In response to the information released on the impact of the new feed-in tariff project on solar energy producers, some important facts need to be taken into account. First, the costs of AS “Sadales tīkls” increased by 183 million euros, mainly due to the increase in the transmission tariff and the electricity price.
The company is no longer able to accumulate cost increases and closed the first half with a loss. Secondly, the new fee structure is as close to the cost of the service as possible. Therefore, the actual cost increase may vary depending on the specific connection and consumption habits of the customer.
Are solar panels still profitable?
Yes. The return on investment of solar panels is determined by the price of electricity, not by the distribution service
The tariff changes will concern all households – both traditional consumers and so-called active customers – producers of micro-generation electricity; it will depend on your connection capacity and electricity consumption habits. As before, microgeneration customers will be charged the same rate as other households with suitable connection parameters, neither higher nor lower. However, it is precisely the families who have installed solar panels, who may also have received compensation from the state support program of several thousand euros, who express particular concern about the tariff increase, up to 700%.
It is necessary to clarify here. It is true that for families with a three-phase connection the price increase of the fixed part of the tariff, ie the fee for connection to the distribution network itself, will be quite significant. Yes, this will also affect microgeneration customers. However, the total consideration for the distribution service consists of both the fixed and variable tariff components. Fixed – per connection, variable – per transmitted kilowatt-hours. For example, a family with a three-phase 32A connection and an average consumption of 500 kWh per month paid 26.78 euros for the distribution service, of which 6.4 euros for the fixed part, 20.38 euros for the variable part. According to the amendments, the fee will increase by approximately 145% and will be 65.44 euros, of which 47.27 euros for the fixed part and 18.18 euros for the variable part. If we look at the extraordinarily largest group of customers, around 600,000. for families with a single-phase connection and consumption of around 100 kWh per month, the costs for the distribution service could increase from 6 to 8 euros.
If a family produces all the electricity it needs on its own and transfers nothing to the grid, then obviously it will only pay for the fixed part of the service, therefore less than other families that also receive electricity from the grid and consequently pay the same fixed part of the tariff in addition to the variable part – according to consumption. By foregoing solar panels, the household would pay both this fixed and variable portion of the tariff and would also purchase electricity from the retailer. The return on investment of solar panels is determined by the price of electricity, not by the distribution service.
The validity of the tariff project will be assessed by the PUK. “Sadales tīkls” also hopes that the forecast of the electricity price will decrease further during the discussion period, and this will leave a positive cost reduction impact on the tariff project. Furthermore, if electricity prices continue to fall during the application of the tariff, the draft regulation requires the system operator to adjust the tariff values downwards in the next year. However, this does not in any way detract from the fact that the provision of system services has specific costs (network maintenance, renewal, development, etc.) and that the cost is attributed to those who use this service.
The new tariff structure is designed to encourage customers to choose an efficient connection, by comparing the technical capabilities or connection capacity with their actual needs. A relatively large part of customers still maintains a connection capacity higher than necessary, this creates an additional burden for the system and increases costs, as well as preventing new customers from using the capacity already created, theoretically occupied, but actually unused . Therefore, we invite each customer to review their consumption habits and, consequently, the required connection capacity.
One concern raised is that households have been forced to increase their connection capacity by installing solar panels to receive state aid, but will now be forced to pay more. It should be noted that the capacity limits for recipients of VARAM support are aimed at guaranteeing an optimal balance between the production capacity of the devices, the customer’s consumption and the potential impact on the network and its development costs. For example, so that as many residents as possible can install solar panels and receive state support, and also, there is no grid overload in the summer. The cases in which the customer has chosen to increase the connection capacity to install a higher capacity micro-generator and receive state support at the same time are very rare, according to data from “Sadales nets”, they are less than 1% of cases .
These households will be affected by the increase in the fixed portion of the distribution tariff, but that doesn’t mean solar panels become unaffordable. Solar panels do not replace distribution service, solar panels replace the need to buy electricity from someone else.
Will the planned tariff changes be an obstacle to the development of large green energy projects?
It is true that the tariff for commercial green energy projects (not microgeneration customers and those who produce electricity mainly for their own consumption) will increase by 570%. We ourselves have expressed concern about this and will continue to do so. The reason is simple. JSC “Augstsprieguma tīkls” does not apply the producer tariff of “Sadales tīkls”, as a result, the consumer tariff is paid for all capacities. Even in situations where capacities should be reduced because consumers do not need them, capacities reserved by producers prevent transformer capacities from being reduced.
Therefore, it is reasonable to attribute to producers the amount of costs that the “Distribution Network” pays for the capacity of the “High Voltage Network”. Indeed, the “Distribution Network” is further forced to shift these costs onto the producers, as it would be unreasonable to level these costs across different consumer groups. We have drawn the attention of both the transmission operator and PURK, asking JSC “Augstsprieguma tīkls” to review these cost allocation principles, in our opinion, unfair, because the generation component tariff has also been reduced for other transmission operator customers. The tariff, in accordance with the European recommendations, should follow the cost structure as much as possible, be reasonable and transparent. Therefore, currently in the tariff proposal for customers connected to the distribution system, the tariff increase corresponds to the transmission tariff fee included in the distribution service.
The “distribution grid” is still ready to go to great lengths to accommodate every kilowatt hour of green energy on the grid, and it needs to be balanced both in terms of costs and investments, so that both green energy producers and consumers.
