The State of Play SOLAR ENERGY Raymond Seeto First Canton Consultants FEED-IN-TARIFF TODAY’S TOPICS Feed in Tariff News & Developments Solar Credits FEED-IN-TARIFF A feed-in tariff is a premium rate paid for electricity fed back into the electricity grid from a renewable electricity generation source like a rooftop solar PV system or wind turbine. Feed-in tariff regulations for renewable energy exist in over 40 countries around the world. Australia currently has no nationalised program, only state run schemes. GROSS VS. NET FEED IN TARIFF A net feed in tariff, also known as export metering, pays the PV system owner only for surplus energy they produce A gross feed in tariff pays for each kilowatt hour produced by a grid connected system. BENEFITS OF A FEED IN TARIFF Simple way of incentives that would otherwise be uneconomical but provides a public benefit Can make small-scale renewable generation economically feasible. Combined with capital subsidies & REC, the rate of return and payback can be reasonable for the household Encourages individuals to invest in infrastructure that can unlock private capital that would otherwise be unavailable to a govt. to use in pursuit of energy policy objectives F.I.T. BENEFITS – CON’T Costs incurred by utility in paying FIT is transferred to the entire energy consumer base. Advantage to consumers with FIT but not to consumers as a whole Overseas experience, mainly in Germany, suggests that FIT are effective in encouraging the uptake of the targeted technology Provides a clear and simple way for potential customers to calculate the returns they can expect from the installation DISADVANTAGES OF F.I.T. FIT’s act as a cross subsidy, they change the structure of the market. Customers are credited for energy at a higher price than normal wholesale rate Additional cost will have to be borne elsewhere in the industry Means retail price paid by other customer will increase Potential difficulty in competition and consumer legislation, which generally discourages cross subsidies DISADVANTAGES OF F.I.T. – CON’T Cost of the tariff to other consumers are a function of the uptake rate Iffew people take advantage of the tariff, then the cost is negligible. The uncertainty of uptake adds considerable uncertainty to the outcome of the policy and the cost implications to the rest of the community VICTORIA NET FEED IN TARIFF Victorian households with solar power systems will be paid a feed in tariff commencing some time in 2009. Legislation for the Victorian feed in tariff was introduced on March 10, 2009; but the exact start date for the program is still unknown. Victorian residential grid connect system owners will be credited 60 cents for every unused kilowatt hour of power fed back into the state electricity grid. However, this will only be as a credit on their bill, rather than as a cash payment. If the system owner generates credit from the feed-in tariff exceeding the cost of their electricity consumption during the billing period, the additional credit is rolled over to the next billing period up to a maximum of 12 months from the generation date. Any accumulated credit will voided if the system owner changes electricity retailers or at the end of the scheme. SOUTH AUSTRALIA NET FEED IN TARIFF From July 1 2008, qualifying South Australian residents will receive $0.44 per kilowatt-hour. Not all electricity companies may choose to offer contracts and those that do may add to this incentive. Customers of TruEnergy offering 20 cents top- up-to their customers ACT GROSS FEED IN TARIFF In July 2008, legislation was passed in the ACT's for a gross feed in tariff to be implemented, which will pay 50.05c/kWh for systems up to 10kw capacity and 40.04c/kWh for up to 30kW capacity, with a system capacity cap at this point of 30kW. The program was rolled out on March 1, 2009. This is the most generous feed in tariff program in Australia TASMANIA NET FEED IN TARIFF The current feed in tariff rate for Tasmania is $0.20 per kilowatt-hour NORTHERN TERRITORY NET FEED IN TARIFF Alice Springs residents can receive a net feed in tariff rate of $0.45 per kilowatt hour produced. In other areas of the Northern Territory, the rate is 14.38c. WESTERN AUSTRALIA GROSS FEED IN TARIFF The Western Australia program will pay a rate of $0.60 per kilowatt hour based on a gross model starting some time in 2009. It appears that in order to qualify, participating households will also take on 100% green power mains supply. Scheme is still under development QUEENSLAND NET FEED IN TARIFF The Queensland Government Solar Bonus Scheme commenced on 1 July 2008. Grid connect solar owners participating in the scheme will be paid $0.44 per kilowatt hour (kWh) for surplus electricity fed into the grid, plus local electricity companies may choose to over additional payments above that. NEW SOUTH WALES FEED IN TARIFF The New South Wales government recently announced the introduction of a feed in tariff in 2009. The amount or type of tariff NSW will roll out is yet to be determined by a task force F.I.T. - SNAP SHOT VIEW LATEST SOLAR PROJECTS/NEWS ACT – EOI for Large Scale Solar Power Facility May 15, 2009 min30MW to power 10,000 homes ACT commitment of $30mil NEWS – CON’T Bonus Tax Concession The Government has announced that it will increase the rate of the one-off bonus tax deduction available to small businesses under the Small Business and General Business Tax Break to 50% where a small business acquires an eligible asset between 13 Dec 2008 and 31 Dec 2009, and the asset is installed or ready for use by 31 Dec 2010. NEWS – CON’T Worley Parson Consortium of major companies to develop solar parabolic trough Advanced Solar-Thermal (AST) Project 250 MW peak electrical output Molten salt storage module (1000 MWHT) The first 250MW AST facility would be the biggest solar-thermal plant in the world SOLAR CREDITS Currently, Fed Govt. provides grant of up to $8k for small generation systems (means tested) From July 1, 2009, grant is replaced by revised REC (not means tested) creating Solar Credits. Solar Credits will assist with the upfront cost of installing roof top PV and other small scale renewable energy systems SOLAR CREDITS Additional credits will be based on the multiple as set below Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 From 2015-16 onwards Multiplier 5 5 5 4 3 2 1 Solar credits will apply to the first 1.5kW of capacity installed Generation from capacity above 1.5kW will still be eligible for the standard 1:1 rate of REC’s creation SOLAR CREDITS Example Under existing MRET scheme, a 1.5kW PV system is eligible for 31 REC’s valued around $1,500. Under Solar credits, the household would receive 5 times that amount (155 REC’s), or around $7,500, depending on the market value of the REC’s.