Solar Feed-in Tariff Review Submission

Transcription

1 Solar Feed-in Tariff Review Submission August 2018 John Thirgood Coordinator Save Our Solar Tas.Org

2 Table of Contents Solar Feed-in Tariff Review Submission... 3 Comparison of Other Jurisdictions FiTs... 3 Tasmania s Export Opportunity... 4 Solar Power in Winter... 5 Reducing Load on the Network... 5 Retailers and Wholesale FiT Prices... 6 Storage of Power in Tasmania... 6 Supporting the People of Tasmania... 7 Grandfathered Solar Systems... 8 Contributing to Energy Security & Financial Security of Tasmania... 9 Conclusion Appendix Appendix

3 Solar Feed-in Tariff Review Submission Comparison of Other Jurisdictions FiTs Tasmania has a distinct advantage compared to other states in Australia, due to its flexible hydro based system. In Tasmania we are able to ramp up or down hydro generation to match demand. This hydro system combined with solar power generation is a perfect mix for providing clean, green power, both for use in Tasmania and for export to the mainland. The nature of roof top solar power generation means that there are fluctuations in production. Currently, the demand for power in the system can vary due to the following factors: 1. Customer demand. That is, the use of appliances and lighting at various times of the day & night. These are used by customers either manually or automatically (via use of a timer or thermostat). There are common trends in customer demand that can be predicted. 2. Private power generation, such as rooftop solar, in commercial and domestic properties. Fluctuations in solar power generation is also predictable and can be allowed for in the normal grid variations that occur over 24/7, 365 day of operations. Given that our hydro based system currently analyses and adjusts to the ebb and flow of power demands, it is able to avoid wastage and allow for increased solar generation. Our hydro based system is unique compared to most other states of Australia. Other states of Australia have inflexible power generation methods, so when solar power is feed-in to the grid and it exceeds electricity demand, the solar power is wasted. Therefore, Tasmania is in unique position in which we are able to capitalise on solar feed-in and use it to its maximum potential by simply withholding water from the turbines for later use. As a result, Tasmania s FiT price should be the highest in Australia, in order to encourage a vastly higher amount of solar power on the grid. As can be seen in Table 1 below, Tasmania is far behind most other states of Australia. Six states of Australia have almost double the FiT compared to Tasmania. Table 1 State FiT (c/kwh) SA up to 15 Qld NSW 6-16 NT 26 ACT 8-17 Vic 7-29 Tas Source data: 3

4 We note that the state of Victoria, despite having most of their power from fixed sources (such as coal), are using Tasmanian generated power via Bass Link to top up their power, at greater expense, to meet their local demand. If Victoria and other Australian states see the value of solar with their fixed energy generation, then we too can capitalise on solar with our flexible hydro energy generation & storage. Our hydro based system allows us to avoid feed-in wastage and gain a greater benefit from solar power compared to other states. Tasmania s Export Opportunity Victoria has taken steps to address their energy needs by encouraging roof top solar installation with a higher FiT. Installation of solar will contribute to meeting their increasing need for energy in the summer months, bought on by the use of air conditioners for cooling. Tasmania has a significantly lower FiT price compared to Victoria. Victoria s has a time-varying rate between 7-29 cents per kilowatt hour (c/kwh), where as Tasmania s is currently only 8.54 c/kwh. Victoria is encouraging consumer based solar generation with their FiT to address their energy needs. With the use of the Bass Link, Tasmania has the opportunity export more solar energy generation during summer to mainland states. Victoria and other mainland states have their power usage peak period in summer. In contrast, the cooler climate of Tasmania means that our peak power usage is in winter (when heating is required). Tasmania is in a position to produce high solar yields over summer and export it to the national mainland grid at premium prices. By increasing solar power yields, we are better equipped to meet Tasmania s demand and sell excess power to the mainland states, while preserving as much of our power generating dam water as possible. This is particularly valuable in summer, as we are able to conserve water when rainfall is at its lowest. 4

