The information on this page is based on a comprehensive report from the Alternative Technology Association, commissioned by Total Environment Centre.
Life after FiTs - Executive Summary
About the premium feed-in tariffs
Over 275,000 customers in NSW, SA and Victoria who took up premium feed-in tariffs in the last six years will lose these payments by the end of 2016. Annual bills will increase on average by over $300 in SA and $1600 in NSW.
By following a few simple steps you can ensure you can help reduce this bill shock and get the most from your solar panels once these premium feed-in-tariffs end.
What are the steps I should be taking?
There are a few simple steps you can take to ensure you’re getting the best economic outcome from your solar panels. Bear in mind that you are not legally required to do anything at all. Also, you can reduce the financial impact of lower solar income by being more energy efficient - retrofitting insulation, switching to energy efficient lighting and appliances, and turning power hungry appliances off when you aren’t using them.
Finally, if you’re still unsure what to do, get help to make sure you’re getting the most out of your solar panels after the change.
1. Get the right meter
Gross and net metering - NSW only
If you’re on the Solar Bonus Scheme in NSW and receive 60c/kWh you are being paid for all solar electricity you generate. If you are on the NSW 20c/kWh scheme you are most likely all receiving gross payments.
To make the most of your solar electricity you’ll need to ensure you are switched over to a net metering arrangement. Many retailers will organise this for you but contact them if you are in any doubt.
What are my options?
- Do nothing and get 0-10c/kWh for your exported solar energy after 31 December 2016 (bad option!).
- Get a smart meter. Most retailers are currently offering these for free to Solar Bonus Scheme customers. If yours isn’t offering them free, think about changing retailers.
- Get a net (non-smart, two-way) meter. If you don’t want a smart meter or your retailer isn’t offering one for free you can ask them for a simple net meter. It will cost you at least $250 and your network may not provide them to retailers anyway.
There are rewiring or back-office netting off options to enable net metering that have been talked about in the Essential and Ausgrid areas, but it is not yet clear if they will be available to solar households.
What is gross metering?
Gross metering refers to a situation where the solar household has two electricity meters. One meter counts how much electricity is imported from the grid and consumed by the house. The other meter counts how much electricity has been produced by the solar panels.
A gross feed-in-tariff pays the solar household for all the electricity that this second meter counts. Only NSW customers have gross meters.
What is net metering?
Net metering means that your household has a “bi-directional” or “import/export” meter connecting it to the grid. Net metering means that you only get paid for any excess energy that your house exports.
What is a smart meter?
A smart meter is essentially a net meter that not only records electrical flows (import and/or export) at regular intervals (at least every five minutes) like a net meter, but also transmits this data to your electricity distributor for billing and monitoring purposes (usually every four hours) via the mobile phone network.
Smart meters typically allow the following things to happen electronically (ie, without someone inspecting or changing your meter):
- Turning the electricity supply on and off remotely
- Meter reading
- Meter installation enquiries — remotely obtaining energy information, meter status, and usage data
- Meter reconfiguration – remotely enable access to new tariffs and new arrangements, such as solar connections and demand tariffs
Going onto a smart meter shouldn’t require you to go onto a different contract or tariff, but some retailers are imposing new terms and conditions, so read them carefully and make sure you are comfortable with them. And be aware that in NSW, retailers can install smart meters on an “opt-out” basis. That is, once the retailer informs you they want to install one, it is up to you to contact them if you want to opt-out - to say no, in other words.
A smart meter will allow your retailer to continue your existing premium feed-in tariff right up to its scheduled conclusion and to automatically switch you to net metering from the very next day. Make sure this is the way the switch will occur if you opt to have a smart meter installed.
If you do opt for installing a smart meter you should have real-time access to the data that the meter generates. Web portals showing you information from your smart meter and energy monitors or in-home displays (which mostly don’t require a smart meter) will help you make better decisions as you progress through steps 2 to 5 below.
How can I still get information on my solar and energy use?
By going from gross to net metering you will most likely lose access to information about your solar system. But there are other ways of keeping up with your solar output and home energy consumption.
Appliance energy monitors simply plug in between the appliance you’re monitoring and the wall socket and are a low-cost solution.
More sophisticated energy management systems can monitor your household energy flows without needing a smart meter. They can even move your solar energy between household appliances, battery storage and the grid depending on what is needed and what is most financially beneficial.
2. Use more of your solar electricity
When you use your solar electricity, you avoid purchasing electricity from the grid (~27c/kWh). This is much better than exporting at around 5-8c/kWh.
The average solar household exports more than 50% of their solar electricity. With the end of the premium solar feed-in tariffs (“Solar bonus scheme” in NSW), the solar energy you export back to the grid will be worth much less (~6 cents per kWh). So it’s important you use as much of it as you can to offset your own electricity use.
How do I use my solar electricity during the day?
