Review into a fair and reasonable feed-in tariff 2013

In August 2012, the Minister for Energy and Water Supply asked us for advice to inform the Queensland Government’s review of the Solar Bonus Scheme. On 22 March 2013, we released our final report.

Our findings

Our report concluded that it is inequitable for solar feed-in tariffs to provide subsidies from one group of electricity customers to another. As such, we argued that feed-in tariffs should reflect the market value of the energy exported.

We also stated that, as retailers gain the financial benefit of on-selling exported solar energy, future feed-in tariffs should be funded by retailers rather than network businesses (as was the case with the Solar Bonus Scheme).

Our investigation concluded that the fair and reasonable value of electricity exported from solar panels in south east Queensland would be about 7.55 cents per kilowatt hour in 2013–14. This value was lower than the retail electricity price, because retailers incur unavoidable costs when on-selling their customers’ excess solar electricity.

Retailers incur network costs, ‘green scheme’ costs, market fees, as well as being entitled to a margin. What is left (the costs that the retailer can avoid) represents the value of solar exports to the retailer. We considered this to be the fair and reasonable value of solar feed-in tariffs.

Consistent with the view that future feed-in tariffs should reflect market value, we recommended that the Queensland Government not fix prices for future feed-in tariffs in the competitive retail market of south east Queensland.

Report and papers