Feed-in tariffs in Australia


Feed-in tariffs in Australia

Feed-in tariffs generally refers to the rates at which a small scale producer of electricity (such as a household) is able to sell that electricity to another party (generally their electricity retailer). They are a means of providing PV financial incentives. They are generally associated with electricity produced by rooftop solar solar photovoltaic arrays. They are sometimes also used to refer to the rates paid to significant new renewable energy sources, such as an offshore wind farm. Feed-in tariffs can be defined by the rate payable, whether on a gross or net metering basis, the period for which a new installation is guaranteed a rate and the limits on eligibility (eg households only). Feed-in tariffs are a way of subsidising renewable energy and can be implemented in conjunction with mandatory renewable energy targets.

Several Australian State Governments have either proposed or implemented solar photovoltaic (PV) feed-in tariffs, but some of the schemes have come under criticism for not effectively encouraging the uptake of solar PV. At August 2008, a Senate Committee (the ECITA Committee) was examining a Bill for a federal solar feed-in tariff. [ [http://www.energyblueprint.info/fileadmin/media/documents/national/australia_report.pdf Energy Revolution: A sustainable Australia Energy Outlook] p. 11.]

Background

The feed-in tariff system is now used in 50 countries. Hans–Josef Fell, a Greens MP in the German parliament who pioneered their feed-in tariff electricity system, claims that this is because it lead to a 100 million tonne reduction in carbon emissions in Germany whereas emissions trading only lead to a 9 million tonne reduction. [ [http://www.financialstandard.com.au/index.php?id=12587 Financial Standard ] ]

Commonwealth of Australia

The Commonwealth of Australia does not of itself offer feed-in tariffs for solar photo voltaic power. The Commonwealth territories (Northern Territory and Australian Capital Territory) are considered separately below. The Commonwealth does however offer a capital grant of up to AUD 8,000 per household for domestic installations and 50% for school installations. [ [http://www.greenhouse.gov.au/renewable/pv/index.html Solar Homes and Communities Plan - Home Page ] The Parliament is presently considering a private members Bill introduced by Sen. Milne, (Tas), the Renewable Energy (Electricity) Amendment (Feed-In Tariff) Bill 2008, which is also the subject of an inquiry by the Senate Standing Committee on Environment, Communications and the Arts. ]

Australian Capital Territory

Current status

Under the Electricity Feed-in (Renewable Energy Premium) Bill 2008, Canberrans can install photovoltaic (solar) cells or other renewable sources, produce their own energy, and sell it back to the power grid but perhaps not until July 2009. They'll be paid a tariff 3.88 times the retail cost of electricity for the clean energy they feed back into the grid for up to 20 years from the date they sign up to the scheme. [ [http://www.legislation.act.gov.au/b/db_32174/current/pdf/db_32174.pdf Electricity Feed-in (Renewable Energy Premium) Act 2008] ] It is a gross metered scheme meaning that owners get paid a premium rate for all electricity produced by their installation with their own usage being metered separately. [ [http://www.hansard.act.gov.au/hansard/2008/week07/2577.htm Legislative Assembly for the ACT: 2008 Week 7 Hansard (2 July) Page 2577] ]

History

The Australian Capital Territory ("ACT") government established an inter-departmental committee to look at feed in tariffs in November 2007. [ [http://www.electricalsolutions.net.au/news/12146-ACT-considers-a-renewable-energy-feed-in-tariff ACT considers a renewable energy feed-in tariff :: ElectricalSolutions ] ] There is some concern that a proposed commercial solar power plant, the feasibility of which is to be examined by a joint study be ACT government and ActewAGL [ [http://www.abc.net.au/news/stories/2008/03/19/2193657.htm?section=business Mixed reaction to solar power plan - ABC News (Australian Broadcasting Corporation) ] ] , may undermine the proposed feed in tariff proposal. [ [http://www.skynews.com.au/eco/article.aspx?id=223405 Sky News Australia - Eco Article ] ]

