Feed in Tariffs - Going up or down?

witsa on 30/08/2023 - 21:59

I can see arguments for both…

It'll go up
- The electrification of appliances is only going to mean demand for electricity is not going to go down. Obviously, EVs will be a major consumer but also heating and hot water. Solar is now cheaper than fossil fuel and whilst it does have weaknesses like its inability to work at night, it's probably one of the best ways to increase supply.
- Electricity prices - like everything else in general - will likely go up. This is both in connection fee to the grid and per KWH.
- Higher prices means people where they can will start shifting their usage to the cheapest times. Whether that's installing batteries or just behavioural stuff like turning their dishwasher on during the day.

It's go down
- Once you install your panels, what incentive is there to pay you the feed in tariff - it's not like you can do anything else with that excess.
- The grid needs massive upgrades - as more and more people install solar, it might not be able to support everyone's extra capacity generated being fed in.
- The costs of solar continue to decline which means it'll make more economical sense for everyone to install it. Maybe it'll even encourage more large scale solar farms. If most people have it, there might be less need for excess.

What do u think?

Poll Options

  • 1
    It'll go up
  • 60
    It'll go down
  • 2
    It'll stay the same
Financial

Comments

  • DashCam AKA Rolts on 30/08/2023 - 22:04
    +10

    Electricity retailers will pay as little as they can get away with for feed-in, all the while demanding government support in one form or another.

  • AustriaBargain on 30/08/2023 - 22:09

    It'll go down. You may have noticed we are approaching peak home sola growth. We'll have more power than we need during the day soon enough, literally won't know what to do with it all.

  • JimmyF on 30/08/2023 - 22:09
    +4

    Feed in Tariffs - Going up or down?

    Only ever gone down…… so ummm down.

  • AngoraFish on 30/08/2023 - 22:09
    +1

    The problem with feed in tariffs is that if you're feeding into the grid everyone else is too. It's basic economics that excess supply leads to reduced prices.

    In fact, many grids are already over-capacity at peak times and therefore companies have been forced to restrict new connections. In these areas, accepting additional electricity to the grid actually costs the electricity company money.

    EVs mostly charge overnight so they aren't being powered by rooftop solar anyhow, and this is mainly the case with heating as well - you typically need heat at each end of the day, not in the middle when the sun is out. Even air conditioning only really gets value from rooftop solar if you work from home.

    Household batteries aren't likely to be cost competitive for years since demand for the materials used to make them vastly exceeds supply.

    In the entire history of feed in tariffs, in the absence of government subsidies, prices have only ever gone one way.

    • witsa on 30/08/2023 - 23:08

      Interesting points - some devils advocate points.

      "but in the absense of government subisidies"

      But why would the assumption be an absense of this? Energy has always been defined by government policy - this is because it's critical infrastructure and most people don't like it when there's no power. Both fossil fuel and renewables have had subsidies and governments are deeply invested in this industry.

      "Grid being overcapacity alrady"

      This is very true, at the same time - this move towards electric is happening. Unless you don't think EVs will be the future and that everything just remain the same, I don't see how they can't upgrade the grid.

      "EVs"

      They're only charged at night now but that only requires behaviours and incentives to change. Cars spend 90% of their time stationary so it would probably only need things like maybe car parks are forced to have x number of car parks with chargeable outlets, and we'll begin to see changes. Also, just cause you're enjoying the AC at work or charging your car at the mall and not at home that doesn't mean you're not still using electricity to charge your EV so there's still going to need that increased load on the grid.

      "Household batteries"

      that's very true, we need something better than lithium. But there's so much money being spent on energy storage right now, I can see major innovations in this area. Plus in grid level energy storage solutions like sand batteries as well. Not all the ideas will succeed, but you only need a few to and it'll go very far towards addressing this problem.

  • trapper on 30/08/2023 - 22:28

    There isn't much incentive to even pay any feed tariff at all, I'm surprised they still do.

    Like you said, what else can you do with your excess day time energy?

    • jv on 31/08/2023 - 02:03

      what else can you do with your excess day time energy?

      This ?

      • JIMB0 on 31/08/2023 - 09:10

        That's about as clever an idea as a solar powered torch.

  • Alzori on 30/08/2023 - 22:50
    +1

    Technology Connections did a good video on the issue of feed in compensation a few months ago (on his second channel, Technology Connextras): https://www.youtube.com/watch?v=C4cNnVK412U

    Basically, the grid costs money to run, so it doesn't make much sense for people to get the benefit of electricity supply when the sun goes away but have enough credits from generation to make their bill negligible (effectively someone else has to pay to maintain the grid).

