ELECTRICITY (MISCELLANEOUS) AMENDMENT BILL

Introduction and First Reading

The Hon. M.F. O'BRIEN (Napier—Minister for Agriculture and Fisheries, Minister for Forests, Minister for Energy, Minister for the Northern Suburbs) (12:01): Obtained leave and introduced a bill for an act to amend the Electricity Act 1996. Read a first time.

Second Reading

The Hon. M.F. O'BRIEN (Napier—Minister for Agriculture and Fisheries, Minister for Forests, Minister for Energy, Minister for the Northern Suburbs) (12:02): I move:

That this bill be now read a second time.

The bill I am introducing today improves South Australia's feed-in scheme by providing greater rewards to the owners of solar generators, and makes changes to ensure that the benefit can be adopted by as many South Australians as possible, while balancing the cost of the scheme.

This government has ensured that South Australia is at the forefront of renewable energy and climate change policy action. In 2008, this government was the first in Australia to implement a premium feed-in scheme for small-scale grid-connected solar photovoltaic systems owned by small customers. Nearly every other state and territory has announced or introduced a feed-in scheme after South Australia.

Honourable members would be aware that South Australia's feed-in scheme works by rewarding eligible small customers with a bonus of 44¢ for every kilowatt hour of excess electricity fed back into the grid from eligible solar photovoltaic systems. This amount is funded through distribution charges levied by ETSA Utilities on all its grid-connected customers. The scheme extends to 2028. The South Australian feed-in scheme has been overwhelmingly successful. I advise honourable members that there are now 32,000 grid-connected solar photovoltaic customers, representing nearly 50 megawatts of installed generating capacity.

The South Australian government announced that once installed capacity had reached 10 megawatts, the scheme would be reviewed. This threshold was reached in May 2009. The review was tasked with looking at several specific elements of the scheme including other possible technologies, retailer payments and the issue of larger systems. I am pleased to say that the review's final report found that the South Australian feed-in scheme has been successful and well implemented as measured against a number of criteria, including installed capacity, exported energy, ease of implementation and operation, and customer complaints.

The review's final report identified opportunities for further improvement while cognisant of not changing the fundamental parameters of the scheme or adding additional layers of complexity which raise administrative costs. The recommendations also recognise the importance of educating and informing customers. Specifically, the review's final report recommended the government explicitly refer to the scheme as a net scheme in legislation, make a provision to include other technologies in the scheme, consider implementing a scheme cap, and reduce eligible capacity size for each unit from 30 kVA to 10 kVA.

It recommended that the Essential Services Commission of South Australia (ESCOSA) conduct analysis into the value of small-scale renewable exports and provide a determination to the minister of a minimum benchmark rate for small electricity customers, and that the government and retailers publish the minimum benchmark rate for small customers while also obliging retailers to publish their rates for comparison purposes.

The review's final report also recommended that the government provide a website for customers to acquire accurate information on connecting small-scale renewables, place scheme parameters in regulation, have a second review in 2012 and make a series of transactional arrangements for existing participants in the feed-in scheme. The South Australian government considered the final report and its recommendations. The Premier announced the government's response on 31 August 2010 in his keynote address on South Australia's leadership within a carbon-constrained economy at the Committee for Economic Development of Australia's Leaders Series. The Premier announced that the government had resolved to accept the review final report recommendations in relation to referring to the feed-in scheme as a net scheme in order to make it clearer and to implement a scheme capacity cap.

To strike the right balance between the availability of the scheme and the overall cost to all electricity customers, the government proposed to close the scheme to new entrants when an installed capacity of 60 MW is reached. I advise honourable members that customer uptake of the feed-in scheme has been strong since the Premier's announcement. In order to provide an adequate implementation period, the government proposes to close the scheme to new entrants from 1 October 2011.

