Queensland Productivity Commission – Solar feed-in tariffs

QCA – Queensland Competition Authority

Mar 11
Queensland Productivity Commission – Solar feed-in tariffs

On 10 March 2016, the Queensland Productivity Commission (QPC) published its draft report on solar feed-in pricing.  The Queensland Government tasked the QPC to determine a ‘fair’ price for solar power exported to the grid from the home or business premises of small customers.

The QPC determined that the price for solar will be fair when:

  • solar PV owners receive an efficient price for the solar they export; and
  • remaining electricity customers are not paying more or less than they should for solar PV generated electricity.

The productivity commission investigated whether solar PV owners are adequately compensated for the public and consumer benefits of exported solar energy, including identified social, economic and environmental benefits.  In addition, the terms of reference for the review states that ‘any price for exported solar energy must not impose unreasonable network costs on electricity customers — particularly vulnerable customers’.

In determining compensation for the environmental benefits of solar generated energy, the draft report found that the Small-scale Renewable Energy Scheme (SRES) provides at least a fair value to solar PV owners for emissions reduction.  Given that, based on average solar PV system prices, the level of the SRES subsidy is between 2.8 and 2.9c/kWh generated. In terms of energy exported, households receive around 7.1c/kWh.

In South East Queensland, where there is no mandated feed-in tariff (FIT), solar PV customers choose between retailers and the FITs they offer range between 4-11c/kWh (2015-16) with the largest two retailers offering 6c and 8c/kWh.  Based on the available information, the draft report does not suggest there is a case to mandate FITs to address market power.  However, in regional areas, Ergon Energy (Retail) possesses significant market power, which provides a basis for some form of continued regulation.  Therefore, in regional Queensland the report recommends that Ergon Energy be required to:

  • purchase solar exports from small customers; and
  • submit their proposed FIT offers to the Queensland Competition Authority for approval on an annual basis.

The other main finding in the draft report is that the Queensland Government should also not increase FITs to induce industry development, wholesale market and network infrastructure effects or other social impacts. The evidence suggests that such a policy would come at a net cost overall, and would not be fair.

Interested parties have until 15 April 2016, to make submissions to the QPC.  The productivity commission is also holding a number of public hearings across the state between 4-14 April to present its findings and take public feedback.