Minimum Feed-in Tariff Review For Victorians 2024-25

Introduction

Switching to solar panels in Victoria offers cost savings by reducing grid energy usage and promoting environmentally friendly energy. The 2024-25 minimum feed-in tariff review for residents is causing some commotion, especially regarding the feed-in tariff incentive.

While the compensation for surplus energy sold back to the grid has decreased, solar panel system owners in Australia can still accrue credits on their bills for the excess energy they generate.

But first, let’s understand what feed-in tariffs are.

So, What are Feed-in Tariffs?

• A feed-in tariff (FiT) is a compensation for contributing surplus electricity generated by your solar panels back to the electricity grid. It is also known as a buy-back rate, representing a fixed payment for each unit of electricity (kilowatt-hour) returned.
• This payment is credited on your bills. If you have solar panels and meet the criteria, you are eligible to receive a solar FiT as part of our electricity plans.
• It's important to note that the terms and conditions for your solar and regular electricity rates may differ. In the event of any changes to the solar rate, we will notify you in advance before it impacts your arrangement.
• In Australia, feed-in tariffs reward individuals generating electricity from solar panels, also referred to as solar photovoltaic (PV) systems.
• These payments are part of state-level initiatives designed to encourage and boost the adoption of renewable energy in Australia.
• In Australia, these programs align with the national target for mandatory renewable energy, emphasising support for solar PV, particularly in residential settings.
• Due to capacity limits, support is not extended to large projects like wind farms or solar thermal stations in Australia.

Feed-in Tariff in Victoria

In Victoria, electricity companies with over 5,000 customers must offer an introductory rate for solar energy sent back to the grid.

Some companies may exceed the minimum rate. Rates can be either constant throughout the day (single rate) or vary based on the time of day (time-varying).

Companies can choose to offer either one or both types.

Single/Flat Rate

This rate applies to electricity sent back to the grid at any time of the day and is the most common option.

On February 24, 2022, Victoria's Essential Services Commission set the minimum rate for sending back solar energy from July 1, 2022, at 5.2 cents per kilowatt-hour. On February 27, 2023, they established a minimum rate of 4.9 cents per kilowatt-hour for the period starting July 1, 2023.

Time-Varying Rates

In Victoria, electricity companies may offer variable rates based on the timing of sending solar electricity back to the grid.

Older & Higher Solar Rates in Victoria

If you applied for rooftop solar panels in Victoria from late 2009 to the end of 2011, you could receive a high rate of 60 cents per kilowatt-hour until late 2024.

Applicants in 2012 received a 25-cent rate until December 31, 2016, and then transitioned to the same buyback rates as other solar users from January 1, 2017.

Keeping the Rate High

In Victoria, residents with a high solar rate can upgrade panels or inverters, maintaining the rate if system capacity doesn't increase during renovations. However, the special rate doesn't move with you if you relocate; it stays with the house and transfers to the new owner upon sale.

Minimum Feed-in Tariffs Proposed for 2024-25

The table below shows the proposed minimum feed-in tariffs for 2024–25.

Wholesale Prices to Decline

Forecasts indicate a drop in 2024-25 wholesale electricity prices, primarily during daylight hours, attributed to increased solar panel installations. This surge has lowered demand, increasing supply and reducing prices during peak solar export times.

Although overnight and early evening tariffs are higher, they are expected to decrease, aligning with an overall forecast of lower wholesale prices throughout the day.

How We Calculate the Minimum Feed-in Tariff

The smallest payment for exported energy is determined by rules in the Electricity Industry Act of 2000, with the rates set before the end of February each year.

Here’s how it works:

• 1. Our estimate considers wholesale electricity market data until February for decisions starting from July 1.
• 2. Changes in the electricity market after the Essential Services Commission's decision in one year influence our decisions for the following year.
• 3. Solar panels generate power at specific times of the day, and we only consider the estimated electricity price during these 'solar hours.'

Any post-final decision changes will be factored into the electricity price estimates for small payments starting from July 1 of the next financial year.

Also,

• Money is saved by not sending power over long distances.
• Companies typically pay savings on charges when getting energy from regular sources.
• The positive environmental impact of solar energy, such as reducing greenhouse gases, is valued at 2.5 cents per kilowatt-hour.

Source - https://www.esc.vic.gov.au/electricity-and-gas/electricity-and-gas-tariffs-and-benchmarks/minimum-feed-tariff

[Disclaimer: The blog post is for informational purposes only and should not be considered professional advice. For accurate and up-to-date information on renewable energy, refer to reputable sources and consult with experts in the field.]

Please don’t hesitate to contact Betta Value Renewable Energy if you have any questions about this topic.