Feed-in Tariff
Background
This concept is important to understand for two reasons
- It has economic implications if you choose to purchase solar PV panels
- So you can campaign effectively to ensure an effective feed-in tariff is instituted in Victoria.
Below are some articles that provide good background :
The basic idea of a feed-in tariff is that people with solar panels that produce power are paid for the power they produce at above market rates. There are various rationales for this :
- It helps provide stimulus for the solar power industry. Germany is the acknowledged world leader in solar power and their gross feed in tariff credited with helping bring this about
- It recognises the fact that solar panels are providing clean power and helping the country meet Greenhouse reduction targets (and addressing climate change)
- It recognises the fact that domestic solar power is especially important because
- unlike the bulk of our power that comes from the Latrobe Valley, there are no transmission losses
- it is being generated at precisely the times (hot summer days) when our electricity network is most under strain
Breaking News July 09 - new amended scheme
Notes courtesy of Peter Campbell
The Labor Government’s feed-in tariff legislation was passed by the Victorian Parliament on 25 June 2009. The government states that amendments were made "in response to input from responsible environment groups" which demonstrates that our combined effortsto contact politicians and build community support for a good feed-in tariff were successful.
Well done ATA, Environment Victoria, CAGs and everybody who spent time and considerable effort on this campaign.
The final structure of the Victorian feed-in tariff includes:
- 60 cents credit per kilowatt hour for energy fed back into the grid within that year. This is about four times the current cost of electricity in Victoria.
- The tariff is paid to residences, community organisations and small businesses with energy consumption less than 100 MWh a year
- An array size limit of 5kW applies
This outcome is a significant improvement on the feed-in tariff initially proposed by the government. Amendments introduced in the Upper House which improved the scheme include:
- extending participation to community organisations and smal businesses with energy consumption less than 100 MWh a year (they were intially excluded)
- increasing the array size limit from 2kW to 5kW
Two electricity retailers have also provided letters which state they will provide cash or rollover credits for energy produced, rather than these credits "expiring" as was initially proposed.
The additional amendment put by the Greens for the tariff to be paid on the
gross output (rather than the net output) was not accepted.
The tariff does not apply to large scale solar or wind either, so there is potential to further improve this legislation in the future.
On balance, this is a significant improvement over the legislation initially
proposed.
More details:
Regards, Peter
http://greenlivingpedia.org
Hi All,
As many of you will now be aware the solar feed-in tariff was voted on in the Victorian upper house yesterday evening. After some busy last minute negotiating supported by the government the size of systems eligible under the scheme was raised from an initial 2kw to 5kW, and
community buildings and small businesses who use less than 100MW per year were made eligible to participate. However, we were unable to get support for the key change from a net to a gross scheme.
This is disappointing, but Minister Batchelor had made it very clear to the Coalition that he would kill the bill entirely if they tried to move for a gross scheme. They didn't want to be charged with making the scheme more expensive, and therefore leading to it being killed off. Interestingly Peter Kavanagh voted with the Greens for a gross feed-in tariff in the end.
..
The success of the campaign is broader than just the amendments that were achieved yesterday. The political fall-out for the Labor party has been painful, and their is a lot of internal discontent with Minister Batchelor's behaviour of late. Backbenchers are now starting to stand up in party meetings and ask why the Labor party is so rubbish on the environment, and local branches have been moving for their MPs to support a gross feed-in tariff to the Premier. There is also a greater understanding that the community is serious about climate change, and is able to mobilise around specific campaign issues in a coordinated way. Many within the party now understand that they will need to improve their environmental credentials if they are to get real community support.
Congratulations and thank you to all of you who have been involved in this campaign over the last 12 months. The only reason that any changes were made at all is because of the strong community support from across the State, and across various sectors. CAGs who have made their feelings known on this issue to their local MPs, local media, at rallies and events have been a vital part of the campaign. Please pass on our congratulations and thanks to members of your groups who have been involved.
Kind regards,
Victoria McKenzie-McHarg
Climate Change and Sustainable Transport Campaigner
Environment Victoria
Campaign Material (First half of 09)
The Victorian Government has proposed feed-in tariff legislation which is currently before Parliament. The current model has a number of major flaws :
- It is limited to systems of 2kW or less. 2kW is not a large amount of power for a solar system - the average home uses more than this.
- It is limited to households (not community groups and others)
- It is a net feed-in tariff (unlike the successful German model, and unlike what is being proposed in WA and ACT). This means that householders will only be recompensed for power they produce over and above what they use at home. This makes it very difficult to plan in advance when making economic decisions about solar purchase
- It only provides credits, not cash.