    It seems like we have it better here (in AU vs. US/Can) in that feed in rates are not equal to consumption rates so "zero dollar bills" aren't really a thing here, it's more fair. I think the "energy market" system we have is pretty good, in that the spot price will generally go down when the sun is out (because so many solar panels are generating these days) and correspondingly the feed in rate will go down - this effect is just hidden by most retailers that offer fixed feed in rates and aggregate the profit/loss difference vs. the spot prices. The market has pushed the feed in rates down, and that just seems fair. If you can provide something others can't, i.e. electricity when the sun is down or the wind is low, then that's worth more, and provides an economic incentive to invest in battery units like the SA battery station thing.

    • witsa on 30/08/2023 - 23:33
      +1

      I definitely don't think feed in tariffs should be the same as the actual rate of electricity - it should be a percentage of it.

      But there's a few problems that I can see and why it needs to stay.

      • We're heading into a future where we're going to need more and more electricity. Electricity is effectively taking over the load for both petrol and gas. We're going to need solutions for that - whether it's increasing supply with renewables, improving distribution by upgrading the grid or improving stability by installing batteries - not sure what the solution is, but we're going to need more.
      • Future energy supply cannot use fossil fuels. Whether you believe in climate change or not, it just won't stand politically. We're signed onto the paris agreement and there's billions of dollars being funnelled into improving renewables and energy storage. We'll be left behind if we don't adopt green technology.
      • We're heading into a future where not only do we need more electricity, but when this electricity is consumed matters. There are things we can do now like pay for batteries but those don't scale, and there are behavioural changes we can adopt but those don't also not scale.

      All of these problems can't be solved with today's technology and hey, they might all need different solutions. But whatever it is, they need to be solved. There is both a critical need and an enormous potential for those who can figure this out.

      So my thinking - even it doesn't make much sense having an excess amount of electricity being generated from solar panels on every roof - it might form the part of the greater solution and it'll make sense then.

  • apple2016 on 30/08/2023 - 23:34

    Logic does not apply to Aus. Prices will only up.
    Otherwise why is gas prices so high!

    • jv on 31/08/2023 - 02:04

      Logic does not apply to Aus. Prices will only up.

      Why is that illogical?

      Inflation goes up, prices go up…………

      • apple2016 on 07/09/2023 - 17:00

        India imports gas from Aus and still gas is way cheaper in india.

        • jv on 07/09/2023 - 17:07

          They don't have to pay for the infrastructure we have to main the domestic gas.

  • Iwantthebestprice on 30/08/2023 - 23:39

    I’ve worked in the energy industry for a very long time, I can assure you it will go down. It may fluctuate now a couple cents here or there but it will not last, within the next 5 years you will never get anymore then 4 cents a KWH max, meanwhile in 5 years you will paying 60 cents per KWH with a demand tariff component and a peak and off peak time…
    Buckle up

    • jv on 31/08/2023 - 02:06
      +2

      meanwhile in 5 years you will paying 60 cents per KWH with a demand tariff component and a peak and off peak time…

      Nah, we're only about 10 years away where battery storage will be economically feasible for home use… Bye bye electricity companies…

  • geekcohen on 31/08/2023 - 05:57

    The costs of solar continue to decline which means it'll make more economical sense for everyone to install it. Maybe it'll even encourage more large scale solar farms. If most people have it, there might be less need for excess.

    I don't think so, I got a quote for my in laws from the same place that did my system and it was more!

    I got solar 2 years ago and glade I did. I didn't do it based on feed-in, but the solar covers my daytime usage (obviously some days are better than others). My feed in last month (July) was all of $5.06, but the money I saved from solar generation is a lot more than that.

    The next step would be battery to capture the excess to use overnight. But I cannot justify the cost at the moment and there are no grants available to me at the moment because I already for the Solar Grant. Until there is more incentive + better cost, I won't be doing it.

  • EightImmortals on 31/08/2023 - 07:35
    +3

    The missus works in that industry and she reckons they will have to go down and eventually be abolished. The amount of subsidies going into making alternative power sources look 'cheap' is huge, way more than most people know and is one if not the primary cause of the recent increases in electricity costs. By all means fit out your house with panels etc to reduce your own personal bill but don't rely on feed-in tariffs forever.

