The Essential Services Commission no longer sets minimum feed-in tariffs, following an amendment to the Electricity Industry Act 2000. The 2024-25 minimum feed-in tariffs apply until 30 June 2025. From 1 July, electricity retailers may set their own feed-in tariffs.
Minimum feed-in tariff
Overview
The Essential Services Commission no longer sets minimum feed-in tariffs, following an amendment to the Electricity Industry Act 2000. The 2024-25 minimum feed-in tariffs apply until 30 June 2025, but there will be no minimum feed-in tariffs from 1 July 2025.
From 1 July, electricity retailers may set their own feed-in tariffs. However, these cannot be below zero ($0.00) cents per kWh. More information is available from the Department of Energy, Environment and Climate Change.
Feed-in-tariff review 2024–25
We have completed our review of the minimum feed-in tariffs for 2024–25. These feed-in tariffs apply from 1 July 2024.
Find out more about our review on our 2024-25 minimum feed-in tariffs page.
Feed-in tariffs from 1 July 2024 to 30 June 2025
The 2024–25 'flat rate' minimum feed-in tariff is 3.3 cents per kilowatt hour
The flat rate feed-in tariff applies regardless of the time of day or day of the week.
The 2024–25 'time-varying' minimum feed-in tariffs are between 8.4 cents and 2.1 cents per kilowatt hour
Under the time-varying feed-in tariffs, customers are credited between 8.4 cents and 2.1 cents per kilowatt hour of electricity exported, depending on the time of day.
Minimum feed-in tariffs for 2024–25
The table below shows the minimum feed-in tariffs for 2024–25. Retailers can offer solar customers a flat feed-in tariff and/or time-varying feed-in tariffs for electricity exported to the grid.
| Flat minimum rate | ||
|---|---|---|
| At all times | ||
| 3.3 c/kWh |
| Time-varying minimum rates | ||
|---|---|---|
| Option 1 | ||
Overnight Weekdays: 10 pm to 7 am Weekends: 10 pm to 7 am | Day Weekdays: 7 am to 3 pm, 9 pm to 10 pm Weekends: 7 am to 10 pm | Early evening Weekdays: 3 pm to 9 pm Weekends: n/a |
| 7.6 c/kWh | 2.8 c/kWh | 7.0 c/kWh |
| Option 2 | ||
Shoulder Everyday: 9 pm to 10 am 2 pm to 4 pm | Off-peak Everyday: 10 am to 2 pm | Peak Everyday: 4 pm to 9pm |
| 4.1 c/kWh | 2.1 c/kWh | 8.4 c/kWh |
Why has the minimum tariff decreased?
Growth in the installations of rooftop, and utility-scale, solar has reduced the demand for and increased the supply of electricity during the day. As a result, wholesale prices (solar weighted wholesale prices) at the times when solar exports happen are lower, leading to a lower feed in tariff.
Wholesale electricity prices in the evening, when electricity demand is the highest, are still quite high and not falling as quickly as daytime prices. For this reason, solar weighted wholesale prices are decreasing more rapidly than average wholesale prices.
The wholesale electricity prices are higher in the evening because electricity demand is higher during that time. Demand is higher partly because solar exports decline as there is less sunlight.
The chart below shows how wholesale electricity prices are low during the day, when solar exports happen, but higher at night.
Figure: Average solar weighted wholesale prices and solar exports over the day
Why the minimum feed-in tariffs are lower than retail electricity tariffs
The minimum feed-in tariff is a payment you receive for generating electricity.
When retailers supply electricity to their customers, they must cover costs including:
- transporting electricity (the poles and wires connecting customers to electricity generators)
- 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)
- the ‘spot price’ of energy in the national energy market paid to generators
- hedging costs to provide a guaranteed price to their customers
- complying with environmental programs.
These additional costs mean the minimum feed-in tariff will always be lower than the retail electricity tariff.
Also, the retail price of electricity covers the cost of supplying energy at all times of the day. Because retailers must supply energy 24 hours a day, they must also pay for high-cost electricity during the night (when wholesale electricity prices are higher). On the other hand, solar exports happen during the day, when wholesale electricity prices are at their lowest. This is part of the reason why the feed-in tariffs are lower than those for retail prices.
How we calculate the minimum feed-in tariffs
Legislation controls how we regulate the minimum feed-in tariffs. The costs we must include are set out in the Electricity Industry Act 2000. By no later than 28 February each year, we must set the minimum feed-in tariffs to apply for the next financial year.
We calculate the minimum feed-in tariffs by forecasting the wholesale price of electricity for the year ahead. This has the following affect on the minimum feed-in tariffs:
- The forecast includes wholesale electricity market information available up to the time of the decision. This means that for each decision effective from 1 July, the forecast wholesale prices are based on market information up to February of that year.
- Any changes in the wholesale electricity market after the publication of the final decision are reflected in the next decision. This means any changes in the wholesale electricity market after the final decision will be incorporated in the wholesale electricity price forecasts for the feed-in tariffs for 1 July of the next financial year.
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 of the feed-in tariffs, 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.
- environmental and social benefits of renewable energy: the value associated with reducing greenhouse gas emissions when energy is produced by solar customers. It is currently set at 2.5 cents per kilowatt hour (c/kWh).
For more information about our methodology and review process for the 2024–25 minimum feed-in tariff, see our final decision paper.
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