By the end of 2016 more than 275,000 households with solar power across NSW, Victoria and South Australia will receive much lower payments for their electricity exports to the grid, as several premium feed-in tariff schemes expire. The Alternative Technology Association’s (ATA) Damien Moyse and Nick Carrazzo, using analysis for the Total Environment Centre funded by Energy Consumers Australia, discuss what affected households can do to mitigate the financial impact, and what is best for solar homes on low feed-in tariffs. The following is an edited version of an article that appeared in ReNew Magazine.
Ensure the correct metering
An important first step for the solar homes about to lose their premium feed-in tariff (see graph above) is to ensure they are using net metering rather than gross metering. Net metering recognises the use of solar electricity on-site to reduce more expensive imports from the grid. This isn’t possible with gross metering.
Victoria and South Australia both use net schemes, so a metering change is not required for solar customers in these states. In NSW, the Solar Bonus Scheme offered a gross scheme. Given the new reduced feed-in tariffs — much lower than the grid rates charged — affected NSW customers will need to change to net metering to maximise the financial benefits of their solar system.
The costs and technical requirements to switch from gross to net metering for Solar Bonus Scheme customers are still under discussion and can vary depending on the distribution area (to work out which distribution area you are in, see bit.ly/1U6pk0i). Some estimates of the costs for gross to net meter replacement by NSW distribution business are in the order of $600.
Because the exact solutions on offer are still unclear, the ATA advises customers to review all options at the time of the closure of the scheme, particularly the zero or low-cost options. The last resort should be to request the local distributor to install a net meter at a cost anywhere near $600.
Distribution company Ausgrid has proposed in its area to use two existing gross meters (where they exist) to calculate net energy flows, but it is unclear if energy retailers will accept this option. If it is accepted, no meter change would be required.
Customers in the Essential Energy area may also have the possibility of using their existing solar meter with a minor wiring adjustment to change the meter from gross to net (an estimated cost of $150). At the time of writing, Essential Energy are preparing a report and consumer advice into this possibility.
Energy retail companies are beginning to offer subsidised or even “free” net meters for solar customers. However, at this time little information is available on whether the companies will increase the energy (i.e. kWh) charge, or fixed daily charge, to recover this cost. Consumers should be very careful to check all of the terms and conditions when signing up to any retailer “free” meter offer.
Note: whether the solution ends up being the replacement of the meter, rewiring or changes to billing arrangements, if it is being offered through an energy retailer the customer must ensure they understand the full implications as it may affect the retail tariff or other related considerations.
Use your solar electricity on-site
With lower feed-in tariffs there is much greater value in using your solar electricity on-site rather than exporting it to the grid. To maximise usage of your solar generation the aim, where possible, is to shift electricity usage from the evening to the daytime.
Most households, even those with relatively small solar systems (e.g. 1.5 to 2kW), do not use a large proportion of their solar generation during the day. As an example, a 1.5kW system in Sydney will generate around 10kWh between 9am and 5pm in summer and around 5 to 7kWh in autumn/spring. Many homes consume not much more than 1 to 3kWh between breakfast and dinner, so even this small system has a relatively high export rate to the grid.
Running your washing machine, oven and dishwasher during the day is a first step, but there’s more you can do. The biggest opportunity lies in shifting the two largest energy users — water heating and space heating/cooling — to solar generation hours.
SHIFTING WATER HEATING
Electric water heating can be done with a traditional electric resistive hot water system or a heat pump (both using storage tanks). If you have either type of electric hot water system, to power it from your on-site solar generation it must be connected to your main electrical circuit, rather than any dedicated off-peak hot water circuit. You must also set it up to operate during the day, when the solar system is generating electricity.
A simple way to do this is to change the timing of the heating cycle to peak solar generation hours (say between 11am and 3pm, depending on location, season and shading). Heat pumps generally have timers built in; some traditional electric resistive systems do too, or an electrician can install a timer at relatively low cost.
Another (more expensive) approach is to use a dedicated solar diverter, although most of these are only suitable for powering a resistive hot water system (the SunMate is programmable to divert only if enough power is available, so it is able to run a heat pump water heater if set up correctly).
An emerging technology, diverter devices measure the amount of surplus generation that would normally be exported and divert that energy to an appliance such as a water heater. Examples include the new Powerdiverter, the immerSun and the SunMate. These cost around $1000–$1100 installed, but hopefully prices will fall as the market expands.
Similar in concept to the diverters above, some modern inverters also come with energy management relays that can switch on or off and control certain loads (like hot water) to match excess solar generation. These may be a cheaper option as they come in-built in the inverter. However, many people may not have an appropriate inverter, and it may be best to wait to upgrade if considering batteries in the future.
Note that if you are using solar electricity to heat water during the day, then you want the water heater to retain as much of that heat as possible for use overnight and the next morning. Many older water heaters have lower levels of insulation, so it might be worth buying a highly insulated tank. You can search the Energy Ratings database at reg.energyrating.gov.au/comparator/product_types to find the tank with the lowest heat losses in the size you need.