In order to ensure that as many customers as possible can access the scheme prior to its closure, the government accepts the recommendations to reduce eligible capacity size. The proposed mechanism differs from the final recommendation because it would be very difficult to enforce an individual unit capacity of 10 kVA. Instead, the government proposes more practical means by limiting the eligibility for the feed-in tariff to the first kilowatt hour/day exported for the first 45 kilowatt per day exported to the grid for customers who have received permission to connect from ETSA Utilities after 31 August 2010. I am advised that a 10 kilowatt solar unit exporting 75 per cent of its power to the grid at maximum generation in summer would remain unaffected by this change: 10 kilowatt is much larger than that in place in the vast majority of residential installations.

The government also proposes limiting eligibility to one generator per customer, and specifically excluding generators operated primarily for the purpose of generating a profit from the scheme. I advise honourable members that the government proposes to go further than the review's final recommendations in relation to retailer payments. The government's proposal will oblige retailers, who choose to contract with solar customers, to pay at least a minimum retail rate, which would be determined by ESCOSA, for the power received from solar panels. The retailer payment will apply to power exported by all small-scale solar photovoltaic generators, regardless of whether or not the power exported is also eligible for the premium feed-in tariff.

The mandated minimum retailer payment will continue to apply beyond the feed-in scheme's expiry in 2028 to ensure that retailers pay customers for the value they receive from power exported to the grid. This minimum rate will not be subject to the new eligibility criteria of the daily cap, and the exclusion of multiple and dedicated generators.

The government has decided not to include wind generation or any other technology in the feed-in scheme. This is consistent with the intent of the scheme, that was specifically designed to support consumers that had installed small-scale solar photovoltaic systems. Wind generation is a mature, renewable technology, which can already be deployed efficiently on a large scale, with the support of the Commonwealth government's renewable energy target. South Australia has more than 1000 megawatts of installed wind generation capacity.

A fair system of transitional arrangements is also proposed by the government. The proposed arrangements will not result in any diminished benefit for existing solar customers. However, all customers that received permission to connect for their solar systems from ETSA Utilities after 31 August 2010 (the date of the announcement) will be subject to the new eligibility criteria.

The bill also clarifies the issue of payment of a customer's entitlement by a retailer. This typically applies where a customer is permanently in a credit balance with their retailer. At a minimum, it is proposed that retailers must make a payment of any outstanding credit balance to their qualifying customers at least once every 12 months. This clarifies and preserves the initial intent of the feed-in scheme. Retailers are able to make payments on a more frequent basis if they wish.

I am pleased to advise members that the government has also resolved to enhance the reward for owners of small-scale solar photovoltaic panels by proposing to increase the feed-in tariff from 44¢ to 54¢ per kilowatt hour. This will apply to all eligible solar customers, both existing and new, and will further reduce the payback period of solar photovoltaic systems. This change, combined with the mandated minimum retail payment, is expected to make South Australia's scheme more generous than those operating in Victoria, New South Wales, Queensland and Western Australia, when considering the various lengths of each scheme.

I also make a comment, in passing, about the New South Wales scheme. The New South Wales feed-in scheme is a gross scheme, which contrasts with the net scheme created originally in South Australia and all other states. From inception, we have resisted the call to apply the scheme on a gross basis, as we considered the reward excessive. The New South Wales government has now pared its benefit back so that its value is now less than our scheme.

The feed-in scheme remains an important mechanism to encourage the contribution of small-scale photovoltaic generation to South Australia's Strategic Plan target of 20 per cent of renewable energy produced and consumed by 2014. This government has also set a longer-term renewable energy target of 33 per cent of the state's energy production by 2020.

The bill also contains additional amendments to the Electricity Act 1996 to provide for the technical regulator's information gathering powers to apply to his electricity emergency management functions under the National Electricity Act 1996. These amendments ensure that the technical regulator can adequately prepare for an electricity emergency event, and has sufficient information gathering powers during such an event to minimise potential impacts on South Australian customers. I commend the bill to members.

Debate adjourned on motion of Mr Pederick.