Time-varying solar tariffs now in Victoria

EnergyAustralia offers 29c kWh peak feed-in tariff.

EnergyAustralia is the first retailer to provide time-varying solar feed-in tariffs in Victoria. On September 15 2018, four residential electricity plans were launched that pay solar owners almost triple their standard feed-in during peak times. We’ll look at how time-varying tariffs stack up against single rate solar tariffs and which option is likely to be better for you.

Introducing a new variable

Earlier this year, Victoria’s Essential Services Commission recommended that solar owners get paid a price that better reflects the wholesale cost of electricity at the time they sell it into the grid. So they set minimum rates for an optional time-varying solar feed-in tariff. From July 1, retailers could provide this option to customers. But until last week no retailer was offering a plan. By 2019-20, all retailers will need to offer time-varying feed-in tariffs. The good news is, solar owners will be able to choose the feed-in tariff that’s right for them.

Time-varying solar tariffs – what does it pay?

Time-varying solar feed-in tariffs operate in the same way as Time of Use (TOU or flexible) tariffs. There are peak, shoulder and off-peak time periods. Different feed-in tariffs are paid to solar homes based on when they export electricity to the grid.

EnergyAustralia’s September 15 plans have feed-in tariffs paying:

Peak = 29.0 cents per kWh Shoulder = 10.3 cents per kWh Off-Peak = 7.1 cents per kWh These rates are also the minimum feed-in tariff set by the Essential Services Commission.

The time periods for varying feed-in tariff plans:

Peak: 3pm-9pm Mon-Fri AEST/DST Shoulder: 7am-3pm & 9pm-10pm Mon-Fri, 7am-10pm Sat-Sun AEST/DST Off-peak: 10pm-7am Mon-Sun AEST/DST EnergyAustralia is currently paying only 9.9 cents for its standard solar feed-in tariff in Victoria. In almost all cases, EnergyAustralia customers will be better off in moving to the time-varying tariff.

How much better will the time-varying feed-in tariff be for EnergyAustralia customers?

To calculate the effective feed-in tariff that Victorian solar owners could achieve with time-varying tariffs we’ll use an example. For a north facing solar system in Melbourne including six months of daylight saving, here is the breakdown of solar generation in the peak, shoulder and off-peak hours according to PVWatts: Peak = 20.82% weekdays only Shoulder = 79.02% weekdays, 99.84% weekends Off-Peak = 0.16% weekdays and weekends Multiplying this out, we get an average feed-in tariff of 13.076 cents (0.29*0.2082*5/7 + 0.103*0.7902*5/7 + 0.103*0.9984*2/7 + 0.071*0.0016) if all solar generated were exported. Great, that’s better than most standard feed-in tariffs in Victoria right? Yes it is, but there are a number of factors that will impact the average feed-in tariff including:

• Which direction your panels face. West-facing panels will increase the average feed-in tariff rate
• The amount of electricity consumed during peak hours. More consumption will decrease the average feed-in tariff rate
• Standby power. Higher standby power will take a larger portion of peak generation and decrease the average feed-in tariff rate
• Whether you have energy storage. Storage owners tend to soak up excess morning solar which will increase the average feed-in tariff rate

We expect that the majority of solar owners will receive an effective rate of between 10-13 cents on this time-varying tariff. The best way to determine what you would likely receive is to request your meter data history. This will tell you exactly how much solar you exported each hour in the last 12 months. Then you can crunch the numbers – something we hope to support you in doing in coming months.

The opportunity for savvy solar and storage owners

If you are willing to shift your usage away from peak solar tariff hours, there is an opportunity to earn higher feed-in tariffs. With around 15% of solar generation available in peak hours there is some scope to change behaviour and reduce consumption during those hours in order to increase feed-in credits. However, for those with energy storage, there is a bigger opportunity. If you can export energy stored in a battery at specific times of the day you can achieve much higher average feed-in tariffs. Using this feature, consumers can charge their energy storage systems using lower value off-peak electricity (15-20 cents) or solar generated during off-peak or shoulder periods (at 7.1-10.3 cents) and be paid 29.0 cents to export during peak time periods. As an example, a storage owner with 10kWh of excess solar and “spare” battery capacity could export that into the grid at peak times and earn 29 cents using electricity that “cost” them 10.3 cents (the opportunity cost of not exporting to the grid).

• Per kWh, that’s an 18.7 cents margin, rounding down to 15 cents for losses in getting electricity in and out of the battery.
• With 10kWh, that’s $1.50 for every weekday where they would normally export excess solar in the shoulder period, and they have more than doubled the value of their solar by storing and exporting it.
• Assuming this solar owner will be able to store 10kWh every weekday for 8 months of the year, they will be better off to the tune of $1.50 x 5 days x 34 weeks = $255.

In the scenario shown, time-varying tariffs offer solar owners with larger exports and storage the chance to gain increased feed-in tariffs worth over $250p.a. That certainly helps improve the payback period for energy storage!