tag:blogger.com,1999:blog-5941647808330919366.post5666598484497526524..comments2023-08-19T21:44:54.436+10:00Comments on Pragmatus J: ROOFTOP SOLAR - GROSS Vs NET FEED IN TARIFFSJohn Dhttp://www.blogger.com/profile/09996593166177190868noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5941647808330919366.post-62841753893143889132015-07-14T08:55:44.592+10:002015-07-14T08:55:44.592+10:00John, I'd like your feedback on this conceptua...John, I'd like your feedback on this conceptualization of FiT and consumption prices at parity:<br /><br />If govt regulated parity applied to Fit and consumption, and the market determined the rate, the following scenario is to be expected:<br /><br />Net vs Gross FiT is the same/irrelevant.<br /><br />Under parity, the FiT and consumption price is less important than identifying who is a customer producer (CP) and who a customer consumer (CC). Retailers will differentiate between CPs and CCs.<br /><br />CCs can be expected to be charged a higher rate than CPs to cover the cost of production & supply. However, this is tempered by their value as consumers, and competition between retailers will drive the price to the lowest it will bare. <br /><br />The rate to CPs will be influenced by the price power stations, etc. are charging. Retailers may also attempt to differentiate between CPs who produce more than they use and those who produce less. However, the unpredictable nature of consumption may make this impracticable. CPs tend to produce as much, or more than they use and they use the grid as a battery, which will be built into their parity rate or fixed charge.<br /><br />How does this play out as the industry heads toward lower demand in a more distributed network of renewable energy supply? (Let's assume for a moment the present Fed govt's plans of keeping us all on coal-powered grid won't last and let's also assume over-investment in infrastructure is borne by those responsible, not customers.) Connection charges should cover the cost of maintaining (and changing) the grid. Parity will encourage uptake of RTS by businesses, adding to distribution (and resilience). This will reduce costs to business and help the economy. Under parity, how will these changes affect the rate to CCs? Whilst they will be incentivised to be efficient and take up RTSs, they will bare the brunt of the price of the changing system and for those CCs who cannot become CPs, there is a problem. As the number of CCs fall, their rate will rise until power station supply falls and balances out to demand.<br /><br />The ideal future is a network of grid-connected CPs who produce as much as they use, where the grid provides security and balances out supply and demand. Power stations make up the shortfall for areas that don't produce power, for whom the rate should be dependent mainly on the cost of renewable energy systems and their maintenance. Falling demand should lead to the closure of the least profitable and efficient power plants. With public divestment, a carbon tax and without government subsidies these would be fossil fuel plants, otherwise the costs of the whole system will not fall. Falling demand is tempered by population growth, but that entails costs in other sectors and is therefore ill-advised. A continued rise in population will delay the transition described.<br /><br />The great advantage of parity is simplicity in a very complex network. This aids planning in a changing industry and incentivizes renewable energy. One of the difficulties of the energy sector is the number of variables that change. Politics and policy changes have only added to that complexity.<br /><br />Government should allow the market to determine fixed charges, or if genuine competition cannot be expected, it should set a reasonable rate (not one that penalizes customers for the mistakes of past business models).<br /><br />Anonymousnoreply@blogger.com