The Australian Competition and Consumer Commission (ACCC) has warned the business community to not raise consumer prices before the impact of the carbon tax on their own costs have been properly evaluated. The ACCC has highlighted the only commodity that can easily document the impact is the electricity generation industry, and this will be reflected in their tariffs from 1 July 2012 as generators can readily evaluate the impact of a $23 per tonne price on carbon on their fossil fuel costs.
As a price of carbon is implemented around Australia, the Sustainable Energy Association of Australia (SEA) will be joining the scrutiny of electricity pricing to ensure that renewable electricity tariffs do not increase with a price on carbon.
‘Obviously the price of 100% green power electricity offered by retailers to customers should not change on 1 July 2012 as there is no carbon emissions associated with electricity from renewables, and so there should be no carbon price to pass on,' says SEA chief adviser Professor Ray Wills.
SEA also expects electricity retailers around Australia to review tariff rates offered for renewable energy buyback from domestic and business customers because renewable energy effectively becomes more valuable as of 1 July 2012.
‘An increased price of electricity should impact on how retailers calculate of value of solar electricity generated on roof tops and so the price of renewable energy buyback,' says Prof Wills.
Around Australia the price being offered for electricity exported from domestic solar generation is in the range of 5 - 10 cents per kilowatt hour and this is not a fair price; in some jurisdictions businesses are not even eligible to receive payments.
A 2007 report by the Australian PV Association to the former Western Australian Office of Energy (now the Public Utilities Office) gave a fair price at between $0.13 and $0.16 per kWh for exported energy which was then in the range of parity for the 2007 electricity price.
A fair commercial price is now likely to be higher, and that fair price should be paid to both domestic and business consumers' for their exported electricity. SEA argues that a fair commercial price is likely to be close to the price being charged for electricity supply, and revised tariffs should move closer to this price point.
‘Note this is not a comment on feed in tariff schemes which are a separate pricing mechanism for rewarding renewable energy - SEA's comment only relates to renewable energy buyback based on the fair commercial value of electricity generated by solar panels,' says Prof Wills.
SEA supports the position taken by other industry commentators, including the Australian Solar Energy Society, we need a more consistent national approach to pricing solar energy.
With electricity prices rising all around Australia, the case for householders and businesses installing solar to generate their own electricity just gets better and better.
‘For anyone with a mortgage, savings from installing solar redirected to mortgage repayments can take years off of your mortgage, and any business on standard business tariffs will find that the price of electricity from solar panels will prove much cheaper,' says Prof Wills.
Electricity prices have risen by up to 80% across Australia over the past four years, the result of upgrading of ageing networks and infrastructure, the cost of meeting peak demand, increased cost of finance, and increases in the cost of fuels.
A shift to lower emissions electricity generation through the renewable energy target, including wind and solar power, has made a relatively small contribution to that price rise, but that investment is likely balancing and minimising growth on the main contributors to price increases, meaning fewer upgrades to poles and wires, improved electricity quality and reliability, and avoiding the need for investment in new fossil-fuel based generation.
The addition of a price on carbon will also add just under 10% to the price of electricity after 1 July 2012.
A review of global trends in falling fossil fuel investment and growing renewable energy investment was published recently on the academic website the Conversation - jointly authored by Ray Wills, Adjunct Professor at the University of Western Australia and Peter Newman, the Professor of Sustainability at Curtin University - see http://theconversation.edu.au/energy-myths-exposed-king-coal-or-king-solar-7611.
One element highlighted by the review was falling global electricity consumption, in part being facilitated by the installation of rooftop solar panels and solar hot water systems, plus energy efficiency initiatives supported by the state governments.
Green electricity tariffs shouldn't include a price on carbon.
SEA Media Release - 20 June 2012