with solar, which just happens to be where their main competitive threat lies. 

CLICK HERE for the 5 mistakes the network lobby made about grid disconnection.

Matthew Wright is executive director of Zero Emissions Australia, technical director at Efficiency Matrix and resident columnist at Climate Spectator.

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