I have been discussing domestic PV systems, Feed in Tariffs (FiT) and the importance of having a balanced policy for Gross/Net metering in the last few posts. (In case you missed it, Karnataka Solar Rooftop Story and Systems feedbacks and the electricity market ) In this post, I will discuss an interesting case study from New South Wales (NSW), Australia.
The publication that I’m referencing for this post is titled ‘Assessing the short-term revenue impacts of residential PV systems on electricity customers, retailers and network service providers’
Before, discussing the case study a short note on the Australian electricity market. It is similar to India, the electricity regulation is done at the central level (Federal Government’ Renewable Energy Target,RET) and at the state level like in the case of NSW, The Independent Pricing and Regulatory Tribunal of NSW (IPART) is responsible for regulating electricity prices. The federal RET scheme mandates a 20% Renewable Energy contribution in the Australian grid by 2020 and the scheme was providing upfront subsidies for installation of PV units when it started. As a consequence of the target and subsequent green schemes at central and state levels, the retail prices started to rise which has since led to a series of interesting publications.
The NSW Case
- NSW government was running the Solar Bonus Scheme (SBS), which offered generous FiTs(60c/kWh) for electricity produced by residential PV systems.
- The SBS was established in 2010, as a 7 year project (50MW target) to create a market for solar, but it had to stop accepting applications within a 1 year and half owing to a significant adoption of domestic PV systems in this period. Close to 150,000 residential systems were installed from a initial number of 3000.
- In 2011, it went to the regulator, IPART asking for suggestions on fixing a new benchmark FiT which would be acceptable to the consumers, government and the retailers. A revision in FiT (20c/kWh) soon followed. A decrease in retailer contribution was also undertaken.
- Utilities are concerned with the growing trend where demand is less than net energy generation from the household systems.
- Even without FiTs, there is an increasing rate of PV adoption among residential consumers owing to a rapid decline in the capital cost of PV over the past few years.
The publication in discussion, conducted an audit of 80 households. The consumers had installed rooftop PV systems. The author collected load profiles and PV generation details. The aim was to identify if there was an opportunity to incentivise the revenues for utilities while increasing the consumer benefits through new tariff mechanisms. The tariff proposals considered include Gross Metering and Net Metering at different tariff levels in line with the wholesale and retail prices.
The author produces revenue benefit calculations for consumer and retailer at different FiTs and policy options. The revenue distribution depends on the type of FiT chosen. It is good to have net metering if the consumption is greater than the average PV generation but gross metering could be ideal if the FiT is lower than the average retail price or equal to the wholesale price. Nevertheless, with technological innovations like smart meters, having a Time of Use tariff and time variant FiT is not far behind.
Overall, the publication provides key insights on why there is a need to consider utility benefit in deciding FiTs. Also emphasized is a need to monitor the individual PV generation profiles with consumers’ load profiles which in the long run could prove useful in estimating the demand reduction potential. The future will welcome residents with PV-battery storage systems who can participate in demand management by feeding energy back into the grid when the overall demand is high.