5 Solar Power in Winter A common complaint about solar power in Tasmania is that it doesn t help in our winter peak period. It is true that roof top solar power generation over winter is half that of summer production levels. Photovoltaic (PV) solar alone does not address peak demand in winter for the domestic sector. Solar hot water units and hot water heated with a PV solar system does address peak demand in winter by lowering overall power demand for households. These systems also reduce power usage in the peak demand periods, when solar is not operating. Energy Efficiency Heating is Reducing Winter Power Demand The heat pump function of the air conditioner (AC) has heavily reduced Tasmania s demand for power. It has replaced the use of power hungry direct electric heating. We currently do not have power generation issues in Tasmania s winter peak demand periods. Where peak demand supply issues arise, due to Transend infrastructure challenges, solar based solutions can be of assistance. AC units with heat pump function use 5-8 times less power and power usage in peak times by at least one third. Rainfall is high in winter and the dams are available to meet Tasmania s winter demand. The only risk to our water supply is the over-zealous exports via Bass Link that have occurred in the past, placing the state in jeopardy. We now believe that this issue has been addressed and trust that it will not be repeated in the future. Reducing Load on the Network It is realised that in some residential areas the network is under stress as supply levels are straining to meet peak demand. Solar can assist in this, even when solar yields are low or not present. The great benefit of PV solar, for residents that have a 5 kw system or above, is that standard hot water units can utilise power that would have otherwise been feed-into the network. PV solar can have power hungry hot water elements not drawing power in peak demand periods. This will reduce the amount of kws feed-in by diverting PV solar generated electricity to heating the residence s hot water. Typically, a 3.6 kw element is used in a hot water system. With the use of a relatively cheap device (such as, a 24-hour timer), solar gains that are not used within the household can be diverted to heating hot water. In this way, hot water elements are drip fed the kws that would have otherwise been fed in to the network during peak solar generation (middle of the day). This takes the power demand off the network at peak periods that typically have high demand. The other device than can be used is a catch style device. This device monitors the potential feed-in kws and presents these kws to hot water heating first before feeding in to the grid. Only when the hot water demand is met, the excess kws are presented for feed-in. 5

6 By encouraging current and new PV system owners to add devices to their current hot water system, residents will save on their power bill and the peak and overall load on the electricity network will be reduced. This benefits both the network and the consumer. Solar hot water (eg, heat pump hot water, evacuated tube, etc) are currently unattractive to most customers, because they have lower rebates and higher prices to install. Typical household hot water bills are between $300 - $600 or even more p.a. When you combine a PV panel system with a timer on their current hot water system, it generally saves 75%-80% of the energy costs. Evacuated tube and flat plate solar hot water systems will create demand in peak power demand times (ie. when showering and bathing activity occurs) and when the sun is low or non-existent. So ideally, all solar hot water systems need to have devices fitted to allow maximum solar recharge to occur during good solar hours and at night (off peak) as a backup charge option. Peak load issues in areas that are difficult to supply, such as Kingston and Bruny Island, can benefit from using electric hot water systems with timers or a catch style devices (when combined with a minimum of a 5 kw solar system). A solution such as this, is far more advantageous, simple and cost effective than adding more infrastructure to our grid system to meet peak demand. Encouraging more domestic solar systems of 5-10 kw for single phase domestic connections can therefore greatly assist peak demand. This value is enhanced by combining timers or catch devices with solar systems. The current feed-in tariff price does not encourage solar installation and does not recognise the extensive benefits of roof top solar to Tasmania s electricity system. Retailers Cost and Wholesale FiT Prices The wholesale rate in Tasmania has just dropped to cents from cents, while the retail price has risen by 0.5 cents. This has created a further 10% gap between retail and wholesale prices. This FiT pricing does not reflect the benefit that locally embedded solar provides. We propose that the ideal the FiT pricing would be equal to the retailer s buy in cost. Buy in cost referred to here is wholesale price plus cost of delivery (poles and wires). With power generation widely dispersed across the network in Tasmania we will have less overall demand for electricity. With the addition of hot water timer devices, we can also moderate peak demand. Storage of Power in Tasmania In relation to solar system owners investing in battery storage, we do not see the benefit of Tasmanian s over investing in battery technology. For battery systems, payback periods and life 6

