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What You Should Know About Feed-in Tariffs

Do you know how much surplus electricity you are sending back to the grid and whether or not it’s actually saving you money on your electricity bill? There have been some recent changes to the minimum feed-in tariff in Victoria so we thought it would be a good time to give you a refresher on the topic and explain how this may affect you and your electricity bill over the next year.

Back to basics: What is a feed-in tariff? A feed-in tariff is a payment you receive from your energy company for the surplus electricity that your solar panels generate. This would be shown on your electricity bill as “solar feed-in”.

When your solar does not produce any excess energy by the end of the day, no solar is exported as this means your household has consumed more energy than what your solar panels have generated.

Although, regardless of whether or not you are left with excess energy to send back to the grid, it’s worth noting that the best way to maximise your solar output is by optimising how you use it.

The benefits of optimising your energy usage are often ignored by most solar homeowners and that’s why we have a dedicated blog on this topic, “How to Best Utilise Your Solar” [link].

Who and what determines the minimum feed-in tariff every year?

Victoria’s Essential Services Commission reviews the minimum feed-in tariff and is meant to reflect the value that solar customers provide to the energy market.

The Electricity Industry Act 2000 sets out that in setting the minimum feed-in tariffs, the Essential Services Commission must consider:

  • prices in the wholesale electricity market,

  • avoided transmission and distribution losses, and

  • the social cost of carbon and human health costs.

What’s the latest change?

As of the 1st of July 2022, the minimum flat rate feed-in tariff will be 5.2 cents per kWh. That is a 22% decrease compared to 2021–22. The minimum time-varying feed-in tariffs will range from 5.0 to 7.1 cents per kWh.

Retailers may offer different packages, each with their own terms and conditions. It’s extremely important to check the fine print and speak to us if there’s anything that you may be unsure of.

How has the feed-in tariff changed over time?

The feed-in tariff has developed significantly since it started in 2008.

For example, if you applied to have a solar system installed on your rooftop back in 2009-2011 you would be enjoying a high feed-in tariff of 60 cents per kWh until 2024.

Even though the current minimum rate is considered to be much lower, we encourage all solar owners to shop around because some retailers offer feed-in tariffs higher than what is set by the Essential Services Commission

Will a higher feed-in tariff rate save me more money? No, not necessarily. It is important to look at more than just the feed-in tariff when deciding on an electricity plan and here’s why.

Some plans which offer higher feed-in tariffs may have less competitive prices for the electricity you consume from the grid, and this may outweigh the benefit received from a higher feed-in tariff. You should consider your energy consumption and generation as a whole when you choose an electricity plan: including your patterns of use, the rates you pay for the electricity you use and the electricity you export

It is also worth noting that you should be extra careful when directly comparing feed-in tariffs among energy retailers. Some companies also offer a higher feed-in tariff until a certain threshold of energy is exported, then once this is reached the feed-in tariff is then massively reduced.

Solar feed-in tariffs can be a complicated topic so whether you are either not getting the energy savings you expected or are having trouble understanding your electricity bill, it’s highly recommended that you speak to a professional. We’re with you all the way to make sure you’re obtaining the most value for money from your investment. Get in touch with us today by submitting an enquiry here or simply call our team directly at 1800 765 237 for a free phone diagnosis.

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