What is the solar feed-in tariff?

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In all parts of Australia the States and Territories have introduced feed-in tariffs (FITs) to promote renewable energy sources, including solar and wind energy.

Electricity providers must pay consumers a fixed price under a FIT scheme. The price which consumers regularly sell back is similar to the wholesale electricity price. 

As a result, investment in renewable energy systems for homes or businesses is supported via this additional financial benefit.

One must be connected to the grid and generate excess renewable energy to participate in a FIT programme. Rates and eligibility restrictions may differ by state or energy retailer.

By contacting your local electricity supplier you can find out how much FIT the local company pays. Its worthwhile to shop around for the best FIT  retail plan.

The solar feed-in tariff explained

A feed-in tariff (FiT) is a payment that electricity retailers pay to solar customers for the solar electricity that is not used by the home or business and exported into the electricity grid.

Some states in Australia have a regulated minimum feed-in tariff, while others have a non-regulated feed-in tariff. The various State and Territory regulators can determine feed-in tariffs in Australia.

How did the FiT start?

In 2007-2008, when the solar power industry was emerging, legislators introduced Feed-in Tariffs (FiTs) as premium payments for solar electricity. These were meant to incentivize residential and commercial electricity consumers to install and utilise solar power. Initially, it was a Gross feed-in-tariff, which meant that all generated electricity received payment.

Nowadays we have a net feed-in tariff. Electricity users who produce more solar energy than they use and feed it back into the grid are guaranteed a fixed price under a FiT system.

The guarantee of a return on their investment encouraged consumers and business owners to invest in renewable energy systems and created the original demand for photovoltaic solar systems across the country. As solar panel production increased sharply and the cost of solar systems decreased, the need for these premium feed-in tariffs decreased.

In some states, such as NSW, the FiT has now reduced from 60 cents per kWh to as low as 5 -10 cents. Nevertheless, in the same timeframe, the solar panel cost has reduced from $1400 for a 175-watt panel to around $200 for a 400-watt panel. This means the price per Watt of panel reduced by a factor of 16 in less than 20 years, from $8 per watt to less than 50 cents per watt.

The FiT rates are lower today to reflect the wholesale rate that energy companies would buy electricity from the power stations.

Old man Saving
Feed-in tariffs can earn you some additional income from solar

How do feed-in tariffs work in Australia?

Feed-in tariffs are paid for electricity supplied from the home or business back to the electricity grid.

The electricity sent back to the grid is recorded by the electricity meter within your meter box. The amount of electricity exported is then reported to the electricity retailer, who will then apply a credit to the electricity bill for that electricity.

This reduces the amount that needs to be paid to the electricity company by offsetting the other charges of consumption and supply service. in your bill

Feed-in tariffs, however, are not the primary benefit of producing solar power, Solar’s primary use and advantage is for self-consumption.

The best returns are using solar power when it is generated and not having to buy the electricity from your electricity retailer at their standard rates (starting at approx. 35c per kWh).

Receiving a FiT for exporting the remaining power at 5-10c provides a smaller benefit. As such, try changing your usage patterns to use more electricity during the day rather than at night for the best financial return for solar.

How can I participate in a feed-in tariff program?

Suppose you have had a solar system installed on your home by an accredited solar installer using accredited solar equipment, including solar panels and an inverter. In that case, you should automatically be eligible for a feed-in tariff via your energy retailer.

Generally, everyone connected to the grid with a residential system and producing excess renewable energy should be able to participate in a feed-in tariff scheme. However, large commercial systems sometimes face a situation where the local grid can’t handle excess export. In these cases, they end up limiting and wasting the exported electricity, which is unfortunate.

Contacting your energy provider is always a good idea to find out if you qualify for a feed-in tariff program and more about the exact requirements and costs. It is also worthwhile to shop around and see who offers the lowest rate per kWh charged and the highest feed-in tariff.

powerlines and worker where electricity is sent back to the grid and a feed-in tariff is paid
The solar that is not used will be exported back to the grid

Is a feed-in tariff right for me?

Suppose you are installing a solar system without batteries. In that case, a feed-in tariff offers the ability to receive an income for excess solar generated that would otherwise go to waste. So it is worth researching the feed-in tariffs available from different retailers in your area to determine the best option rate and plans for your situation.

Based on the low feed-in tariffs and your usage patterns, installing a battery to store your excess solar may be a better option for your situation to use the power during the evening peaks.

This can be particularly valuable if you are on the time-of-use tariffs and being charged in the vicinity of 50-60c per kWh during these periods.

It is likely to make more financial sense to store the solar electricity in the battery, use it during peak periods, and save 50-60c per kWh than sell the electricity during the day and be paid 5 to 10 cents per kWh.

If you want to make sure you get the best feed-in tariff for your particular region, consider installing the Solar Analytics Monito Software. They offer a program called Plan Optimiser which will use your existing real consumption and solar generation data to calculate and recommend the best energy plan in your region.

In summary

Feed-in tariffs can be a valuable instrument for encouraging the use of renewable energy in Australia. They aid in lowering the cost of renewable energy systems and offer some financial incentives for businesses and homeowners to transition to green, sustainable sources of electricity.

Nevertheless, nowadays, the main benefit of installing a solar system is self-consumption.

Therefore, we should prioritise self-consumption when installing solar power and consider feed-in tariffs only as a minor additional income stream from solar.

Be sure to check with online electricity price comparison websites to find out what feed-in tariff options are available in your area. Sometimes your local installer can also recommend the best local deal.

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