7 duration are not attractive. As a result, we recommend to Tasmanian s that solar systems are installed as a grid connect systems. We as Tasmanians have ownership of the electricity grid via our State Government. The only energy storage system Tasmanian s need is our hydro system of kinetic energy in the water reserves that we have invested in historically and currently. It is the job of the Government to provide the best outcomes for Tasmanians and Tasmania. By having a higher price for FiT the Government will invest in encouraging and rewarding the use of Tasmania s electricity grid. Loyalty to the grid is something that should be highly valued. As energy storage technologies become more advanced and better priced we risk disgruntled customers prematurely leaving the grid system. Deterring loyalty now, will lead to customers leaving the grid and relying on self-sufficient alternatives. Why encourage customers to work towards going off grid rather than holding onto the customer base? Keeping Tasmanian s on the grid is a more prudent strategy and will see the addition of embedded solar as a positive addition to Tasmania s electricity system. Whilst battery technology can assist with peak load management, we propose that hot water management and space heating with energy efficient solutions, such as heat pumps, is a far more effective investment for Tasmanians. We call on the Government to bring awareness to and encourage these energy saving solutions for the sustainability of our energy infrastructure and the benefit of Tasmanian households and small business. Supporting the People of Tasmania The risk of large installations, funded by large business outside of Tasmania, is increased when Tasmanians are not supported to invest in roof-top solar. A proactive approach to encouraging Tasmanian residents and small business to purchase solar will avoid the situation of having outside investments in our energy system. Large external investments in energy infrastructure, such as solar and wind farms, will take the balance of control of our energy infrastructure away from Tasmanians. This will do little to assist Tasmanians and Tasmanian small business (our most sustainable employer base). It would preserve our lower standard of living ratio and discourage growth in the small business sector. It may be in the future that large scale solar is considered in Tasmania, but we would like to see that the first and highest priority is given to community investment in roof-top solar. We believe that embedded rooftop solar can deliver an important lift to both individuals and Tasmanian based small businesses. It will provide financial stability and security to drive benefits for all concerned. It will even benefit those that are unable to invest in solar, through the general economic lift that will been in the Tasmanian community. The current low feed-in rate is seeing Tasmanians pushed into poor investments, such as battery options. If the poor feed-in rate is continued, Tasmanians will further be encouraged to commit their 7

8 budgets unnecessarily. Conversely, a higher feed-in tariff will allow Tasmanian s to receive a fairer deal for current installations and will encourage Tasmanians to direct their budget to increasing their investment in solar panels. Supporting fair feed-in tariffs will support Tasmanians to invest in our electricity infrastructure, keeping much needed funds in the state. It will support the people of Tasmania, keep investment in the hands of Tasmanian people and decrease cost of living and business running costs. Grandfathered Solar Systems The cost for the Grandfathered 28,000 solar systems has been stated as $11.7 million in This is insignificant when you consider it is just on 0.01% of the retail turnover of electricity! Note that, each domestic and commercial installation being grandfathered affects 1 household, which is approximately 2.5 constituents. Therefore, approximately 70,000-80,000 constituents are directly affected by the demise of the grandfathered feed-in tariff, not the 28,000 commonly referred to. The householders and businesses that are losing their grandfathered tariff are about to be adversely affected by having their investment not recovered by the end of the 5-year grandfathering term. Previously, we submitted the data showing that on average it would take 10 years of grandfathering to achieve breakeven on their investments. An investment that they believed to be secure at the time of purchase. General opinion at the time was that they were being short changed against other mainland states (with up to 60c/kWh rate locked in for up to 15 years!). Whilst some people now see that such feed-in levels were unrealistic, others still disagree. There is massive disgruntlement from those that will lose their grandfathered tariff, but do not underestimate the feeling of disgruntlement across the Tasmanian community at large. For example, the Honourable Rosemary Armitage M.L.C. raised the point in the upper house around 6 months ago. It was confirmed that our own Momentum Energy, the retail arm of Hydro Tasmania, is unable in legislation to retail power in Tasmania, but it is able to sell power in mainland Australia to low volume domestic customers for accounts of around $120 a month at low prices. Momentum Energy is able to sell energy to regional Victorians for as little as 16.5 cents and 17.5 cents per kwh (plus GST) with a daily fee of about 98 cents (refer to Appendix 1). There is no time of use or headline fees or charges other than a single equivalent T31 supply for light and power. As Victorian s can have gas hot water and gas heating, it is possible for them to have no electric hot water or heating at all (as Appendix 1). The dishonest replies from the Honourable Rosemary Armitage s point were very close to a Yes Minister saga with no satisfactory or correct reply being tendered to date! The retail price variation by Momentum Energy (Victoria), demonstrates a vast difference in pricing compare to Tasmania s non-contestable pricing. So as no competition exists in this state for noncontestable accounts, we believe there is more room to move in funding Tasmanian s feed-in rate. 8

