In February 2022 we completed our review of the 2022-23 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 2022-23
Draft decision released2 December 2021
Consultation closed10 January 2022
Final decision24 February 2022
We have completed our annual review of the minimum feed-in tariffs that your energy company pays you for power you export to the grid via sources including solar panels.
From 1 July 2022, retailers will continue to be able to offer solar system owners a single rate feed-in tariff, a time-varying feed-in tariff or both.
Our final decision
Retailers can offer solar customers the minimum flat feed-in tariff and/or the time-varying feed-in tariffs for electricity exported to the grid. The table below shows the minimum feed-in tariffs to apply from 1 July 2022.
Weekdays: 7am-3pm, 9pm-10pm
The inputs to the minimum feed-in tariff model have been updated since we released the draft decision in December 2021 but the outputs are unchanged. This reflects the most recent data available to us at the time of our final decision. Compared to our draft decision, wholesale electricity price forecasts increased very slightly, but these were offset by reduced transmission and distribution losses.
Read our media release on the final decision.
The flat rate minimum feed-in tariff will be 5.2 cents per kilowatt hour from 1 July 2022
If you are on a flat feed-in tariff a single rate applies to your exports, regardless of the time of day or day of the week.
The time-varying minimum feed-in tariffs will range from 5 to 7.1 cents per kilowatt hour from 1 July 2022
Under a time-varying feed-in structure, customers are credited between 5 and 7.1 cents per kilowatt hour of electricity exports, depending on the time of day and day of the week.
Wholesale electricity prices for 2022-23 are forecast to be lower
The final minimum flat feed-in tariff of 5.2 cents per kilowatt hour is 22 per cent lower than the current tariff of 6.7 cents per kilowatt hour. The final minimum time-varying feed-in tariffs are also lower than the current tariffs.
The main driver of the lower minimum feed-in tariffs is lower forecast wholesale electricity prices during daylight hours for 2022-23.
Read our final decision
Feedback from stakeholders
We sought stakeholder feedback on our draft decision throughout the review. Submissions closed on 10 January 2022.
Submissions can be viewed in the resources tab of this page.
We considered stakeholders' feedback in reaching our final decision. Submissions and engagement events have been summarised below in our Public Engagement Summary.
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 most 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.
The chart below shows how the wholesale electricity price and the minimum feed-in tariff have changed since 2015.
|Wholesale electricity prices||Minimum feed-in tariffs|
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.
More information about the feed-in tariff
Submissions on our draft decision
In line with our submissions policy all confidential submissions are not publicly available.
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.
You can view a recording of the information session on YouTube or read a summary of the questions and answers below.