What are solar feed-in tariffs? Your questions answered.
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What is a solar feed-in tariff?
First things first, it’s important to clarify what is generally understood when referring to solar feed-in tariffs.
According to the Australian Energy council, “a feed-in tariff (FiT) is a payment from either a government or an energy retailer for electricity that is generated by you, either at home or in a business. The payment is made to recognise the value of energy that you feed back into the electricity grid.”
Did you know?
There are three million rooftop solar systems installed across Australia1
with a combined generation capacity of 15GW – approximately 20% of the total Australian generation capacity. This is 3 times larger than the largest coal fired power station!
So why not get paid for your contribution?
How exactly does it work?
Feed-in tariffs first appeared a decade ago as a way to encourage investment in renewable energy.
They provided an incentive for solar owners to lower their home energy bills while reducing their carbon footprint, and making a positive impact on the environment.
Feed-in tariffs were subsidised by each state government under specific FiT schemes. Back in the day, this meant a homeowner could generate electricity with their solar system and sell their excess electricity to the grid at a FiT rate as high as 60c per kilowatt hour (kWh).
Understanding Buy-Back Rates: Getting Rewarded for Your Excess Solar Energy Production
These rates provided a huge incentive for small businesses and homeowners to install rooftop solar with the guarantee of a quick payback. With the successful adoption of solar power across Australia and successful creation of a thriving rooftop solar industry, all state governments stopped offering this scheme years ago.
Nowadays, you can still get paid for the excess electricity you produce and sell it back to the grid for other customers to enjoy. These rates, also known as ‘‘buy-back rates" are much more in line with the actual value of electricity in the market, which varies from state to state.
Am I eligible for a solar feed-in tariff?
If you’re one of the early solar adopters, you might still be on a premium FiT scheme offered by your state government. The best way to find out is to check your electricity bill. Those schemes are all set to retire soon but most will still continue for existing customers for a few more years. You can refer to this cheat sheet for more info on each state scheme and when they end.
For anyone who had their solar system installed in the last 3-4 years or are looking to get solar, regular solar feed-in-tariff rates (or buy back rates) can still significantly offset your electricity bills.
As mentioned, those rates now reflect the market value and will vary based on:
- Where you live
- How much solar energy you can feed back into the grid
- Which electricity retailer you choose and which electricity plan you go with
In order to be eligible, your solar system will need to be:
- Installed on a household or small business
- Connected to the electricity grid
- And in areas where the grid can support solar
What is the average solar feed-in tariff?
There isn’t really an “average” benchmark for solar feed-in tariffs. Rates vary between states and territories for how much you can get paid for feeding excess solar energy back into the grid.
Generally, you'll get paid more in states with higher electricity prices (like Queensland or Tasmania), and you'll get paid less in states with lower electricity prices (like Western Australia or the Northern Territory).
Calculating Savings: Understanding the Average Solar Feed-In Tariff and Your Potential Yearly Credits
That being said, the average solar feed-in tariff across all of Australia is around 11 cents per kWh. A typical 6kW solar system will generate approximately 22 kWh per day, and will typically export about 10 kWh of solar energy in a day. Hence a typical customer would expect to receive a credit of around $1.10 per day from their energy retailer, a saving of $400 a year. Not too bad! Especially when added to the 12kWh you used for your own energy needs that at $0.25 per kWh will additionally save you about $1,045 a year.
Of course, no one and no home is typical, so your savings will vary depending on your location, solar system, energy usage and available energy plans.
Who gives the best solar feed-in tariff?
The best solar feed-in tariff will vary depending on your specific needs and situation.
Understanding your typical energy behaviours will help you find the best electricity tariff for you. As feed-in tariffs and electricity prices are constantly changing, you might want to keep an eye on those rates and do ongoing comparisons to ensure you have the best plan for your energy needs.
Solar plans with feed-in tariffs
Finding a good solar plan isn’t as easy as it sounds and feed-in tariffs are just one part of the equation. That’s why we’ve made it easier for you to compare plans and shop around.
If you’re interested in comparing solar energy plans, our plan comparison tool is a great place to start! With this tool, you’re able to get a sneak peek into the best plans available in the market, ranked by savings potential for your energy usage profile. It allows you to easily compare energy plans and check the different tariff types.
Feed-in tariffs are reducing. Should I be concerned?
Yes, feed-in tariff rates have dropped over the years as state incentive schemes have ended, but this is because they have done their job and created a thriving industry. The growing adoption of rooftop solar has seen solar system costs decrease by 75% and driving down demand for fossil fuels, helping energy consumers save billions on power bills.
So lower solar feed-in tariffs are the result of a successful solar uptake making overall energy more affordable, which is actually excellent news for everyone!
But how can this be good news for solar owners?
Solar Affordability: How Lower Feed-In Tariffs Don't Diminish the Savings Potential
Despite the lower feed-in tariffs, owning solar is also more affordable than ever and is still the best way to reduce your energy bills and save. The upfront cost of solar has come down significantly with the declining cost of solar panels.
More importantly, the cheapest electricity you can get is the one you produce yourself. Maximising the use of the energy you produce with your solar system is the best way to save on your energy bills.
Is it better to have a higher feed-in tariff?
Whether or not it is better to have a higher feed-in tariff works on a case-by-case basis, depending on your energy consumption and excess production.
If you are able to produce more electricity than you use, you will be able to export the excess back to the grid, which means a higher feed-in tariff could benefit you. The advantage is that you'll earn more money for the same amount of electricity you normally generate.
However, if you use more electricity than you generate, then you would actually benefit more from a lower electricity rate, as you would be relying more on electricity from the grid.
Our solar expert, Nigel Morris, just went through this journey and was shocked to discover he could have saved an additional $800 pa by switching to a plan better suited to his needs.
The final verdict for solar customers
Solar panels are a great way to save money on your electricity bills and do your part for the environment. Although solar feed-in tariff rates may be decreasing, there are still plenty of ways to save with your solar. You can start by finding the right plan to suit your needs.
This is where Solar Analytics can help you. Our solar monitoring app connects to your system to analyse your home energy data and find the best plan for you. Our Plan Optimiser tool runs in the background and regularly updates all plans on the market to compare them to your current plan to make sure you’re always on the best plan.
Unlock Your Solar Potential: Navigating Feed-in Tariff Changes and Maximising Savings with Solar Analytics
So if you're thinking about going solar or just want to optimise your current system, don't let the recent changes to feed-in tariffs stop you! Using your solar energy is the best thing you can do to save on energy bills.
To make the most of your rooftop solar, a tool like the Solar Analytics dashboard will help you maximise your solar savings; ensuring your system is performing as it should, understanding your energy usage, or helping you check your electricity bills, amongst many other benefits.
Enjoy more savings, more control and more confidence with your solar. Find out how it works now!