9 Contributing to Energy Security & Financial Security of Tasmania Tasmanians and businesses operating in Tasmania, should be able to enjoy the benefits of our unique position of our largely hydro based system. Indeed, the Prime Minister, amongst others, consider Tasmania to be a support structure as the battery of the nation. Every kw of power generated by business and household solar equates to equal amounts of kinetic storage, stored in the hydro system as water. As a result, water is reserved for Tasmania s enhanced energy security and increases our capacity to generate power for export. Exporting more solar power will increase Tasmania s financial gains while keeping energy stored in the hydro system. Having a fairer feed-in rate in Tasmania will increase the profitability of solar systems and encourage Tasmanian s to invest in solar. Investment in solar has the following flow on effects: 1. Commercial Solar - Cut Costs of Businesses Operating in Tasmania Cutting business cost drives a higher investment in Jobs and Growth in businesses that are currently trading in Tasmania. A fairer FiT will make this state more attractive for more business to locate in Tasmania, including, call centres, manufacturing, information technology and other services-based industries. Add to this the other advantages Tasmania offers (such as, lifestyle and GiGA NBN), it will attract businesses and drive the obvious benefits to our state economy. 2. Domestic Solar Increase Standard of Living With Tasmania having some of the lowest socioeconomic areas in Australia, we can use a fairer feed-in rate to allow Tasmanian s to lift their standard of living. Whether a home is occupied by pensioners, everyday workers or students, investment in solar with an encouraging feed-in rate, would deliver great financial assistance and drive better standards of living. It would allow more freedom in the household budget to enhance lifestyle, which in turn drives the local economy and supports the local community. 3. Domestic Solar Passing on Savings to Tenants Data collected demonstrates that solar systems for public housing and private rentals can drive lower rent for tenants. Previous, and perhaps current, opinion has thwarted the ability to provide a better standard of living for tenants. Refer to Appendix 2 for modelling of high quality, reliable domestic solar systems at current market prices. It demonstrates that fitting a 5 kw solar system with a retailers cost feed-in 9

10 rate of 21 cents could then allow the system to be financed by the property owner at bank interest rates. This would see tenants pay just $1800 annually (built into weekly rental) and cover the general costs of between $2400-$2600* Any power used in excess of this will be paid for by the tenant. *general estimated cost per tenancy with a heat pump electric hot water and general lights and power. This higher feed-in tariff would give much needed financial relief directly to low income tenants. This in turn relieves the support services that are stretched to provide support required for low income families. 10

11 Conclusion We believe that Tasmania is in a unique position to encourage a much higher feed-in tariff that is closer to, if not the same as, the retailers cost per kw. This fairer FiT will provide true benefits across the entire Tasmanian business and domestic community, both directly and indirectly. We believe significantly increasing solar feed-in tariffs to be equal to the retailer cost, will drive roof top solar yields and provide the following benefits to Tasmania: Significantly relieve the burden of high power costs in our community. Give real financial benefit to Tasmanians and Tasmanian local businesses which will contribute to the betterment of the Tasmanian standard of living and the Tasmanian economy. Mitigate the risk of external investments in energy infrastructure. Lower electricity demand internally across the state, which will: o support energy security, o alleviate peak load issues, o support clean, green power to be exported to the mainland, and o preserve valuable hydro water storage. Introducing a more substantial feed-in rate will allow more Tasmanians and Tasmanian businesses to invest in solar power. In doing this, Tasmanians will have an opportunity to: reduce their power bills (reduce their cost of living or cost of business) contribute to the clean, green image of our state, conserve their hydro dams contribute to exporting clean, green power to mainland states. Our organisation, Save Our Solar Feed In Tariff Tasmania, represents many Tasmanians that would like to see their locally generated, clean, green, sustainable energy supported by the Tasmanian Government. This submission has been made by John Thirgood on behalf of the supporters of the Save Our Solar Feed In Tariff Tasmania organisation. Our community of supporters includes an active group of 3,683 people on Facebook ( and many more community members that we have had discussions with since our establishment in April

