The Victorian feed-in tariff currently offers a minimum of 11.3 cents per kilowatt hour for excess electricity fed back into the grid. All electricity retailers with more than 5,000 customers must offer at least this minimum rate, but they may offer different packages and terms and conditions.
From 1 July 2017, solar customers on the previous minimum feed-in tariff rate of five cents per kilowatt hour moved to a new minimum tariff rate of 11.3 cents, as set by Victoria's independent regulator, the Essential Services Commission (ESC), on 28 February 2017. This new tariff follows changes the government has implemented to the current feed-in tariff framework. The new tariff better reflects the true energy value of the electricity customers provide to the grid, and the value of avoided greenhouse gas emissions.
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. This rate is determined by the ESC. More information on this rate can be found on the ESC website.
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 will 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 transitioned to the current minimum feed-in tariff rate of five cents per kilowatt hour for excess electricity fed back into the grid. This rate changed to 11.3 cents on 1 July 2017.