You should try to use your electrical appliances during the day when the sun is shining. This might be difficult if you’re not at home during the day, but timed switches can help and some appliances, such as washing machines and dishwashers, have timers built-in.
A simple timer switch can help you use your solar electricity:
Image: HPM Analogue Timer D8180D http://hpm.com.au/products/timers
Typically, your two biggest energy uses are for hot water and heating/cooling your home.
Hot water - the battery you already have?
It's a good idea to use your solar power to heat your tank during the day.
‘A large 400L tank will store about 19kWh of usable energy, which is more than double the nominal capacity of Tesla's new daily-cycle 7kWh Powerwall unit.’ “Analyst John Rodriguez at Solar Choice
The two ways of using electricity to heat water are to use a traditional electric storage hot water (ESHW) system or a heat pump. If you have either of these you should consider installing a timer so that you are heating water during the day when the sun is shining.
Heating and cooling your home
If you have a well insulated home, it may also be possible to set timers on your heaters and/or air-conditioners to operate during the afternoon. This has the effect of “pre-heating” (or pre-cooling) your home so that when you arrive home later in the day you only have to make a small adjustment to bring the temperature to a comfortable level.
3. Think twice about gas
In many instances it is more financially beneficial to use electric appliances rather than gas.
The results of ATA research undertaken in 2014 were that for many scenarios, it is more cost effective over a 5 year or 10 year timeframe to go with efficient electric appliances rather than gas.
“With space heating and hot water comprising more than 50% of a home’s energy needs in most locations, it is difficult to maximise the use of solar PV without using it to power one or both of these major loads.”
This of course, doesn’t take into account the climate impacts of gas or concerns about coal seam gas (CSG).
If you can’t get off gas right away you might want to consider a plan for moving off gas in the coming months or years ahead - so you’re prepared, say, when your gas hot water system breaks down.
See Section 7 of the Life after FiTs report for more info.
4. Get the best electricity deal
Your premium feed-in tariff is about to end and you’re going to be getting a lot less for the electricity you export to the grid.
However, you should be aware that there is much more to a good electricity deal than your solar feed-in tariff alone.
The elements that make up your electricity bill are:
- consumption charges (cents per kWh consumed),
- daily supply charge ($ per day),
- pay on time discounts,
- guaranteed discounts,
- pre-purchasing discounts,
- contract durations (lock-in periods), and
- your solar export price (cents per kWh exported).
Your bill also varies according to your tariff type - that is, the way the consumption charges change over the day or for different levels of energy consumption. The main tariff types are flat, inclining/declining blocks, time of use and demand tariffs. For example, time of use tariffs cost more in the afternoon and evening and less overnight.
Please note that when you come off your premium feed-in tariff, your electricity tariff type should not change.
How can I compare offers from different retailers?
Choosing an electricity retailer is a bit like choosing a mobile phone carrier. You should shop around, make sure you understand the pricing structures, make calculated estimates of what your bills are likely to be and avoid being locked into a bad deal for a long time.
Start by calculating your likely annual bill with your current retailer after the premium feed-in tariff ends. You can do this looking at your feed-in line items on your bills for the last 12 months and adjusting these to reflect the new (much lower) feed-in tariff.
Then use a comparison site like Energy Made Easy to shop around. This and other sites do not account for your solar export price.
5. Consider more solar or a battery
If you’ve completed steps 1 through to 4 and you’re still purchasing energy from the grid during the day, installing more solar is something you could consider. The cost of electricity from a solar system over its asset life in Australia is in the order of $0.10/kWh - or less than half that of most peak/daytime retail tariffs. This will probably work best if your new panels face north-west or west to supply the late afternoon or evening peak, but make sure the new panels are compatible with your existing system.
Is now the right time to get a battery?
Once you’ve sorted out your metering, you’re confident you’re maximising your self-consumption of solar electricity, you’ve considered if gas is something you’d be better off without and you’ve made sure you’re on the best retail electricity deal, then it might be a good time to consider batteries.
In most instances, batteries won’t stack up as a viable purchase but falling costs and the increasing cost of electricity mean that this is a rapidly changing area. They do make sense in Adelaide now due to a combination of plenty of sunshine, high electricity prices and government grants. Choice July 2016: Banking on Batteries.
What do I need to consider when getting a battery?
There are at least three main reasons for investing in batteries. Going off grid, reducing the cost of peak power or providing back-up in case of blackout. Here are some things to consider when purchasing a battery:
- Compatibility with your existing inverter
- Warranty, including the number of cycles
- Payback period
- Single or modular battery system
- Your power or energy requirements
- Technical specifications - for example, the temperature range and whether it’s suited to outdoors
- Size and aesthetics
- Environmental (lifecycle) concerns
This project was funded by Energy Consumers Australia (www.energyconsumersaustralia.com.au) as part of its grants process for consumer advocacy projects and research projects for the benefit of consumers of electricity and natural gas. The views expressed in this document do not necessarily reflect the views of Energy Consumers Australia.