Here is a link to an electronic campaign to get the Liberal Party to amend the legislation
Here is a sample campaign letter below :
Folks,
Below is the later letter (email) I have sent regarding the Victorian Government's proposed feed in tariff legislation. It would be great if you could send a letter to John Brumby and Peter Batchelor about this too. Feel free to use any of the content.
*Shorter version:*
The Victorian Government proposed Feed-in Tariff legislation will not provide significant financial incentive for the installation of more solar power. Their is no valid reason for either net metering a arbitrary 2kW cap on array size. The government should bring in a gross tariff with no cap so that the stated objective of encouraging people to install more solar panels is achieved. This would be in line with proven effective Feed-in Tariff policy in Germany, where it has been an overwhelming success.
Separate energy efficiency legislation is also required to complement this.
Climate change, reduced rainfall, heatwaves and electricity grid failures are all linked and are now having a huge impact across Victoria, Australia and across the globe. More solar panels, encouraged by an appropriate Feed-in Tariff are one of the important measures for tacking this problem immediately.
Regards, Peter Campbell
http://greenlivingpedia.org
More information*Problems with 2kW cap on array size.*
DPI have stated that:
"**Data available from the Commonwealth Solar Homes and Communities Plan
indicates that the average size of residential PV systems is 1.5 kilowatts
and over 90% of currently installed PV systems are at or below 2 kilowatts.
For this reason, the 2 kilowatt capacity threshold was deemed appropriate
for the premium fee-in tariff scheme."*
Your stated purpose for the feed-in tariff is to increase the residential
uptake of PV systems. Putting an artificial cap on array size, based on the
average systems installed to date, simply limits the financial incentives
for households to install systems over 2kW for no good reason. It is
therefore in direct conflict with your stated purpose. Your basis for the
proposed 2kW cap on array size is simply not valid.
*Encouraging energy efficiency*
Your government states that encouraging energy efficiency is another
objective of the feed-in tariff. This is simply not relevant. The feed-in
tariff is a policy measure for encouraging the uptake of solar panels, not
driving energy efficiency. I urge you to consider effective measures for
encouraging energy efficiency such as:
- Introducing energy efficiency labelling standards for all consumer
electrical goods
- Introducing energy efficiency standards as part of building standards
- Consider raising the price of electricity so that consumers will be
encouraged so use less
*The cost to households is much lower than you claim
*I understand that a cabinet committee submission from the Department of
Sustainability and Environment stated that the so-called "gross feed-in"
solar subsidy scheme would have cost households just $18 a year, or 35 cents
a week, increasing electricity bills by just 2 per cent. This is
significantly less than your previously claim, based in information not
released from Energy Minister Peter Batchelor's office, that claimed the
cost at $100 a year for households. This claim now appears to be in error.
*More solar panels could avoid or reduce recent power outages.*
The very hot weather across Victoria last week, combined with many
households using energy hungry air conditioners during the day (up to or
great than 8kW) resulted in electricity supply falling below demand.
Photovoltaic panels, if enough are installed, would generate power for the
grid precisely when on hot sunny days when it is needed most and power is
most expensive. Additional generation by solar panels may have avoided
these supply problems and kept the grid, and Melbourne's train network,
operating properly during the heatwave conditions.
*Solar panels reduce emissions and therefore address climate change.*
All power generated from PVs should be paid a gross tariff as they produce
power that would otherwise be sourced from the coal-fired electricity,
thereby reducing carbon emissions, This is an essential measure for tackling
climate change, which is now an urgent concern following the recent
extremely hot weather resulting in some deaths and huge disruption to
Victoria's economy.
The Feed in tariff should also provide financial incentive for large scale
solar power energy producers to encourage investment in large scale solar
plants too.
I strongly urge you to implement a proven effective gross feed in tariff
with no cap on array size as this would greatly boost installation of solar
panels and green jobs, both of which will benefit Victoria.
[Peter Campbell]
• It is interesting to note that while the proposed Vic feed-in tariff will pay 4X the retail rate for net input to the grid, electricity spot prices that retailers pay on the National Electricity Market (NEM) have been as high as 67 times the normal retail rate, as per this table below, measured on 28 January 2009. The high figure (67X) was South Australia; the lower figure (40X) was Victoria.
• Source: http://www.aer.gov.au/content/item.phtml?itemId=727134&nodeId=6ab8bca9b6f8148f812c303a8587d311&fn=Prices%20above%20%245000/MWh%20-%2028%20and%2029%20January%202009.pdf
• Solar panel producers could qualify for this peak rate - given they are producing on the hottest days when peak load is highest - rather than only getting 4X the retail rate.
• Also note that retailers pass on this very high spot price to consumers, which tends to negate the argument that paying 4X for the FiT will have a major impact on electricity prices.