Research from Cornwall Insight Australia shows market conditions putting the brakes on distributed solar exports. In fact, there are substantial savings if consumers switch retailers without installing solar compared to opting to install solar panels with one of the big three retailers.
The below graph compares the choice between installing rooftop solar with one of the big three retailer’s standard offers or switching to a lower-cost retailer without installing solar. As well as our calculations of the payback period of the solar install using the retailer savings as an opportunity cost. This means the adjusted payback only reflects the additional savings from installing solar.
Benjamin Macey, Senior Storage Consultant at Cornwall Insight Australia, said:
“In most states, electricity retailers determine and set their own rooftop solar feed-in tariffs (FiTs). A major driver of these tariffs is wholesale energy prices. Wholesale energy prices have continued to decline during the midday period. As the solar weighted wholesale energy prices reduce or become negative, it reduces the benefit of rooftop solar feed-in for retailers and, in turn, reduces the solar FiTs offered.
“Cornwall Insight Australia’s research shows that the big three retailers offer higher solar FiTs but offset these with higher overall electricity charges. This causes an inflated return for solar. Hence consumers need to assess and compare the real benefits of solar based on the energy costs and solar FiTs across multiple retailers.
“Overall, the payback period for exporting rooftop solar decreases as lower mid-day energy prices act as a market signal to reduce solar FiTs. As this trend continues, it will encourage active self-consumption of rooftop solar through energy storage. This, combined with “solar sponge” network tariffs and VPPs, could slow rooftop solar for export, reducing the urgency for solar export charges/services proposed under the AEMC draft rule change ERC0311.
“With support from government schemes such as the SA Home Battery Scheme and decreasing battery prices, it might not be long before we see strong growth in distributed energy storage. If this eventuates, distributed storage could play a key role in the NEM, contributing to system security, reliability and potentially reduce the scale of future network upgrades.”
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Notes to Editors
For more information, please contact: Charlotte Nelson at c.nelson@cornwall-insight.com or Benjamin Macey at b.macey@cornwall-insight.com.au
To link to our website, please use: https://www.cornwall-insight.com.au.
