What NSW’s 2014-15 benchmark feed-in tariff rates mean for solar homes

NSW’s Independent Pricing and Regulatory Tribunal (IPART) last week released the benchmark rates for solar feed-in tariffs in the state for the year 2014-2015. The range for rates, which are recommendations only and which electricity retailers are not obligated to pay, will be between 4.9¢/kWh and 9.3¢/kWh. What does this mean for current solar system owners and would-be owners?

Although the rates are a decrease from those of the previous year, their voluntary nature makes this fact virtually irrelevant. In the end, electricity retailers can offer whatever rates they determine suitable, depending on how many solar customers they wish to attract and how much they deem one unit of solar power to be worth to them.

Parsing through the federal government’s electricity comparator site EnergyMadeEasy.gov.au for ‘offers available to solar customers’ using the sample post code 2095, it was possible to find the contract rates which retailers publicly advertise. As of the time of writing, for new solar customers (i.e. those not on a government-mandated tariff rate, none of which are any longer on offer to new customers), these rates range from 5¢/kWh to 8¢/kWh. Given the fact that these rates remain largely unchanged from those available when voluntary pricing was first put into place, there is little reason to believe they will be any different in the coming financial year.

Solar Choice has noted on numerous occasions that these low rates–which work out to around 1/3 of what households pay for a kWh of electricity (i.e. around 25¢)–more or less obligate solar homes to ensure that they are sourcing as much electricity from their panels as possible and therefore avoiding purchasing expensive power in the first place. A unit of solar power exported to the grid instead of being ‘self-consumed’ is a missed opportunity for power bill savings. These days this is the case not only for NSW residents, but for solar homes in other states as well.

One of IPART’s original stated purposes in introducing the benchmark range was greater market transparency, so that solar customers had some bearing as to what their exported solar power is worth to electricity retailers. This knowledge puts them in a better position to negotiate, and means that, in individual cases, customers could potentially secure rates higher than those which are publicly advertised. As noted above, self-consumption is the rule these days, offering savings substantially larger than exporting power to the grid. But every cent more that a household receives for its home-grown solar electricity is a cent saved on their power bill, and mitigates the effects of solar power export ‘leakage’.

For a more in-depth look at how to size and use a system, please see our recent article: How to get the most out of your solar panels.

© 2014 Solar Choice Pty Ltd