The submission of the Independent Competition and Regulatory Commission25 February 2008 was that there were issues to be resolved including:
* overall effectiveness and efficiency
* cross-subsidy elements
* equity issues particularly for households suffering financial hardship
* a gross or net approach is adopted
* a clearly predefined finite life (no more than 5 years);
* a partial subsidy rather than full cost recovery
* ability to terminate if national policies are introduced eg carbon tax
* transparency of tariff setting [ http://www.icrc.act.gov.au/__data/assets/pdf_file/0004/95647/ICRC_Submission_Feed-in-Tariff_25-2-08.pdf accessed 10 May 2008]

outh Australia

Announced: September 2006Come into force: The first of July this year, 2008. Name of Law: "Electricity (Feed-In Scheme-Solar Systems) Amendment Bill 2008" Runs out: 30 June 2028. Normal tariff for electricity: $0.22 / kWhFeed-in tariff: $0.44 / kWh. [http://www.climatechange.sa.gov.au/PDFs/Feed-in_Discussion_Paper_submissions_closed.pdf] Result: Not only will thousands of South Australian homes have solar systems installed, but many businesses will now have the opportunity to embrace this technology and turn their roofs into mini-renewable power stations. The South Australian Premier, Mike Rann, thinks that they can make the government completely carbon neutral by the year 2020.

Note it is not clear whether there is a provision for the feed-in tariff to increase with natural increases to the price of electricity, at a multiple of two. This was the original intent, but may have got negotiated out. The 44 cent tariff is only paid for any electricity exported, so only when the system output exceeds domestic demand. [http://www.solarhome.com.au/?p=106]

Rebates: The South Australian government does not offer any additional rebates or incentives to domestic customers, it’s a solar schools program.Estimated payback: It’s very hard to calculate, but it will be best for systems of largest eligible size, where the domestic demand is smallest, or mainly occurs at night and low power consumption during the day. Houses without air-conditioning would seem to fit the bill. [http://worldisgreen.com/2008/02/19/economic-incentives-for-solar-systems-in-]

New South Wales

The government of New South Wales are not interested in feed-in tariffs. NSW is seeking national consistency on this matter. For the same reasons they strongly support a single expanded renewable energy target rather than separate state-based schemes, thereby providing the lowest cost to consumers and reducing compliance costs to industry while achieving the same environmental outcomes. In an announcement on 8 May 2008 the government again failed to introduce feed in tariffs, but did provide $200M of subsidies to the coal industry. [http://www.nsw.gov.au/energy/download.aspx?id=2e191147-ebc9-4279-8b2b-1ed134d70c7b accessed 10 May 2008]

Western Australia

Western Australia is yet to make an announcement on a feed-in tariff [ [http://www.ata.org.au/feedintariffs/take-action-wa/ Alternative Technology Association website » Take action WA ] ] although a 2006 submission by Next Energy recommendeded that the WA Government consider:
* Undertaking analysis of the correlation between PV power output and the commercial demand
* Introducing advanced, time varying or dynamic metering or
* Introducing some kind of guaranteed ‘feed in’ tariffs for PV that recognise the peak value of PVafter noting that funding schemes and feed in tariffs to the local grid in many countries have played an important role in the PV industries development. In Germany, a guaranteed PV tariff means that Germany now has the highest PV capacity per capita – at 10W for every person in Germany compared to Australia at 2.6W per capita. [ Supply side options for WA stationary energy: An assessment of alternative technologies and development support mechanisms in the Final report to WA Greenhouse and Energy Taskforce by Next Energy in 26 September 2006 ]

Queensland

The Queensland Government Solar Bonus Scheme is a program that pays domestic and other small energy customers for the surplus electricity generated from roof-top solar photovoltaic (PV) systems that is exported to the Queensland grid. It is expected to be operational by mid 2008. [ [http://www.dme.qld.gov.au/Energy/solar_feed_in_tariff.cfm Department of Mines and Energy - Solar Bonus Scheme ] ] The scheme provides for 44c/kWh (around three times the current general domestic use tariff of 15.45c/kWh (inc GST))on the net amount exported to the grid, subject to having proper metering installed.

