In February 2021 we completed our review of the 2021-22 minimum feed-in tariffs. Energy retailers must pay you at least the minimum for power you export to the grid from small renewable energy sources including solar panels.
Minimum feed-in tariff review 2021-22
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Draft decision released17 November 2020
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Consultation closed8 January 2021
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Final decision25 February 2021
Overview
Read our final decision
In February 2021 we completed our review of the 2021-22 minimum feed-in tariffs. Energy retailers must pay you at least the minimum for power you export to the grid from small renewable energy sources including solar panels.
View more information about the minimum feed-in tariff and how it affects you.
Minimum feed-in tariffs that apply from 1 July 2021
Retailers can offer solar customers a flat feed-in tariff and/or time-varying feed-in tariffs for electricity exported to the grid. The table below shows the minimum feed-in tariffs that apply from 1 July 2021.
Retailers may offer feed-in tariffs higher than the minimum.
|
Flat FiT rate |
Time-varying FiT rates (cents per kWh) |
||
|---|---|---|---|
|
All times |
Off peak Weekdays: 10 pm to 7 am Weekends: 10 pm to 7 am |
Shoulder Weekdays: 7 am to 3 pm, 9 pm to 10 pm Weekends: 7 am to 10 pm |
Peak Weekdays: 3 pm to 9 pm Weekends: n/a |
|
6.7 |
6.7 |
6.1 |
10.9 |
Key facts about the 2021–22 tariff
Wholesale electricity prices for 2021-22 are forecast to be lower
The 2021-22 minimum single feed-in tariff of 6.7 cents per kilowatt hour is 34 per cent lower than the 2020-21 feed-in tariff of 10.2 cents per kilowatt hour. The 2021-22 minimum time-varying feed-in tariffs are also lower than the 2020-21 time-varying feed-in tariffs.
The decrease in minimum feed-in tariffs is mainly due to recent decreases in wholesale electricity prices that are expected to continue into 2021-22.
Customer notification of tariff changes has improved
Since 1 June 2021, retailers must notify their solar customers of annual feed-in tariff rate changes at least five business days before the changes happen. This gives solar customers certainty they will be told about changes to the minimum feed-in tariff before they happen.
Feedback from stakeholders
We consulted with a range of stakeholders throughout our review. We considered stakeholders' feedback in reaching our final decision.
View a full list of submissions in the Resources tab of this page. You can also view questions raised by stakeholders, and our responses, on Engage Victoria.
You can view recordings of our public forum and a question and answer session on YouTube.
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 electricity 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.
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 retail electricity tariffs will always be higher than the minimum feed-in tariffs.
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 starting 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 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.
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