This week, our 'explainer' series will address commonly asked questions on the feed-in tariff decision.
Last year the feed-in tariff was 10.2 cents per kWh, now it’s 6.7 cents. Why is the feed-in tariff going down this year?
The feed-in tariff changes each year because we calculate the value of solar energy based mostly on the energy market’s (ASXEnergy) 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.
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’.
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.