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).
Minimum feed-in tariff
Overview
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 system owners a choice between a single rate or time-varying tariff.
Retailers have to offer you at least the minimum tariff.
Feed-in tariffs from 1 July 2020 to 30 June 2021
The 2020-21 'single rate' minimum feed-in tariff is 10.2 cents per kilowatt hour
The single rate feed-in tariff applies regardless of the time of day or day of the week.
The 2020-21 'time-varying' minimum feed-in tariff is between 9.1 cents and 12.5 cents per kilowatt hour
Under the time-varying feed-in tariff, customers are credited between 9.1 cents and 12.5 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 | 9.1 c/kWh |
| Shoulder | 7 am to 3 pm, 9 pm to 10 pm | 7am to 10pm | 9.8 c/kWh |
| Peak | 3 pm to 9 pm | n/a | 12.5 c/kWh |
How does the minimum feed-in tariff affect me?
Your energy bills give you information on the feed-in tariff your retailer is paying you. Every plan is different, so you should always check to make sure your energy retailer offers you one that best suits your circumstances.
How we calculate the minimum feed-in tariff
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’.
We also consider the costs that are avoided when your retailer buys your solar power instead of power from a large scale generator. This includes the cost of power that is normally lost when it travels long distances through the transmission network from a large central generator and the cost of the fees and charges your retailer would normally pay to the Australian Energy Market Operator when they buy wholesale energy.
The minimum feed-in tariff also includes a price that is paid to account for the avoided social cost of carbon attributable to a reduction in air pollution due to the energy exported by your solar panels. This rate is currently set by the Victorian Government at 2.5 cents per kilowatt hour (c/kWh).
Why the minimum feed-in tariff has gone down this year
We expect to see the minimum feed-in tariff rates to fluctuate each year depending on market expectations on the wholesale electricity prices.
The minimum feed-in tariff rate has gone down in 2020-21 due to the reduction in the forecast wholesale electricity component of the feed-in tariff during the 'solar hours'.
Annual changes in the minimum feed-in tariff are affected primarily by the changes in the forecast wholesale electricity price - the biggest component of the minimum feed-in tariff rate.
More detail can be found in our decision papers and consultant's report for the minimum feed-in tariff review 2020-21.
Why we introduced time-varying tariffs
In 2017, we completed an inquiry into the value of distributed generation, which included the value of electricity generated from alternative sources, like solar power.
The inquiry recommended that solar system owners are paid a price that better reflects the wholesale cost of electricity at the time they sell it into the grid. As a result of the findings, retailers have been able to offer customers either a single rate feed-in tariff and/or a time-varying feed-in tariff since 1 July 2018.
Solar system owners also have the opportunity to shop around to choose a tariff-type that best suits their individual circumstances.
Why the minimum feed-in tariff is lower than the retail electricity tariff
The minimum feed-in tariff is a payment primarily for generating electricity. The retail price of electricity includes payment for a number of additional costs.
To provide electricity to their customers, retailers must pay for, among other things, the costs of:
- 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).
This means the minimum feed-in tariff will always be lower that the retail electricity tariff.
Find out more information in our final decision on the minimum feed-in tariff 2020-21.
How to maximise the benefit of solar power
The main financial benefit for customers with solar is the savings from using the electricity they generate in their home or business – rather than paying retail electricity rates. Changing the pattern of electricity usage is key to maximising savings.
Energy efficient products, use of a timer and changing your pattern of usage means using more of your solar generated electricity rather than importing from the grid at higher rates, saving you money.
We are reviewing the feed-in tariff to apply from 1 July 2021
Our review of the minimum feed-in tariff to apply from 1 July 2021 is now underway.
We recently released a draft decision, and are seeking submissions until 8 January 2021.
We will release a final decision in February.
Got a question?
Contact us for more information.