How is the Bill Guarantee calculated with the Victorian government minimum feed-in-tariff?

Follow

Victoria is the only state in Australia with an annually legislated government minimum feed-in-tariff (FiT). During the 2022-23 financial year this was set at 5.2¢/kWh for solar exports and will be set at 4.9¢ for the 2023-24 financial year.

Over the last few years the Victorian government minimum FiT has been higher than the true market value of many customers’ solar generation.

Traditional retailers probably cover this gap by subsidising the government minimum feed-in tariff using the retail markup they charge on all their customers’ usage.

This isn’t an option for Amber, because we pass through true wholesale prices with no retail markup.

We take a different approach to passing through the government minimum feed-in tariff for your exports - one that fits with our wholesale model.

How does this work with Amber’s wholesale pricing model and bill guarantee?

  • Throughout the year we'll pay you the true wholesale value of your solar exports - so if you’re exporting at expensive times you’ll be earning a lot, but if you’re exporting at times when wholesale prices are low you’ll be earning less.
  • When we apply our Quarterly Bill Guarantee at the end of each quarter, if you have earned more than the Victorian government minimum FiT on average for your exports across the period we will take this into account when evaluating your average usage cost and any payments you may be eligible for under this guarantee.
  • Then, at the end of the financial year we will make sure that your total bill was not more than the combined value of our quarterly bill guarantee rates for your usage minus the minimum feed-in-tariff for your exports. 
  • We'll take you through a few examples of how this guarantee works in the next section. 

How does this guarantee work?

  • Let’s go through a couple of examples showing how we’d compare two different hypothetical customer’s bills against our guarantee. You can use these principles to calculate how you’re stacking up against our guarantee at any point during your time with Amber.

Example 1

  • Sudeep lives in postcode 3205 (South Melbourne).
  • Sudeep’s household consumed 1,000 kWh from the grid over the quarter at an average wholesale price of 30.00¢/kWh. Sudeep also exported 500 kWh over the quarter at an average wholesale feed-in-tariff of 2.7¢/kWh. Because Sudeep uses more power from the grid than he exports, his household is a good fit for Amber’s wholesale prices.

Sudeep’s quarterly usage costs with Amber is calculated as follows:

= ⚡️ Usage charges - ☀️ Exports

= (⚡️ 1,000 kWh x 30.00¢/kWh)  - (☀️ 500 kWh x 2.7¢/kWh)

= ⚡️ $300.00 - ☀️ $13.50

= 🧾 $286.50 ($300 excluding exports)

Now let’s compare this with Amber’s guarantee:

  • At the end of the quarter we compare Sudeep’s quarterly bills to his applicable bill guarantee rates. Sudeep's maximum average usage rate for this quarter under our quarterly bill guarantee is 40.89¢/kWh.
  • As the average wholesale feed-in-tariff is below the 2023/2024 Victorian government minimum feed-in tariff of 4.9 ¢/kWh, we will ignore exports in this comparison.

Sudeep’s quarterly bill guarantee usage comparison is calculated like this:

= ⚡️ Bill guarantee usage charges 

= ⚡️ 1,000 kWh x 40.89¢/kWh

= ⚡️ $408.90 

= 🧾 $408.90

  • Sudeep’s actual quarterly bill for usage ($286.50) was lower than it would have been on the prices quoted in his bill guarantee ($408.90). Sudeep has been better off than these prices - so he’ll get to keep all those awesome savings he’s made (and won’t receive any additional credit). And beyond monetary savings, by buying his electricity at cheaper and greener prices when solar and wind are generating, he’s helping shift more of Australia’s energy demand to peak renewable times.
  • Finally, we will also conduct an annual calculation at the end of financial year including the 4.9 ¢/kWh minimum feed-in tariff. This is calculated for the whole financial year using a usage-weighted average of the guaranteed rates for usage each quarter minus the government minimum FiT for exports. If, at the end of the year, Sudeep had paid more than the combined value of our quarterly bill guarantee rates for his usage minus the minimum feed-in-tariff for his exports because of an average annual FiT less than 4.9c/kWh, he would be eligible for an additional payout of the difference. 

Example 2

  • Michelle lives in the same area as Sudeep, so her energy prices are the same. However her energy usage is much lower than Sudeep’s (500 kWh to his 1,000 kWh) and Michelle’s household has exported much more solar over the quarter (1,500 kWh). She has a battery system, which allows her to export during peak periods and receive a much higher average FiT. 

Michelle’s quarterly bill with Amber’s wholesale pricing is calculated as follows:

= ⚡️ Usage charges - ☀️ Exports

= (⚡️ 500 kWh x 30.00¢/kWh)  - (☀️ 1,500 kWh x 7.4¢/kWh)

= ⚡️ $150.00 - ☀️ $111

= 🧾 $39.00

Let’s compare this with Amber’s quarterly bill guarantee:

  • As the average FiT is above the 2023/24 Victorian government minimum feed-in tariff for Michelle’s exports, we include exports in this calculation:

Government minimum 4.9¢/kWh FiT x 1,500 kWh exported = $73.50

Michelle’s quarterly bill guarantee is calculated using her applicable bill guarantee rates:

= ⚡️ Bill guarantee usage charges  - ☀️ Minimum FiT

= (⚡️ 500 kWh x 40.89¢/kWh)  - (☀️ 1,500 kWh x 4.9¢/kWh)

= ⚡️ $204.45 - ☀️ $73.50

= 🧾 $130.95

  • As Michelle's quarterly bill ($39.00) is below the quarterly bill guarantee ($130.95), she will not be eligible for a quarterly payout. We will still conduct an annual calculation, but as the minimum FiT was included in her quarterly calculations, it is unlikely she will be eligible for an annual payout.

Why is the market value of solar generation often lower than the minimum FiT at peak solar times (i.e. in the middle of the day)?

  • Solar adoption is exploding in Australia, with enormous amounts of rooftop solar and solar farm capacity being added to the grid every month.
  • It’s great progress, but this doesn’t get us to 100% renewables on its own. That’s because supply is increasing way faster than demand during peak solar times.
  • Unless we fix this imbalance between exploding supply and stagnant demand, the market value of solar generation during the middle of the day will continue tracking towards zero.
  • One big reason why we created Amber is to help fix this imbalance by rewarding Australians for shifting more of their energy demand to times when solar is generating.
  • We also need better ways to use more solar generation during late afternoon and evening peak times, including adding more west-facing rooftop solar to the grid, and more home batteries to store solar power for use in the evening when demand is highest.
  • We've got an awesome guide to navigating negative FiT here.
Was this article helpful?
58 out of 70 found this helpful

Comments

0 comments

Article is closed for comments.