We set the minimum feed-in tariffs that your energy company pays you for power you export to the grid.
Minimum feed-in tariff
We set the minimum feed-in tariffs that your energy company pays you for power you export to the grid (via sources including solar panels).
Retailers can offer solar customers a choice between a single rate or time-varying tariff.
Retailers have to offer you at least the minimum tariff, but they are free to offer you above this minimum.
View our information session on the minimum feed-in tariff
We held an information session on 28 October 2021 to explain our role, how we must set the minimum feed-in tariff, how people can contribute to our review and to answer questions from attendees.
Feed-in tariffs from 1 July 2021 to 30 June 2022
The 2021-22 'single rate' minimum feed-in tariff is 6.7 cents per kilowatt hour
The single rate feed-in tariff applies regardless of the time of day or day of the week.
The 2021-22 'time-varying' minimum feed-in tariff is between 6.1 cents and 10.9 cents per kilowatt hour
Under the time-varying feed-in tariff, customers are credited between 6.1 cents and 10.9 cents per kilowatt hour of electricity exported, depending on the time of day.
The time-varying tariff for certain times of day is outlined in this table:
|Period||Weekday||Weekend||Rate: cents per kilowatt hour (c/kWh)|
|Off peak||10 pm to 7 am||10 pm to 7 am||6.7 c/kWh|
|Shoulder||7 am to 3 pm, 9 pm to 10 pm||7 am to 10 pm||6.1 c/kWh|
|Peak||3 pm to 9 pm||n/a||10.9 c/kWh|
Why the minimum feed-in tariff changes each year
The minimum feed-in tariff changes each year mostly because of changes in wholesale electricity prices. Wholesale electricity makes up around 60 per cent of the costs covered by the minimum feed-in tariff.
In recent years, wholesale electricity prices have been going down, particularly during the middle of the day when most solar is exported.
The wholesale price is set in a competitive national market, based on the supply of and demand for energy. The wholesale price is not set by government or a regulator.
The chart below shows how the wholesale electricity price and the minimum feed-in tariff have changed since 2015
Why the minimum feed-in tariff is lower than the retail electricity tariff
The minimum feed-in tariff is a payment you receive for generating electricity.
When retailers provide electricity to their customers, they must cover costs including:
- the ‘spot price’ of energy in the national energy market paid to generators
- transporting electricity (the poles and wires connecting customers to electricity generators)
- complying with environmental programs
- operating a retail business (for example, billing and revenue collection systems, information technology systems, call centre costs, human resources, finance, legal services, regulatory compliance costs, licence costs and marketing).
These additional costs mean the minimum feed-in tariff will always be lower than the retail electricity tariff.
How we calculate the minimum feed-in tariff
Legislation controls how we regulate the minimum feed-in tariff. The costs we must include are set out in the Electricity Industry Act 2000.
We calculate the minimum feed-in tariff by forecasting the wholesale price of electricity for the year ahead. The wholesale price varies across different times of the day due to changing supply and demand. As solar panels generally export power between certain hours of the day, we only use the forecast wholesale price for electricity during these ‘solar hours’.
In our calculation, we also include:
- avoided transmission and distribution losses: the value of energy saved by not transporting the energy long distances from large scale generators.
- other fees and charges: the value of market fees and ancillary service charges that retailers avoid when energy is produced by solar customers.
- avoided social cost of carbon: the value associated with avoiding carbon emissions when energy is produced by solar customers. It is currently set at 2.5 cents per kilowatt hour (c/kWh) by the Victorian government.
For more information about our methodology and review process for the minimum feed-in tariff 2021-22, see our final decision paper.