    • MrThing on 31/08/2023 - 09:19
      +1

      the whole pay back period calc using feed in tariffs is done

      any solar installer or retailer who still uses that as a basis for their cost benefit example is pulling the wool over your eyes

      • EightImmortals on 31/08/2023 - 09:21

        Yeah I guess it would depend on the details of the individual contract. If it says x amount of cents for a certain period of time they would have to honour it.

  • Hvrd on 31/08/2023 - 08:55

    mines gone up

    • KaTst3R on 31/08/2023 - 10:21

      which retailer?

      • Hvrd on 31/08/2023 - 12:03

        origin in sa, gone from 5c to 6c kWh

        • KaTst3R on 31/08/2023 - 12:23
          +1

          had a quick look at some energy plans in SA. It appears 6 cents is pretty common. Probably price matching other retailers.

  • caboose on 31/08/2023 - 09:08
    +1

    Can't imagine FIT would ever go up - energy companies will always do what's best to make them money.

    I wouldn't hate if feed in tariffs were abolished and consumers were given battery subsidies in lieu of FIT.

  • MrThing on 31/08/2023 - 09:18

    down down, tariffs are down (and staying down)

  • KaTst3R on 31/08/2023 - 10:23

    It was a good idea initially when the uptake for solar was low and feeding in the grid helped with easing some demand. Now that every other neighbour has solar, the grid is likely to have excess capacity during the day.

  • freefall101 on 31/08/2023 - 10:53
    +1

    We currently have negative wholesale prices through the day on a regular basis, with power price spiking in the evening. Feed in tariffs won't help that at all until home batteries are far more common, or the government gets their arse into gear and starts creating the regulation for V2H/V2G. We have plenty of power in the pipeline, just not the capacity to time shift it.

    Shifting power at home isn't easy either. Hot water going to the middle of the day with heat pumps, sure, but then heat pumps are far more efficient to begin with. People will prefer to charge their electric cars at night, not during the day (when they're at work/doing things). It's difficult to convince people to do things like preheat/precool their house in the middle of the day instead of waiting until the evening when they're at home.

    • witsa on 31/08/2023 - 19:11

      Don't forget the majority of Australia's electricity supply is still coal.

      As these are retired due to age or simply being unprofitable (eg. Eraring) - this will decrease supply and require something in its place.

      I agree that renewables will never be 100% of the market until we invent economical form of energy storage but at the moment it's only 29%. Plenty of room for capacity to be increased as coal is phased out.

      • freefall101 on 31/08/2023 - 21:33

        The problem is we already curtail solar power during the day because there's simply too much load - we could basically run without coal in the middle of the day most sunny days, except coal is hard to slow down. Home solar can't generate 24/7 but coal can, which is why it's still providing power. We've got stuff all wind, storage and hydro at the moment on the grid, we need more of that, not more solar.

        Have a look at the OpenNEM Data. Renewables are making up much more than 29% in the middle of the day.

        It's why we won't increase feed in tariffs, because home solar doesn't generate it when we need it. Unless you're running a battery that can feed back in after hours or your own private wind turbine there's no need to pay anyone.

        Besides, it's not like you have a choice - we only get paid right now because the government demands it. What are you going to do if your power company won't pay you for it, sell it to someone else?

        • witsa on 31/08/2023 - 23:50

          That's a nice site - did not know that exists. Thanks.

          Yeah I see your point. Renewables seems to be taking about 65% during the peak of the day. I'm not sure about us being able to totally sustain the entire daytime load without coal - there's nothing in that chart that indicates this. Could be true but that would mean we are actually generating 50% more solar energy and just not using it?

          And also, electricity usage is only going to go up though. There's EVs as we've mentioned - something needs to charge them - but it's also just the march of human innovation - there's a positive correlation between progress and energy usage - all the way from the dawn of mankind to the industrial revolution to today's tech age. Energy consumption increases as we lower energy costs as we find innovative ways to exploit energy. The green revolution won't decrease energy usage, it'll increase it.

          One thing for sure is we're not making any more coal plants - and the ones that are operational will start to close. So maybe what we may see is like you say - more renewables like wind and hydro because they'll now be more profitable as they'll generate during the night. Personally, I think solar will still play a major part as it's cheap and abundant. We literally just need a cheap way to store energy for like 12 hours. No one knows the answer of what that solution is yet, but there's so much money being spent on solving this, it can't be far off before we start seeing progress in this area.

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