Australian Chart of the week | Is the market putting the brakes on distributed solar exports?

In most states, electricity retailers determine and set their own rooftop solar feed-in tariffs (FITS). A major driver is the wholesale energy prices, which continue to decline midday. For more information, please refer to our previous Chart of the Week issue 76. As the solar weighted wholesale energy prices reduce or become negative, it reduces the benefit of rooftop solar feed-in for retailers and, in turn, reduces the solar FITS offered.

For example, the Victorian Essential Services Commission (ESC) sets the minimum solar FITS in Victoria. The ESC has reduced this from 12c/kWh in 2019-20 to 10.2 c/kWh in 2020-21 then to 6.7c/kWh in 2021-22, stating, “This fluctuation is primarily due to changes in the forecast wholesale electricity price”.

This week we compared the choice between installing rooftop solar with one of the big three retailer’s standard offers or switching to a lower-cost retailer without installing solar. We have then calculated the payback period of the solar install using the retailer savings as an opportunity cost. This means the adjusted payback only reflects the additional savings from installing solar.

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