The Victorian Parliament yesterday passed amendments mandating the inclusion of the health and environmental benefits of rooftop solar when calculating minimum feed-in tariffs paid to households for surplus generation.
Amendments to the Victorian Electricity Industry Act 2000 expand the scope of what must be considered when calculating minimum feed-in tariffs for rooftop solar systems. The amendments were passed by the Victorian Legislative Council yesterday, with the support of the crossbench.
The additional considerations include factoring in the avoided social cost of greenhouse gas emissions and the “the avoided human health costs attributable to a reduction in air pollution” and are expected to lead to an increase in the minimum price paid for exported generation.
Finding the right Feed-in tariffs for solar
Previously, the termination of feed-in tariffs for rooftop solar generation did not consider any of the environmental or social benefits of rooftop solar.
Previously under the Act, the Victorian Essential Services commission could only have consideration of the wholesale cost of electricity generation and the value of avoided electricity loses by solar systems reducing the need for electricity to be in setting the minimum tariffs.
The minimum feed-in tariff for rooftop solar has been set at just 5 cents per kilowatt-hour and many environment and consumer groups have been outspoken in arguing the price was too low.
While the price set by the Essential Services Commission establishes a minimum price to be paid to households exporting electricity, can opt to compensate their customers at a higher rate.
Smaller electricity retailers have offered more generous tariffs, with Click Energy offering up to 10 cents, and Diamond Energy paying customers at a rate of 8 cents per kilowatt-hour for surplus generation.
The three retailers with the largest customer bases, AGL, Origin Energy and EnergyAustralia, all provide the minimum tariff of 5 cents per kilowatt-hour.
Victorian Minister for Minister for Energy, Environment and Climate Change Lily D’Ambrosio estimates that the inclusion of avoided carbon and health costs in the feed-in tariff determination will boost the tariffs by approximately 20 percent.
“Victorians should be fairly compensated for the power they generate – plain and simple.” Minister D’Ambrosio said when the amendments were introduced.
“This is the first time the tariff has been increased in the last 6 years, rising by approximately 20 per cent. It fell every year under the Coalition.”
“Households will now be compensated through the most cost effective and fairest system available, which is through a time-of-use feed-in tariff.”
Pleased to report that VicGov’s fairer solar feed in tariff bill has now been passed by parliament (coalition voted against it)
— Lily D’Ambrosio MP (@LilyDAmbrosioMP) February 7, 2017
An Australian First
It is the first time that an Australian jurisdiction has opted to include factors beyond factoring in market and network costs in feed-in tariff determinations.
After running a coordinated campaign to push Governments to adopt additional social and environmental factors when determining the value of solar generation, Solar Citizens welcomed the Victorian Government’s change.
“This is a first for Australia and last month we stated that we believed the Victorian Government was leading the world with this announcement to better value the benefits of rooftop solar, also known as distributed renewable energy,” Claire O’Rourke, National Director for Solar Citizens said.
“These changes, if successful, would ultimately lead to solar owners receiving a fairer return from the clean, efficient electricity they provide to the grid. Greater reform like these will ensure that all Victorian electricity consumers are better off.
Additional measures passed by the Victorian Government include stricter requirements for companies to act on potentially faulty and unsafe gas and electricity equipment installed on premises.