Distributed energy demands better tariffs

Better electricity tariffs are needed to unlock the full potential of distributed energy, according to the Energy Networks Association (ENA).

The association has penned a submission to the Queensland Productivity Commission (QPC) in response to its inquiry into solar feed-in pricing and urges the QPC to support pricing reforms that reward customers and encourage peak demand reductions.

Queensland currently leads Australia which, in turn, leads the world in rooftop solar penetration, according to ENA CEO John Bradley.

“Queensland has overtaken South Australia to have 29% of dwellings with a PV system — over 10% of the state’s total generation capacity is owned by grid-connected small customers,” he said.

Bradley said transformation to distributed energy will require smart pricing and incentives to maximise the benefits.

”The Queensland Productivity Commission was right to conclude that blunt feed-in tariffs are not an efficient mechanism to deliver either greenhouse gas abatement or electricity network investment savings.

“Customers who take up the new network pricing plans which are being offered will be rewarded for how they use their new technology to reduce peak demand,” said Bradley.

“Peak demand is a key driver of future network investment — so it makes sense to reward customers who help ‘beat the peak’.”

Bradley said blunt subsidies will cost customers more in the long run and that the focus must be on the efficient reduction of emissions and lower system costs.

“The ENA agrees with the QPC that a broad, undifferentiated feed-in tariff is not an appropriate tool to facilitate savings in network costs because the value of solar PV generation depends on where and when it happens on the network.

“The right pricing framework will reward customer choices that help avoid unnecessary investment — whether through smart orientation of solar panels, the use of on-site storage, load control of pools and air conditioning or smart home automation,” he said.

Bradley said the ENA had advised the QPC there was a potential role for embedded generation incentives as part of a broad network tariff reform program.

“There are a host of innovative companies, including energy networks, who are working on how to save customers money with smart technologies like storage, solar panel inverters and home automation.

“Over time we can see a range of new markets emerging which might see payment streams to customers for the specific benefits their on-site generation creates for the network — the reform of network tariffs is the first step on this journey.”

Bradley said the ENA has just released a draft Electricity Network Tariff Reform Handbook for consultation to guide the development and implementation of electricity prices that provide benefits to customers.

“The electricity grid is the backbone of the energy system and a vital platform for integrating renewable energy sources.

“By rewarding customers who reduce peak demand, we can avoid future network investment, encourage the best use of solar panels and battery storage, and reduce cross-subsidies between customers,” said Bradley.

The draft Electricity Network Tariff Reform Handbook can be downloaded via this link.