Your guide to solar feed-in tariffs, solar generation and the Wholesale Energy Market

Considering selling the excess solar from your business’ solar generation back into the grid? Before doing so, there are several factors you should consider that suggest that choosing to sell excess solar may not be the most effective way to maximise your solar energy value. This is especially true for those businesses with substantial solar output who may be considering shifting their excess solar from one business site to another, as this cannot be achieved.

Keep reading to learn more about solar feed-in tariffs, the impact that solar generation has on wholesale energy prices and how you can maximise the value of your solar investment without exporting energy back to the grid, including through harnessing the benefits of a Battery Energy Storage System (BESS) and participating in Demand Response (DR) programs.

What are solar feed-in tariffs and how are they calculated?

Solar feed-in tariffs are the set rate retailers pay for solar energy exported back to the grid. It is usually a fixed rate tariff agreed as part of your initial retail electricity contract and will depend upon when your solar was installed, the size of the installation and the terms of your retail contract. You will be paid this tariff for the solar energy that you generate but do not use when that energy is exported to the grid from your site.

If you’re planning to feed excess solar back into the grid, it’s important to ensure that you’ve agreed a feed-in tariff rate with your energy retailer upfront to avoid receiving a lower price than you may have anticipated.

It’s also important to avoid oversizing your solar with the intention of selling excess energy back to the grid, as this may not be the most effective way to maximise value. Similarly, installing more solar than you need for a site with the intention of transferring excess solar from one site to another may not help you to maximise your solar energy value, due to the fact that standard retail products do not support this arrangement.

What impact does solar generation have on wholesale energy prices?

When considering the energy needs of a typical large Australian business, it would be natural to assume that daylight hours, when operations are in full swing, would be when demand is highest.

However, daylight hours are also when solar generation is at its highest, offsetting high demand and frequently leading to negative energy spot prices, the incidence of which is becoming more common.

Source: AEMO Data

There are a number of factors that drive negative spot prices, including the compressed time period in which all solar generation and export takes place.

Due to the impact of solar generation on wholesale energy prices and the negative spot prices that result, retailers have reduced the feed-in tariffs they are willing to offer, meaning they are no longer the effective revenue stream they once were.

However, there are other ways in which your business could get more out of solar generation, including harnessing the benefits of a Battery Energy Storage System (BESS) or participating in Demand Response (DR) programs.

How do I maximise the value of my solar investment without exporting back to the grid?

There are several steps your business can take to maximise the value of behind-the-meter solar generation without relying on exporting excess energy back to the grid.

The first is to ensure your behind-the-meter solar generation system is sized appropriately for your site and business plans before installation, as it can’t be assumed that oversizing your solar generation with the idea of exporting the excess will deliver the best financial outcome.

It’s also important to investigate whether your energy distributor will support export back to the grid, as this option may not be available depending on the location of your business site. Distributors may choose to limit or not support energy export back to the grid for a number of reasons, including to protect the integrity of the poles and wires network, which can be damaged or even stop functioning if overloaded.

A battery that can store excess energy may help you unlock additional revenue streams through Demand Response. Demand Response programs involve large energy users reducing their energy demand when requested, to help alleviate pressure on the electricity grid by drawing on their battery instead. By participating in a program, your business may be able to unlock additional revenue and help to maintain grid stability, depending on the program you choose.

How can I achieve the right energy value for my business?

Your solar feed-in tariff rate is only one part of your retail supply agreement. That’s why it’s important to consider several factors when deciding how your business can achieve maximum energy efficiency and value.

Our retail, energy solutions and wholesale trading teams work side-by-side to provide large businesses with tailored solutions to make smarter energy decisions that reduce costs and help achieve emissions reduction goals.

To find how we can help you harness the benefits of solar generation to maximise your energy value, get in touch with our team.

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