Retailers Seek Cost relief to Offer Three Hours of Free Power
Energy retailers are seeking assurances of a reasonable return on investment as they consider implementing a government proposal to offer all customers three hours of free electricity daily. The initiative, dubbed “solar Sharer,” aims to leverage Australia’s high adoption rate of rooftop solar – the highest per capita globally - to benefit consumers.
Currently, daytime wholesale electricity prices frequently hit zero or even negative values due to the influx of solar power. Energy Minister Chris Bowen has stated consumers shouldn’t have to pay their energy companies when this occurs, and has pledged to work with retailers to address concerns while prioritizing consumer benefit.
However, industry figures warn that forcing artificial concessions without addressing underlying market dynamics could be detrimental. “If all you are doing is forcing out an artificial concession at a retail level… then all you are going to do is break the market,” Bowen cautioned.
The Australian energy Regulator and the federal energy department are actively soliciting feedback from industry participants regarding tariff design and retailer profitability.
A few retailers, including AGL, OVO, and Snowy Hydro’s Red Energy, already offer limited free power access during certain times. Many others are developing plans centered around cheaper daytime rates for appliance use and electric vehicle charging, alongside financial incentives for storing surplus solar energy in batteries for later use.
flow Power chief executive Matthew van der Linden advocates for enhancing existing market incentives rather than implementing potentially disruptive interventions. “I would be keen for regulators and governments to be looking for ways to enhance the existing market drivers that are already there, and find a way to reward customers who are taking steps and are participating,” he said.
Amber Electric, a retailer specializing in fluctuating wholesale pricing, welcomes the government’s direction. Co-founder Chris Thompson noted the company has built its business model around the benefits of cheaper daytime power for the past seven years. However, he expressed concerns about the scheme’s implementation, specifically regarding potential changes to network tariffs and whether those changes can be enacted before the program’s planned July launch.
“We could end up in a situation where the retailers will be more expensive in non-free times to cover those costs,” Thompson warned.
