Solar feed-in tariffs in NSW: Setting a fair price for prosumers

This submission responds to the Independent Pricing and Regulatory Tribunal’s (IPART) draft report on solar feed-in tariffs in NSW. The submission discusses two issues; first, the issue that the wholesale value method is insufficient to capture the key components and benefits of solar-feed in tariffs. Second, that NSW is the only Australian state to have a deregulated feed-in tariff payment system. PIAC reiterates the need for IPART to assess whether allowing retailers, and especially retailers who also own generation assets, to set feed-in tariffs is in fact conducive to efficiency and competitiveness. PIAC is concerned that the basis for the calculation of the benchmark range does not reflect the real value of the electricity that PV owners feed into the grid. PIAC supports the payment of a fair price to the consumers who are generating electricity that is fed back into the National Energy Market (NEM). Feed-in tariffs should be technology-neutral, time-varying, include a critical peak payment, and (ideally) location specific. Moreover, feed-in tariffs should be mandated by regulation; the NSW Government should mandate a minimum solar feed-in tariff and instruct IPART to set a value for the tariff based on equity and the fair benefits of renewable energy to consumers. In the meantime, IPART should consider what methods other than regulation would encourage gentailers in particular to offer benefit-reflective feed-in tariffs.

There is economic benefit to be gained distributed generation but there will only be an incentive to do so if feed-in tariff structures provide the financial incentive. The current situation is one of both significant inequity and inefficiency.