12 Appendix 1 12

13 Appendix 2 plus if meter disconnected $ 62 Public rental market modeling Premium 5.13 kw system as per case study 70% Feed - In If Feed in rate 21 cents rate Case Study=> 1,512 kwh per Kw of System per annum $342 per kw Power Increase C.P.I. S 2.0% But use 90% re variances on sites 1421 $ NO. Panels 19 Size k.w K.W. Size = 5.13 NEW JULY 2018 ENERGY PRICING USED RECS 79 Rate $35.00 System Price Inc. gst $ 9,663 Rebate/GST $2,765 Nett Deal $6,898 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 10 Year 15 Year 20 Year 25 Yearly value $1,580 $1,611 $1,644 $1,676 $1,710 $1,744 $1,779 $1,815 $1,888 $2,084 $2,301 $2,541 Cumulative $1,580 $3,191 $4,835 $6,511 $8,221 $9,965 $11,744 $13,559 $17,298 $27,319 $38,383 $50,599 R.O.I. % 22.9% 46.3% 70.1% 94.4% 119.2% 144.5% 170.3% 196.6% 250.8% 396.0% 556.4% 733.5% Cash Break even w/ out timer to hot water Plus Catch Hot Water device Option fitted $7,898 Catch Power Unit $190 $194 $198 $202 $206 $210 $214 $218 $227 $251 $277 $306 $190 $384 $581 $783 $989 $1,199 $1,413 $1,631 $2,080 $3,286 $4,617 $6,086 Combined totals $1,770 $3,575 $5,416 $7,294 $9,210 $11,164 $13,157 $15,190 $19,378 $30,605 $43,000 $56,685 R.O.I. % 22.4% 45.3% 68.6% 92.4% 116.6% 141.3% 166.6% 192.3% 245.4% 387.5% 544.4% 717.7% $ 3 Cash Break even With Catch unit on existing how water tank 12 Month Case study then data based presentations outcomes as best available data. Variations occur due to annual and seasonal solar gain conditions. * Installation costs etc. Subject to TasNetworks approvals and aditional conditions or variations that they sometimes require. Fee to upgrade or changeout meter not included as this is charged through you Aurora account by Tasnetworks and is some $186 Hot watwer savings formula against Catch data p/a p/a/ per day kw hrs normal $ Adjust lost credit Feed in 100% $190 recharge normal rate 0% $0 new cost $190 50% Savings now $190 50% avoiding feed in credit of 8 cents to save paying 16.8 cent rate plus if meter disconnected $ 62 Premium 5.13 kw system as per case study 70% Feed - In at current cents rate Case Study=> 1,512 kwh per Kw of System per annum $210 per kw Power Increase C.P.I. S 2.0% But use 90% re variances on sites 1421 $ NO. Panels 19 Size k.w K.W. Size = 5.13 NEW JULY 2018 ENERGY PRICING USED RECS 79 Rate $35.00 System Price Inc. gst $ 9,663 Rebate/GST $2,765 Nett Deal $6,898 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 10 Year 15 Year 20 Year 25 Yearly value $971 $990 $1,010 $1,030 $1,051 $1,072 $1,093 $1,115 $1,160 $1,281 $1,414 $1,562 Cumulative $971 $1,961 $2,971 $4,002 $5,053 $6,125 $7,218 $8,333 $10,631 $16,790 $23,590 $31,098 R.O.I. % 14.1% 28.4% 43.1% 58.0% 73.2% 88.8% 104.6% 120.8% 154.1% 243.4% 342.0% 450.8% Cash Break even Plus Catch Hot Water device Option fitted $7,898 Catch Power Unit $190 $194 $198 $202 $206 $210 $214 $218 $227 $251 $277 $306 $190 $384 $581 $783 $989 $1,199 $1,413 $1,631 $2,080 $3,286 $4,617 $6,086 Combined totals $1,161 $2,345 $3,553 $4,785 $6,041 $7,323 $8,630 $9,964 $12,712 $20,076 $28,207 $37,184 R.O.I. % 14.7% 29.7% 45.0% 60.6% 76.5% 92.7% 109.3% 126.2% 160.9% 254.2% 357.1% 470.8% $ 3 Cash Break even With Catch unit on existing how water tank 12 Month Case study then data based presentations outcomes as best available data. Variations occur due to annual and seasonal solar gain conditions. * Installation costs etc. Subject to TasNetworks approvals and aditional conditions or variations that they sometimes require. Fee to upgrade or changeout meter not included as this is charged through you Aurora account by Tasnetworks and is some $186 Hot watwer savings formula against Catch data p/a p/a/ per day kw hrs normal $ Adjust lost credit Feed in 100% $190 recharge normal rate 0% $0 new cost $190 50% Savings now $190 50% avoiding feed in credit of 8 cents to save paying 16.8 cent rate 13

