As outlined above, the usage tariffs include network, environmental levies, retailer margins and the energy cost.
The FIT is energy cost only. In Australia consumers of electricity pay the environmental levy, network charges and retail margins, not the generators. This is standard across all generators whether they are large scale such as coal, gas, wind farms, hydro or solar farms…to small scale residential PV systems.
So it isn’t a markup of 700%. Without other charges, it is likely to be about 1/2 to 1/3 of that. The difference has been explained above and also below.
Yes zero/negative pool prices are for for comparatively short periods, until such time the market operator (AEMO) can adjust generation to better balance demand. In such cases, it usually means disconnecting/shutting down generators. It is worth noting that more recently installed domestic PV inverters have such functionality and proposals to allow disconnection of residential PV systems has been tabled so they can be managed no differently to other larger generators.
While zero/negative only occurs for comparably short periods, lower spot energy prices occur when residential PV solar can export. These being in the middle hours of the day (as an example, this link shows spot prices for an unexceptional day in NSW, where lowest spot prices are in the middle of the day - around $0.06/kW). This has been exacerbated by lack of storage connected to the grid (due to high costs) to allow excess generation to be used later. This means solar farm production generation along with other forms of generation (traditional and renewable) peak during middle of the day hours, each trying to make money by suppling to the network. Fluctuation nature of renewable generation causes excess generation and downward pressure on spot prices.
With peak demand shifting to late afternoon/evening, solar exports has limited ability to export when spot prices are higher. With greater shift to renewables, the peaks and troughs in spot prices will change to traditional generation profiles. Higher spot prices are likely in the evening through to morning when storage partly fills deficits. So, one should expect the FIT differential to get greater in the future.
Outside middle of the day hours, there is a greater risk of upward pressure on spot prices, as solar is removed as a generation sources. This accounts for most of the day (say 18 hours) compared to lesser time for downward price cycles (say 4-6 hours per day).
What you are suggesting as being unfair is asking for a FIT averaged across 24 hours when the FIT in reality only occurs for 4-6 hours. If the FIT is averaged over 24 hour spot prices, someone has to pay the extra premium which would be all consumers with higher import tariffs. This is where unfairness exists as all consumers will pay for those who have residential solar. Such has existed in the past when state governments gave high FITs to encourage solar uptake - with all consumers paying to subsidise those who installed residential PV systems.
