Government agencies begin to struggle with the disruption caused by solar photovoltaics, mis-priced feed-in tariffs, and mis-priced residential electric rates.
Update 3/26/13: To get more of an idea of how the government is tying itself up in knots, see Qld solar PV households face dramatic tariff changes. This is what happens when there is a dramatic shift in costs and technology and the market cannot react, in this case because of poor government pricing policies.
If you have an item that is easily mass produced, people can purchase a lot of it in a short time if the price is attractive. Solar panels are mass produced and mass installed.
Queensland paid too much for the feed-in tariff for too long; $0.44 AU/kWh, far above the average price of $0.23/kWh. They included fixed costs of distribution in their variable prices for retail electricity. They now have a political firestorm on their hands between the solar power haves who are getting a fat subsidy, and the solar power have nots who are paying for the subsidy. And they are positing that the subsidizers are those least able to afford it (relatively low income) while the subsidizees are those who need it least (relatively high income).
The government authorities search for a way out that makes both happy; likely they will make neither happy with associated political consequences. Once you get into this mess with government as the price setter, it is extremely hard to get out. In the U.S. we have a small window to correct our price structures for the retail consumption of electricity and the recompense for excess solar electricity (typically net metering). If we fail to act within this short window, we will be in Queensland’s predicament.
Queensland Competition Authority recommends time-of-use tariffs be mandatory for solar-powered households
SOLAR-powered households could be forced on to time-of-use tariffs to ensure they pay their share of network charges.
A report ordered by the Newman Government has recommended the highly-controversial move after finding the current solar schemes were hurting lower income households.
The report found that by 2015/16, the cost passed on to all electricity users from paying for home-produced solar power would drive up the average annual power bill by $276, or about 17 per cent.
“When those doing the paying are likely those least able to afford it and those enjoying the benefits are those likely to be most able to afford to meet their true costs, then something is truly wrong,” the Queensland Competition Authority report said.
Industry insiders are convinced thousands of solar households maximize the benefit of the 44-cent feed-in tariff they receive by selling all the power they produce during the day and using only grid-produced power at night.
This way they received 44 cents per kWh for the solar power they produce while paying the retail rate of about 23 cents per kWh for what they use.
The QCA report found one way to reduce the impost being passed on to other consumers would be to switch solar households to the time-of-use tariff, which is currently voluntary.
Time-of-use tariffs offer off-peak price discounts but make power more expensive at night when there is increased demand.
“In this regard, it would go some way to reducing the problem of PV customers avoiding a portion of the true cost of their network access due to their net consumption profile, which leads to higher average variable network charges,” the QCA said.