14 common power bills with heat pump $200~$2600 P.A. t31 $1400, t 41 h.w. $400 h.pump $800 Recovery if tennants charged discounted bill Premium 5.13 kw system as per case study 70% Feed - In At Aurora cost if 21 cents rate Case Study=> 1,512 kwh per Kw of System per annum $342 per kw Power Increase C.P.I. S 2.0% But use 90% re variances on sites 1361 $ NO. Panels 19 Size k.w K.W. Size = 5.13 NEW JULY 2018 ENERGY PRICING USED RECS 79 Rate $35.00 System Price Inc. gst $ 9,663 Rebate/GST $2,765 Nett Deal $6,898 Plus catch device $7,898 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 10 Year 15 Year 20 Year 25 Yearly value $1,770 $1,805 $1,841 $1,878 $1,916 $1,954 $1,993 $2,033 $2,115 $2,335 $2,578 $2,846 comulative $1,770 $3,575 $5,416 $7,294 $9,210 $11,164 $13,157 $15,190 $19,378 $30,605 $43,000 $56,685 Tenants bills high side P.A. $2,600 $2,652 $2,705 $2,759 $2,814 $2,871 $2,928 $2,987 $3,107 $3,431 $3,788 $4,182 Landlord Shortfall $830 $847 $864 $881 $899 $917 $935 $954 $992 $1,096 $1,210 $1,335 cumulative s/fall $830 $1,677 $2,541 $3,422 $4,321 $5,237 $6,172 $7,126 $9,091 $14,358 $20,173 $26,594 but say in rent $2,000 $2,040 $2,081 $2,122 $2,165 $2,208 $2,252 $2,297 $2,390 $2,639 $2,914 $3,217 Cumulative $2,000 $4,040 $6,080 $8,120 $10,160 $12,200 $14,240 $16,280 $20,360 $30,560 $40,760 $50,960 balance Cashflow off P.V. $1,170 $1,193 $1,217 $1,241 $1,266 $1,291 $1,317 $1,344 $1,398 $1,543 $1,704 $1,881 cumulative off P.V. Outlay $1,170 $2,363 $3,580 $4,821 $6,087 $7,379 $8,696 $10,040 $12,808 $20,229 $28,421 $37,467 Claw back on Investment 14.5% 29.2% 44.3% 59.7% 75.3% 91.3% 107.6% 145.5% 185.7% 293.3% 412.0% 543.2% R.O.I.s once owned 14.5% 14.8% 15.1% 15.4% 15.7% 16.0% 16.3% 16.6% 17.3% 19.1% 21.1% 23.3% Cash Break even Loan Recovery Negative cash flow max 8 years terms or rental paid out. General Guideline Pricing for Finance Balance Principal Less Deposit to Amount Solar $9,663 price inc GST Finance $ 8,082 $ - $ 8,082 Payments Plus h/w device $1,000 Inc Gst Term End to Term Years Months Per Month Quarterly Per Total own $10,663 Gross outlay Rental 11.0% $127 $ $1,523 $12,188 $100 $2,765 Less RECS Per If this rate Years Months Per Month Quarterly Total Year Bank Loan 8.0% $114 $343 $1,371 $10,968 $7,898 NETT Price $8,082 With Network meter cost 14