Special Report - The Feasibility and Effectiveness of Introducing a Time-varying Feed-in Tariff in Tasmania

​​​​Special Report

On 11 December 2018, the Treasurer required the Regulator to investigate the merit of introducing​​ a time-varying feed-in tariff in Tasmania and report on its findings either as part of the Regulator's 2019 Investigation​ or, separately, by 31 December 2019.

The Regulator’s preliminary analysis in relation was presented in the 2019 Regulated Feed in Tariff Investigation Draft and Final Reports. In the Final Report, the Regulator stated that further consultation and analysis was required and that a separate report would be prepared before the end of 2019.

The Special Report, prepared in accordance with section 9 of the Electricity Supply Industry Act 1995 and titled The Feasibility and Effectiveness of Introducing a Time-varying Feed-in Tariff in Tasmania, was provided to the Treasurer on 28 November 2019.

 Summary of Findings

The Regulator found that it is likely that it would be neither feasible nor effective to introduce a time-varying feed-in tariff in Tasmania at this time. Despite there being no technical barrier, the Regulator considers that the introduction of such a tariff would not be feasible for retailers and that it would not provide benefits to customers more broadly. It is also not likely to be effective as it is not evident that a time varying feed-in tariff would result in any significantly closer alignment of export prices with the wholesale electricity prices that retailers would otherwise have paid through the National Electricity Market.

Also, given the time of day when most electricity is generated from distributed generation systems, introducing a time-varying feed-in tariff was not expected to deliver benefits to the Tasmanian network in the form of reduced or deferred capital expenditure.

Furthermore, it appeared unlikely that a time-varying feed-in tariff would promote any increase in the rate of installation of renewable generation, as the tariff rate at peak generation periods is unlikely to be higher than under a single rate feed-in tariff. It was also not expected that a time-varying feed-in tariff would encourage an increased uptake of battery installations.

The Report pointed out that, while under current conditions, the value of wholesale energy in Tasmania does not vary significantly over the typical day, some major changes affecting Tasmania’s electricity supply industry may arise in the years ahead. These include the proposed Robbins Island wind farm, the proposed Project Marinus, some of the major Battery of the Nation initiatives under consideration and potentially major changes in demand in Tasmania. The Report stated that there is merit in reviewing the feasibility and effectiveness of a time-varying feed-in tariff if major changes such as these occur.
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