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 2018-19 minimum feed-in tariffs. From 1 July 2018, customers on the current minimum feed-in tariff have been receiving either a single-rate minimum feed-in tariff of 9.9 cents per kilowatt hour (c/kWh) or a time-varying feed-in tariff. All electricity retailers with more than 5,000 customers must offer at least one of these tariffs to their customers. Retailers may offer different packages and terms and conditions.
The new single-rate tariff of 9.9 c/kWh is slightly lower than the previous rate for 2017-18 (11.3 c/kWh) because the value of energy at times of the day when solar systems generate power has fallen, due to the growth of solar generation in Victoria and other States.
Under the new time-varying feed-in tariff, the price paid for surplus electricity differs through the day to reflect changes in demand at different times. This new tariff comprises a lower rate during off-peak times, a marginally higher rate during shoulder hours, and a significantly higher rate during peak hours (7.1, 10.3 and 29.0 cents per kilowatt hour, respectively). This may encourage customers to export more power into the grid when demand for electricity is higher. More information about the time-varying feed-in tariff can be found on the ESC minimum feed-in tariff web page.
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.