What is Feed-In Tariff and How Does It Work?
With more than 3 million rooftop solar installations, Australia is already at the forefront of renewable energy generation and usage. Thanks to the falling prices of solar panels and a variety of incentives, Australians are increasingly embracing the solar revolution. One of the incentives that are available is a feed-in tariff.
In this blog post, we will explore what the feed-in tariff is, how it works and how it can help lower your payback period for a new solar panel installation.
What Is a Feed-in Tariff?
When you install a solar panel power system, you are essentially installing your own power generation setup. Since you are not going to consume all of the electricity generated by this setup, it has been mandated by the government to allow solar panel power system owners to export the excess electricity generated by their system to the power grid. This exported electricity is paid at the rate which is known as a feed-in tariff.
How Do Feed-in Tariffs Work?
Installing a new solar PV system does cost quite a bit of money. Once the system has been installed, the user may apply for a feed-in tariff incentive. If the system meets the set conditions such as location, size and energy source, they can enter into a contract with their electricity retailer to get a feed-in tariff for the amount of electricity exported to the grid by their system. It could be a fixed term or a flexible contract.
In Australia, it is generally a fixed-term contract for a period of 20 years. It’s important to keep in mind that the feed-in tariff is usually just a part of the retail price you pay for the electricity. In short, you’re not going to get the same amount of money for one unit of exported electricity as you pay for one unit of electricity taken from the power grid. It is an incentive to help you bring down the payback period for a new system and not a business where you can use it primarily as a way to make money.
Feed-in Tariffs in Australia
The concept of feed-in tariff was first introduced in Australia with the introduction of National Principles for Feed-in Tariff Schemes by the Council of Australian Governments in 2008. It mandated that all small-scale solar generators may export electricity to the power grid in exchange for money. Since then, the system has been updated to include all kinds of renewable power sources.
There is no national scheme in the country which means there is no minimum feed-in tariff across Australia. Every state has its own program and every utility has the freedom to fix its own feed-in tariff structure.
Some states such as Victoria offer a flat rate minimum feed-in tariff as well as a variable minimum feed-in tariff. Keep in mind that most Australian states do not have a mandatory minimum feed-in tariff.
Where to Find Your Rates and Feed-In Tariff
This information should be available on the website of your electricity provider. You can also check the local government website to find the minimum mandatory feed-in tariff applicable in your region. It is important to understand that these schemes keep changing and information that may be valid at one point in time may no longer be valid tomorrow.
As far as feed-in tariffs in Australia are concerned, all are based on a net basis. It simply means that you get credited for every unit exported to the power grid.
In Victoria, there are two types of government-mandated feed-in tariffs including a flat minimum rate and a time-varying minimum rate. You also have the freedom to shop around to find the best rates in your part of the state. Currently, a feed-in tariff is applicable for a maximum of 100 kW capacity. The minimum feed-in tariff rate is reviewed and published each year.
Final Thoughts
Overall, a feed-in tariff is an incentive provided by the government to encourage the adoption of renewable energy such as solar panels. There is no national scheme across Australia and in most Australian states, there is no minimum mandatory rate. However, the Victorian government sets a mandatory minimum rate that is reviewed each year. It helps in bringing down your payback period and eases the burden of making a substantial investment in solar panels. It is recommended to shop around to find the best possible feed-in tariff in your region.
Switch to Solar Energy!
If you are planning to switch to solar, get in touch with the premier installer of solar panels in this part of the country – Macedon Ranges Solar Power. We are a Clean Energy Council accredited & approved solar panel retailer and installer. With thousands of successfully running solar panel power system installations under our belt, we guarantee the best performing solar panels at the most affordable prices to our customers.
Please give us a call today on 1300 693 113 or make an enquiry.
