From 1 July this year, solar households in regional Queensland will be less paid for the power they inject into the grid following the Queensland Competition Authority’s (QCA) decision to cut the flat-rate feed-in tariff. The pricing regulator announced the feed-in tariff for regional customers in 2019–20 would stand at 7.842 cents per kilowatt hour (c/kWh) down from 9.369 c/kWh in 2018-19.
As for the reasons behind the decision, the QCA said the tariff was lowered primarily due to reduction in wholesale energy costs. “This reduction is mainly driven by the expected entry of approximately 5,200 MW of solar and wind generation into the National Electricity Market,” QCA Chair Flavio Menezes said.
With around 600,000 solar systems installed, Queensland is not only leading the nation in rooftop PV uptake, but also in large-scale solar deployment. According to the Clean Energy Council, Queensland led the way with 14 new solar farms out of 28 projects (1442 MW) commissioned Australia-wide in 2018. It also hosted 34% of 59 large-scale solar projects under construction or financially committed across Australia last year.
The inflow of cheap renewable energy is not identified as the only reason behind the tariff cut. According to ACIL Allen, the QCA’s consultant, another factor that explains the reduction is the Queensland government’s directive to establish CleanCo, which is expected to place downward pressure on peak prices.
According to preliminary analysis, the new state-owned renewable electricity generator should reduce wholesale electricity prices on average by around $7/MWh, which is expected to translate to an estimated $70 per annum saving for the average Queensland household.
QCA explained that it considered the avoided network costs in calculating the annual feed-in tariff. “Costs that the retailers do not pay [when they buy energy from customers with solar panels] are wholesale energy costs, certain fees levied by the Australian Energy Market Operator and the cost of energy losses associated with transporting electricity over long distances,” Menezes said. “However, retailers still incur most of their normal business costs, including retail operating costs and network charges. That is why the solar feed-in tariff is less than regulated electricity prices.”
Customers who receive the 44 c/kWh feed-in tariff under the Solar Bonus Scheme will not be affected by the new tariff. Queensland households and businesses that applied to install rooftop solar power systems before 10 July 2012 will stay on the same generous feed-in tariff until 2028 as long as they maintain their eligibility.
The announcement of the feed-in tariff reduction was accompanied by the Queensland government’s announcement of a fall in regional power prices. Queensland Energy Minister Anthony Lynham said on Friday the fall for a typical regional household represented a 4.4% decrease, and for small businesses, a 5.8% drop on the current 2018-19 prices.