Alternatively, you can super-insulate your existing tank by adding more insulation. There are numerous insulating wraps and materials that can be used to insulate water cylinders; if your cylinder is external then you may need to cover it with a waterproof layer as well. There is a useful instruction page on water tank insulation at http://1.usa.gov/1Pas1lf.
BUYING A NEW HOT WATER SYSTEM
The ATA recently compared the cost of purchasing, installing and running a traditional electric resistive hot water system versus a heat pump hot water system for a Sydney home with existing solar and about to lose the premium feed-in tariff. Irrespective of solar system size the analysis suggested that, given maximum possible use of the solar to run the hot water system, most households would be better off or at least no worse off over 10 years with a heat pump system compared to an electric resistive system.
SHIFTING SPACE HEATING/COOLING
Space heating/cooling is the other big energy user (in fact, the biggest in most homes). Electric space heating/cooling can be via a split system air conditioner, ducted reverse cycle, low wattage panel heaters or heat pump hydronic systems.
With many people at work during the day, a lot of space heating/cooling occurs at night or in the morning before work. However, an electric space heating/cooling appliance can be programmed to at least partially run during the daytime, using excess solar energy. The aim is to pre-heat or pre-cool the space and reduce the evening energy
To do this pre-heating or pre-cooling, you will need to be able to program your heating/cooling appliance to switch on during the day (e.g at 3pm), but at a relatively conservative setting (e.g 16 to 18°C in winter or 28 to 30°C in summer). Less energy is then required to bring the house to a reasonable temperature in the evening.
Bear in mind that while many heating and cooling systems can be preset to run at specific times, some will use whatever temperature settings were used previously, so make sure that is set correctly when setting the timer. Of course, this will depend on the system and its degree of programmability.
A key factor is the thermal performance of the home. The building must have good draught-proofing and decent levels of ceiling insulation (and potentially wall and floor insulation) for this to work. In addition, curtains/blinds and internal doors should be closed, the latter for zoning.
Get off gas
Some NSW, Victorian and South Australian solar customers will currently be using gas for space heating and/or hot water. Switching away from gas will involve considering the kind of electric hot water and space heating solutions discussed above.
If designed and implemented well, a transition away from gas will allow most NSW, Victorian and South Australian solar homes to reduce their annual energy bills (for electricity or electricity and gas) to no more (and potentially less) than $1000 per year. This is in the context of the majority of NSW, Victorian and South Australian non-solar homes currently paying $2000 to $3000 a year for energy.
Get the best retail deal
The ATA recently conducted an analysis of retail feed-in tariff offers, including their associated consumption tariffs, in NSW, Victoria and South Australia.
Currently in Victoria, every retailer with 5000 or more retail customers must offer a mandatory minimum feed-in tariff payment to any new solar customer. South Australia takes the same mandatory minimum approach as Victoria, with regulators in each state setting a minimum rate each year.
In NSW there is no mandatory minimum feed-in tariff rate that must be offered by retailers to any new solar customer. Retailers can choose whether or not to offer a feed-in tariff at all.
The ATA’s analysis found that lower pay-on-time discounts were offered to solar customers than non-solar customers, particularly in NSW and South Australia. Non-solar customers in those states were offered discounts that were on average 7% higher. Irrespective of the solar and non-solar offers in these states, our advice to existing and new solar customers is the same: shop around to get the best overall deal, taking into account feed-in tariff, consumption tariffs, supply charge, discounts and any other relevant offer elements.
What about batteries?
The ATA recently conducted modelling to consider the value of installing new lithium-based battery storage for homes with existing solar systems in Sydney, Adelaide and Melbourne. The modelling looked at installation in 2017 and 2020 of both small (3kWh) and large (7kWh) battery storage systems as add-ons to existing small (1.5kW) and large (4kW) solar systems.
The results suggest that retrofitting energy storage to solar is unlikely to be cost-effective for existing solar customers before 2020, but is likely to become cost-effective in some locations/scenarios by 2020. The results suggest :
- Systems with smaller batteries, that have more chance of being fully used over the course of the year, are likely to be economic in these three (and likely other) locations by 2020.
- Systems with larger batteries, that have less chance of being fully used over the course of a year, may remain uneconomic in these three locations in 2020, and potentially beyond. A key factor will be how much the cost of storage technologies declines over this time frame.
- Adelaide offers better economics than Sydney or Melbourne, largely due to higher electricity retail tariffs (about 30% higher on average than Sydney/Melbourne) and higher annual sunlight levels in Adelaide.
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.
To read the ATA’s Life after Feed-in Tariffs report, click here.
If you live in NSW and are changing to net metering and need guidance on how to select the best solar tariff, read consultant Martin Gill’s helpful article.