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 to apply from 1 July 2021
We have completed our review of the minimum feed-in tariff to apply from 1 July 2021. We released our draft decision in November 2020 and held a public consultation for seven weeks up to 8 January 2021.
We published our final decision on 25 February 2021.
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 |
Our 2017 inquiry into the value of distributed generation 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.
Since 1 July 2018, retailers have been able to offer customers either a single rate feed-in tariff and/or a time-varying feed-in tariff.
How does the 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 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.
View our fact sheet on how to maximise the benefit of solar power in your home, or visit Solar Victoria's page on getting the most out of your solar system.
Tariffs and solar panels
If you are thinking about installing solar panels, remember that the minimum feed-in tariffs change each year largely following changes in wholesale electricity prices. Wholesale electricity prices are set in a competitive market by the demand for and supply of electricity. The table below shows how the minimum feed-in tariffs have changed over the last five years in Victoria.
|
|
2015 |
2016 |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
|
Wholesale electricity prices |
5.7 |
4.6 |
8.1 |
6.8 |
8.9 |
7.3 |
4.0 |
|
Minimum feed-in tariffs |
6.2 |
5.0 |
11.3 |
9.9 |
12.0 |
10.2 |
6.7 |
Why the minimum tariff changes each year
The feed-in tariff fluctuates each year because we calculate the value of solar energy based mostly on the energy market's (ASX Energy) wholesale price for energy. For 2021-22, we forecast a lower price.
Your retailer is free to offer a feed-in tariff above the minimum we set.
The price of wholesale energy is set in a competitive national market, based on the supply of and demand for energy. The price is not determined by government or a regulator.
Why the minimum tariff is lower than the retail electricity tariff
The minimum feed-in tariff is a payment you receive primarily 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 means the minimum feed-in tariff will always be lower that the retail electricity tariff.
How we calculate the minimum 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’.
In our calculation, we also include:
- Social cost of carbon: the price retailers pay to cover the avoided social cost of carbon (because of your home's solar panels). This rate is currently set by the Victorian Government at 2.5 cents per kilowatt hour (c/kWh).
- Avoided transmission fees: the costs that are avoided when your retailer buys your solar power instead of power from a large scale generator (including the cost of power normally lost when it travels long distances through the transmission network from a large central generator)
- Avoided market fees: the cost of the fees and charges your retailer would normally pay to the Australian Energy Market Operator when they buy wholesale energy.
Legislation controls how we regulate the tariff
Our role in regulating the minimum feed-in tariff is determined mainly by the Electricity Industry Act 2000, Section 40FBB.
Got a question?
Contact us for more information.