I enjoy a good internet discussion!<p>So the topic of debate is whether its fair to charge a retail price for solar buybacks, or a wholesale price. I argued that a retail price is unfair, because energy utilities have a bunch of retail costs, of which billing is one of. The counter argument is that billing is a minute component of the retail cost. You&#x27;ve suggested that I have an informed opinion, but need sources to back up my argument.<p>Contact Energy have a management paper that discusses energy costs. A definition of Netback from Contact Energy (2015) is:<p>Netback is calculated by deducting the network, meter, levy and cost to serve costs from customer tariffs. This enables the performance of the retail channels to be measured without using an energy cost. The netback is meant to cover, inter alia, the cost of energy, capital return, risk margin and a retail margin.<p>Cost of Energy was $994M, while Cost of Transmission and Metering was $621M, and Cost to Serve (such as billing) was $118M for Contact Energy for the year ending 30 June 2015 (Contact Energy, 2015). The remainder, as EBITDAF was $484M.<p>As you can see, $118M for Cost to Serve is 11.8% of the Cost of Energy. This doesn&#x27;t change with solar buybacks. The cost of energy is from a different source (your personal solar panels), but there&#x27;s still costs of transmission and metering, cost to serve, and depending on the utility you connect to, some sort of EBITDAF (unless they&#x27;re a not for profit). So that&#x27;s $0 (your solar panels) + $621M (transmission&#x2F;metering) + $118M (retail&#x2F;billing) + $484M (earnings before income, tax, depreciation, amortisation, and changes in fair value of financial instruments).<p>Do check out McNicol (2013) for an interesting article on this.<p>tl;dr - Electricity networks are expensive, and the cost of energy is about half the total costs of running the system. Who pays for that, if the utility has to pay the retail rate to you because you&#x27;re using solar panels?<p>References:
Contact Energy. (2015). Management discussion of financial results for the year ended 30 June 2015. Retrieved 9 February 2016 from <a href="https:&#x2F;&#x2F;www.contact.co.nz&#x2F;cenergymedia&#x2F;contactenergy&#x2F;files&#x2F;pdfs&#x2F;corporate&#x2F;cen-fy15-management-discussion.pdf" rel="nofollow">https:&#x2F;&#x2F;www.contact.co.nz&#x2F;cenergymedia&#x2F;contactenergy&#x2F;files&#x2F;p...</a><p>McNicol, H. (2013). Are solar energy systems worth the cost? Retrieved 9 February 2016 from <a href="http:&#x2F;&#x2F;www.stuff.co.nz&#x2F;the-press&#x2F;business&#x2F;the-rebuild&#x2F;9329703&#x2F;Are-solar-energy-systems-worth-the-cost" rel="nofollow">http:&#x2F;&#x2F;www.stuff.co.nz&#x2F;the-press&#x2F;business&#x2F;the-rebuild&#x2F;932970...</a>