The South's solar storage feed-in gaffe

SA Power's quiet ruling on feed-in tariffs for solar storage owners is a backward step in defence of conventional business models.

SA Power Networks is the monopoly distribution network operator in South Australia. In a subtle, surprise move, it very quietly recently announced that: “If a customer currently receives feed-in credits under the Solar Feed-in Scheme, they will no longer be eligible for receipt of credits once they install a battery storage system or a fuel cell system."

Given that the vast majority of South Australians are currently on some type of FIT, disappointingly this policy effectively wipes out the cost effectiveness of using storage in South Australia for the time being. Intriguingly, only a few weeks ago some Californian distributors used the same blocking tactics and refused to connect some customers who had purchased solar with storage systems, although fortunately, only a week later new regulations were introduced that mandated the introduction of storage.

It is somewhat telling that in its own industry briefing, SA Power Networks acknowledged that “... as customers and the industry seek the next technological innovation to reduce electricity demand and reliance on conventional electricity distribution networks, the emergence of fuel cells and battery storage systems is starting to gain momentum".

Innovation. Reduced demand. No thought given to embracing the advantages or optimising the network benefits which could reduce all consumers costs; just an immediate reaction to stop any threat to conventional business models.

And they are monopoly so, guess what, you have absolutely no choice and absolutely zero consumer power to challenge the decision. This lack of market power was eloquently and acutely described in the report Going Solar: Renewing Australia’s electricity option, which was recently released by the Centre for Policy Development.

The report noted:

Solar consumers have the right to a fair contract with electricity retailers, and one that is not to their financial disadvantage, under the Australian Consumer Law.177. However, the structure of the electricity industry, and relationship between retailers and customers, means that solar consumers have limited market power. Where this constrains consumer choice or creates an uneven playing field for solar compared to other sources of electricity, governments may need to intervene to protect consumer rights.

Although we are talking about a distributor in this case, I would think that, equally, consumers have virtually no power here and are potentially being financially disadvantaged by this ruling. Ironically, stopping consumers from (potentially) making investments in storage has the bizarre consequence of allowing networks costs to potentially rise, or at least preventing the potential of helping to alleviate them, which would seem to be against the broader community’s interest.

Further, it is also plainly apparent that this ruling is a retrospective condition, added subsequently to householders signing up for the FIT, which would hardly seem in the spirit of consumer law.

The report goes on to say that:

..the threat posed to ‘gentailer’ profits by rooftop solar is significant and the level of market power and access to information is so heavily weighted in the utilities’ favour that it would be challenging for any consumer advocacy body to get traction. If this proves to be the case, a stronger regulatory approach may be required – particularly if around a million new solar households become disenchanted with the status quo. A recent poll by Essential Media suggests this is more likely than not – power companies are considered the least likely industry to act in the public interest..

The excuse that SA Power networks uses to enact this ruling is that “…this equipment can cause interference on our network and can impact the quality of supply for other users connected to the local network”, obviously implying that they see a (perceived) technical risk.

Really? Really?

Can someone explain how storing energy from a solar system in a battery and using it in the home at peak times to avoid peak charges (effectively avoiding the purchase of energy) creates a power quality risk? The solar industry is one of the most regulated in the country and I am all for standards and accreditation, don’t get me wrong. Anything we sell or install should be the epitome of quality and safety lest we do ourselves a disservice, but let's not confuse a device that alleviates network load and consumer costs with something that simply threatens the status quo.

Now to be fair, SA Power Networks do talk about an interim process and pending modification of the Small Embedded Generator request process to take into account storage. So the ruling doesn’t say you can't do it, but by default it certainly discourages it for pretty much every single South Australian.

We urgently need standards and regulations developed which allow storage on networks and encourage innovation and reduced demand, not policies that block them and disempower consumer choice. Let’s hope the modifications to their rules take a much more adaptive and progressive approach.

You can read the relevant SA Power Networks Industry News here.

Nigel Morris is the director of SolarBusinessServices.