Rooftop solar payments reduced due to grid congestion

Last week, Australia’s energy market operator warned that rooftop solar systems may need to be switched off as Victoria’s solar power supply could threaten grid stability.

Gavin Dufty, national director of energy at the Society of St. Vincent de Paul, said that when wholesale prices fell in the middle of the day when the sun was shining, retailers could buy power from the market cheaper than from customers.

The challenge for consumers was to change consumer behavior to take full advantage of solar energy, Dufty said.

“Many people are pushing for feed-in tariffs, but it is in their interest to change consumption patterns,” he said.

“If you have a battery you can drain it, you can run the dishwasher in the middle of the day or you can heat the house. If you have solar energy, you want to use it. This gives the largest dividend, much larger than the feed-in tariff,” he said.

The supply of solar energy has caused wholesale prices to fall steadily between 10 a.m. and 4 p.m. over the past two years. However, over the last 12 months it has reached a saturation point.

In May, the New South Wales Independent Tribunal on Pricing and Regulation said that in 2024-25 a fair benchmark for solar power fed back into the grid would be between 4.9 and 6.3 cents per kWh.

According to a yet-to-be-published report on energy prices in New South Wales, prepared by St Vincent de Paul and Alviss Consulting, the state’s average FiT rate has fallen from 8.2 cents/kWh in July last year to 5.8 cents/kWh in July this year.

More retailers were also moving to a model that offered a higher tariff rate for a certain amount of kWH exported each day and a lower rate above that threshold.

The reduction could have a “significant impact on households with even moderate export capacity,” the report said

For example, a Sydney household exporting 604kWh quarterly would receive $210 at Red Energy’s decreasing FiT hurdle rate of 10c and 5c compared to $240 for a retailer offering 10c with no threshold.

In the case of Energy Australia, it now offers 5 cents kWh with no cap, or a plan where you pay 10 cents per kWh for the first 15 kWh per day and 5 cents kWh for the excess.

Last week, AEMO issued two warnings of an “increased risk of insufficient demand to maintain a safe operating state in the Victorian region” for early Friday afternoon and four hours into the middle of the day on Saturday.

Power demand was forecast to be just 1,420 megawatts in Victoria at midday on Saturday, well below the minimum threshold of 1,865 megawatts.

“Insufficient market response may require AEMO to take action or intervene to maintain the security of Victoria’s electricity system,” it said.

It said it could curtail “unscheduled production units” – or rooftop solar systems – or force transmission lines that have been out of service to restart to deal with excess energy.