Solar export credits to reach near zero

Recent news in Victoria has laid the path for solar feed in tariff credits to reach near zer. So let's revisit the decline of solar feed-in tariffs and begin the eulogy.

The Victorian Essential Services Commission announced that on July 1st, the minimum for solar feed-in tariffs are recommended to decrease from the current 3.3¢ down to 0.04¢... Yes, four-hundredths of a cent.

Profitable solar feed in tariffs are going the way of the Tasmanian tiger

To put this into perspective, if a home with solar is currently exporting 6000 kWh of solar a year they would earn roughly $200 in credits, it's not much but better than nothing. After July 1st, on the new export minimum that home would earn only $2.40 for a full year of exporting solar!

Meanwhile, our energy providers still get to charge us 20¢ to 40¢ per kilowatt hour for using power that comes from your neighbour's solar system. If it seems unfair, that's because it is!

If these dramatic pricing changes are surprising they shouldn't be. On January 14th 2024, I wrote about the trending decline of solar feed-in tariffs, and then in May of 2024, I wrote again about negative feed in tariffs beginning to emerge in parts of the country. This has been an unfortunate trend of decline for a few years.

How to mitigate the effects of solar exports being next to worthless

The best two options, get a solar system that matches your consumption or go all in with a battery, or an EV thats at home during the day. Basically, absorb and use as much of the solar energy as you possibly can because exporting it is lost savings.

Going big on solar without a concrete plan of how you're going to use all of that power is wasting money.

In another article, I looked into the possibility of such a thing as too much solar for a home. In the article, I look into doubling my Mum's solar system from 7.6kW to 14.8kW only to find that her solar consumption would increase by a marginal 12%. As in, only 12% of her grid consumption would be replaced with solar power.

But her exports to the grid would increase by around 105% to 168%. With a solar feed in tariff credit rate of $0.0004, she'd be better off getting a smaller solar system and using the extra cash for upgrading a different part of the home, like new insulation or a hot water heat pump.

In that past article I charted what her solar exports would look like month to month. Below is the amount of solar that would be exported to the grid given different-sized solar systems. Granted she doesn't use that much power as a family home but the principal is the same, get a solar system that is optimised to your consumption.

Buying batteries to soak up the solar is looking more attractive

If it's in your home, on a commercial site, or in a fleet of electric cars, the future of solar is going to be storing that energy in batteries. The question for homeowners will be, does it make sense to buy the battery instead of selling the solar for near zero.

With these kinds of future losses for solar and the decreasing cost of batteries it will be more attractive to put in our home.

Back in July of last year I looked at the profitability of buying a battery and what a payback period might look like over the course of its warranty. For this home they would have earned at least $6,000 in value from using the battery to power their home.

But we also had to subtract the opportunity cost of selling their solar instead, which was around $1200. Now though, since those credits have dried up the equation is no longer $6000 minus $1200 but more like $6000 minus $12.50, which makes the battery far more attractive over the long term.

Below is a graph showing the opportunity cost of the solar credits sold over time in the darker orange bar relative to the savings of a battery.

Using your solar exports and consumption to choose the right energy rate

Finding the best solar tariff rate is a total shot in the dark.

How can anyone calculate the best rate for their home without knowing their consumption and exports? There are a couple of tools out there, but they generalise a home's consumption and the complexities of the energy plans available. In short, they don't use your real-world consumption and exports to give you a personalised recommendation.

So we built something better. We can access up two years of a home's energy consumption and solar exports within minutes. No home visits, sales calls or powerpal devices needed.

Then, by examining every hour of your consumption and exports over the last two years we figure out what is the best energy rate and plan for your home. We've already saved some homes over $500 a year by doing this more in-depth analysis using their real consumption and exports.

If you'd like to give it a go let me know. It is a paid service but only a tiny percentage of the total savings, so we are making sure everyone benefits and stays way ahead. Reply to this email and we can run an analysis for your home and find you the best rate for your home.