MEDIA STATEMENT: Solar feed-in pricing report now open for consultation

The Queensland Productivity Commission has today released for public consultation the draft findings of its inquiry into solar feed-in pricing.
Commissioner Kim Wood said the Solar feed-in pricing in Queensland draft report had been produced following a request from the Queensland Government in August 2015 to investigate and report on fair prices for solar exports produced by small customers.

Mr Wood said a key line of inquiry was whether pricing arrangements were fair not only for solar PV owners and electricity businesses, but for all electricity customers and the Queensland economy.

“The inquiry presents a range of evidence and findings on which we are seeking feedback, so this is an opportunity for Queenslanders to have their say” Mr Wood said.

“Solar feed-in pricing is an important consideration for Queenslanders given we have one of the world’s highest penetrations of small-scale solar PV,” Mr Wood said.

“From less than 1,000 residential installations in 2007, there are now around 400,000 solar systems in Queensland, and this is projected to increase further.

“Overall, the outlook for the state’s solar export market is very positive, with new products and services, and solar storage batteries forecast to become more affordable.

“The Commission has considered a wide range of factors including the public and consumer benefits of exported solar energy and how a fair price should be determined.

“Overall, our findings suggest that Queensland solar PV owners are being fairly compensated from a combination of renewable energy programs, market contracts in south east Queensland and the regional feed-in tariff.

The inquiry also examined the potential impacts changes in tariffs for solar PV owners could have on costs for remaining electricity customers.
“Our findings suggest there is a balance to be achieved between realising the economic and environmental benefits of solar PV, ensuring owners receive an efficient price for the electricity they generate, and making sure remaining electricity customers are not paying more (or less) than is fair,” Mr Wood said.

“We are inviting public comment on the draft findings and we will be holding public forums across Queensland in April to seek feedback prior to delivering a final report in June 2016.”

The inquiry found that the national Small-scale Renewable Energy Scheme (SRES) provides a fair price to solar PV owners for emissions reduction. People who install solar PV systems receive a subsidy for reducing carbon emissions from the SRES which reduces the upfront cost of their system by around 30–40 per cent.

Currently in the south-east, nine retailers offer feed-in tariffs of between 4 cents per kilowatt hour (c/kWh) and 11c/kWh to solar PV owners who return surplus power to the grid.

“While the inquiry found that this was a ‘fair price’ for solar exports, it has also identified – for further consultation – options for determining a price for solar exports in the south-east if the market were not delivering a fair price, from voluntary benchmark pricing to a mandated minimum tariff,” Mr Wood said.

Also considered were differences between the south-east and regional Queensland. In regional areas, Ergon Energy is the dominant electricity retailer, selling electricity to 97 per cent of small customers. The inquiry has proposed that solar export pricing be regulated to counter the impacts of limited competition in the less diverse regional market.

“The recommended regulation is price approval. Retailers would be required to buy surplus solar power from small customers and submit their prices to the Queensland Competition Authority annually,” Mr Wood said.

“This would provide regional customers with a high level of consumer protection while removing regulatory constraints on retailers so they can offer more innovative and varied solar related products.

The Queensland Productivity Commission is an independent body that reviews complex economic and regulatory issues and proposes policy reforms to government.

Queenslanders have until 15 April 2016 to respond to the solar pricing draft report, which is available online at www.qpc.qld.gov.au
People can comment further on the issues raised in the draft report, either in writing or at public forums in April in Brisbane, Toowoomba, Bundaberg, Rockhampton, Townsville, Mount Isa and Cairns.

The Commission will consider this input and deliver its final report to the Government in June 2016.

The Government will then consider the Commission’s findings and announce its response.