A feed-in tariff will ensure that Queenslanders benefit from the federal Photovoltaic Rebate Program. [http://www.enviro-friendly.com/ClimateSmart_2050.pdf]

Victoria

In the lead up to the recent Victorian State election, ALP made a commitment to introduce a fair price for grid-connected solar PV electricity via the implementation of a feed-in tariff. The policy release entitled Tackling Climate Change – Helping families play their part announced that an effective and efficient feed-in system would be developed in conjunction with energy companies and shareholder groups, and that such a feed-in tariff would provide a fair price for renewable energy fed into the grid. [http://www.ata.org.au/wp-content/policy/fit_design_victoria.pdf]

On 7 May 2008 it was announced that under the new premium Feed-in Tariff Scheme, households will be paid 60 cents for every net kilowatt hour of power fed back into the state electricity grid. This is almost four times the current retail price for electricity and the highest feed-in tariff offered in Australia as at 7 May 2008. The premium feed-in tariff scheme is to be introduced in 2009 and to run for 15 years. The scheme would apply to all household systems of up to two kilowatts capacity and have a cap of 100MW of generating capacity. [ [http://www.dpc.vic.gov.au/domino/Web_Notes/newmedia.nsf/8fc6e140ef55837cca256c8c00183cdc/43fb9ccd3361fe7cca2574440007d1ff!OpenDocument Premium rate to solar-powered Victorian households] , Victorian State Government media release]

The announced feed-in tariff has been described by environment groups as ineffective, as the 2kW cap on array size, combined with net metering, means that very little surplus power will be put into the grid so very little of the high tariff will actually be paid. Environment groups have called for the Victorian feed-in tariff to be paid on gross metering with a 10kW cap on array size to overcome these problems. [ [http://www.envict.org.au/inform.php?item=1797 Brumby Government’s solar feed-in law a flop] , Environment Victoria, May 5, 2008]

Tasmania

On Tuesday, 3 March 2008, the Premier of Tasmania announced that the Government will consider a mid-year report on the introduction of minimum feed-in tariffs to support householders and small energy consumers using solar panels and other forms of domestic renewable energy and that provide surplus energy into the electricity grid. [ [http://www.dpac.tas.gov.au/divisions/policy/climate/ Department of Premier and Cabinet - Policy ] ]

Northern Territory

Northern Territory is yet to make an announcement on feed-in tariffs as a means of subsidising and encouraging solar PV, other than in relation to Alice Springs. [ [http://www.ata.org.au/feedintariffs/take-action-nt/ Alternative Technology Association website » Take action NT ] ]

In 2006 there was a bid to make Alice Springs a Solar City. Australian Government funding would give four different regions in Australia the chance to become a Solar City and share $75m funding to make solar power projects a reality. If successful, the Alice Springs project would involve solar power generation plus investigating energy efficiency, smart metering and tariff pricing. [http://www.nt.gov.au/business/documents/general/2006_Industry_Sector_Snapshots.pdf accessed 10 May 2008]

In Alice Springs, an official Solar City, from May 2008 people with grid connected PV systems can sell all the solar electricity they generate back to Power and Water Corporation at 45 cents per kilowatt–hour, which is more than double the cost of purchasing electricity from the grid. [http://www.alicesolarcity.com.au/sites/default/files/media-release-080512-first-resident-PV.pdf]

Outside of the Alice Springs Solar City area, people with Solar PV in the NT can arrange to sell their gross electricity production to the Power & Water Corporation of the Northern Territory at 14.38c. They can effectively use the grid as a bank and notionally re-purchase the electricity at night. [ [http://www.powerwater.com.au/powerwater/business/photovoltaic_rebate.html Power and Water Corporation - Solar Energy Buyback Program ] ] [ [http://www.nt.gov.au/dpifm/Minerals_Energy/MakeTheSwitch/index.cfm?header=Roof-top%20solar%20panels Make the Switch ] ]

ee also

* PV financial incentives
* Solar power in Australia
* Solar power
* Photovoltaic cells
* Energy policy of Australia
* Renewable energy commercialization in Australia
* Mandatory renewable energy targets

References


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