The current feed-in tariff scheme aims to fairly compensate customers for the excess power they export to the electricity grid.
Feed-in tariff rates are set annually by the Essential Services Commission (ESC). In 2017, following an ESC review, the government implemented reforms to feed-in tariff arrangements. These reforms allowed the ESC to determine a single feed-in tariff rate or multiple feed-in tariff rates, and recognise the environmental and social value of distributed generation, including solar generation. Consequently, on 1 July 2017, around 130,000 households on the minimum feed-in tariff were provided new rates that were more than double the previous rate.
The ESC applied these criteria again to set the 2019-20 minimum feed-in tariffs. From 1 July 2019, customers on the current minimum feed-in tariff have been receiving a single-rate minimum feed-in tariff or a time-varying feed-in tariff. Electricity retailers may offer one or both of these feed-in tariffs to customers. The new single-rate minimum feed-in tariff is set at 12 cents per kilowatt hour (c/kWh), which is higher than the rate for 2018-19 (9.9 c/kWh).
From 1 July 2019, customers on the time-varying tariff have been receiving an increased off-peak rate of 9.9 c/kWh, an increased shoulder rate of 11.6 c/kWh and a significantly reduced peak rate of 14.6 c/kWh compared with the respective 2018-19 rates. This time-varying tariff may encourage customers to export more power into the grid when demand for electricity is higher, and may improve the business case for customers considering adding small energy storage devices. More information about time-varying feed-in tariffs can be found on the ESC website.
For minimum feed-in tariffs set over the 2019-20 financial year, the ESC has used a futures market approach to forecast wholesale prices that underpin the feed-in tariff rates, offering stakeholders a more transparent price that aligns with the method adopted by other regulators. According to the ESC, a possible explanation for the significant reduction of the peak rate under the time-varying feed-in tariff for 2019-20 is the moderation of high wholesale prices by increased generation capacity and demand management actions.
Customers on the Transitional Feed-in Tariff and Standard Feed-in Tariff schemes, which expired on 31 December 2016, are also eligible for the new minimum feed-in tariffs.
The feed-in tariff is available to solar and other eligible forms of renewable energy, such as wind, hydro or biomass, with a system size less than 100 kilowatts.
Ensuring Victorian feed-in tariff customers get fair value
On 7 February 2017, the Energy Legislation Amendment (Feed-in Tariffs and Improving Safety and Markets) Bill (the ELA Bill) passed through Parliament.
The ELA Bill amended to the Electricity Industry Act 2000 (the Act) to allow Victoria's independent regulator, the Essential Services Commission (ESC) to determine a single rate or multiple rates for purchases of small renewable energy generation electricity, and to have regard to the avoided social cost of carbon and the avoided human health costs attributable to a reduction in air pollution.
The amendments also moved the setting of feed-in tariffs from a calendar year to a financial year, commencing on 1 July 2017, requiring the ESC to make its final minimum rate determination no later than 28 February of each year.
The changes to the Act ensure that from 1 July 2017, solar customers have access to new rate(s) which better reflect the true energy value of the electricity they export into the grid.
Households on the Premium Feed-in Tariff (PFiT), who currently receive 60 cents per kilowatt-hour, will have no change to their existing arrangements, as this tariff remains in place until 2024. The PFiT closed to new applicants at the end of 2011.
The Electricity Industry Act 2000 was changed in February 2017 to implement findings from the ESC's inquiry into the true energy value of distributed generation.
The ESC's inquiry was completed in two stages. Stage 1 addressed the energy value of distributed generation looking at the wholesale market, environmental and social value. Stage 2 addressed the network value of distributed generation and the extent to which investment in local distributed generation can assist in avoiding costs of investment in the poles and wires network.
In August 2016, the ESC released its Final Report on the Energy Value of Distributed Generation (Stage 1), which made a number of recommendations on the design of feed-in tariff arrangements in Victoria.
The government's response supported a number of findings from this report. These included:
- the introduction of time-of-use feed-in tariffs that align with the time blocks operating for flexible retail prices (peak, shoulder and off-peak);
- the addition of a payment to recognise the environmental and social value of distributed generation; and
- moving the setting of feed-in tariffs from a 'calendar year' to a 'financial year', commencing on 1 July 2017.
To view the ESC's Stage 1 report, visit the ESC website
Stage 2 of the ESC's inquiry into the network value of distributed generation completed in March 2017 with the release of its Network Value of Distributed Generation Inquiry Stage 2 Final Report - Network Value
The ESC’s report included the following key findings:
- distributed generation creates network benefits, primarily by reducing congestion in the electricity network, reducing the need for expensive network upgrades;
- this value is highly variable depending on location, time of generation, capacity of system and the technology used; and
- while the network value of distributed generation is currently modest, new smart technologies and business models are likely to increase opportunities to deliver this benefit in the future.
For more information view the ESC's Stage 2 report
Transitional and standard feed-in tariff schemes ended on 31 December 2016
From 1 January 2017, customers who came off the schemes have been able to access the same market offers for feed-in tariffs that are available to other solar customers. This means that they initially transitioned to the minimum feed-in tariff rate of five cents per kilowatt hour before the rate changed to 11.3 cents on 1 July 2017. Since 1 July 2018, they have been receiving the single-rate feed-in tariff of 9.9 cents per kilowatt hour, or the time-varying tariff.
Page last updated: 06/08/19