ROOFTOP SOLAR IS DRIVING DOWN EVERYONE'S POWER BILL

This is a summary of an article of mine  Why Utilities will Pay a Premium for Rooftop Solar published in REnewEconomy on 14 Dec 2012.  It was written to counter claims that people without rooftop solar (RTS) were paying more for their power so that RTS owners could be paid a 44 cent/kWh feed in tariff  much higher than the current tariff of about 23 cents/kWh .

Claims are being made that ordinary householders are subsidising rich rooftop solar owners. For example, Mark McArdle, (Queensland Minister for Energy and Water Supply) issued a media statement saying “the QCA analysis showed the solar bonus scheme currently added $26 per year to everyone’s annual electricity bill, which will increase to $90 next year if an application by Energex to the Australian Energy Regulator was successful.”

He added, “Rooftop solar costs are projected to add more than $240 per year to average electricity bills within five years.” (These claims were based on the previous government’s feed in tariff of 44¢/kWh)

So what is rooftop solar actually doing to household power bills in Queensland? And how high could the feed-in tariff go before it really would be increasing household power bills?

In the detailed section below, a comparison of demand and revenue vs time of day for 2008 and 2012 is used to answer the above questions. The quick answers are:

1. Rooftop solar is actually saving the “typical Queensland household” (without PV) $65/yr.

2. The feed-in tariff would have to rise above 96¢/kWh before rooftop solar actually stopped saving households (and power companies) money. Power companies can actually become more competitive by locking in extra contracts for the supply of rooftop solar, even if it means paying the small premium that was offered to me.

3. It is difficult to say what effect rooftop solar would have on household bills in five years’ time. My guess is that investment in rooftop solar will be justified at feed-in tariffs below what householders will be paying for power and that it will still be saving households money.

DETAILS:

If the feed-in tariff for rooftop solar is higher than what householders are paying for power it looks, at first glance, as though it would push up household bills. However, the reality is more complex. What really counts is the price of the power rooftop solar is replacing. Solar PV produces power during the high demand part of the day. Part of the power mix at this time comes from very expensive sources such as peaking generators that may only run for a limited amount of time during the year. It is these expensive sources of power that rooftop solar should replace. Moreover, added capacity from rooftop solar will increase downward market pressure on prices in general.

Despite the size of the feed-in tariff, it is quite possible that rooftop solar is actually driving down the average household power bill.

Figs 1 and 2 come from RenewEconomy. These graphs compare Queensland demand and revenue vs time of day for 2008 and 2012. This period is important for this discussion. RTS grew dramatically between 2008 and 2012.

The graphs exclude data for RTS

Fig 1 shows that average demand only differed during the time of day when rooftop solar would have been producing power. For this reason, it is not unreasonable to assume that the differences between 2008 and 2012 figures were due to its growth. We can also assume that the amount of rooftop solar for 2008 was small enough to be ignored in calculations.

Data taken from the smoothed curves was used to estimate changes in daily demand, revenue and price for non-rooftop solar. Between 2008 and 2012 there was:

1. A 1.87% drop in demand. (2.67 gWh/day).

2. A massive 31.3% drop in the daily revenue received by non-rooftop solar generators ($2.059 million/day)

3. A 30% reduction in the average price paid to non-rooftop solar generators. (1.41¢kWh)

Little wonder that the power generation industry is not completely enthusiastic about rooftop solar.

For more go to original article