Feed in Tariffs offer you a defined value for the energy you generate from your solar system and are a frequently used mechanism to incentivise the use of solar power around the world.
In Australia solar system owners have benefitted from a variety of Feed In Tariffs which are defined and managed by State Governments who are responsible for energy policy and rules in each State, and define what electricity Retailers can and can’t offer, although increasingly when it comes to solar Feed In Tariff’s, this is left to the market to decide. In some cases the FIT’s are mandatory and in some cases they are voluntary.
It is important to understand that these policies are State based and as an incentive mechanism they can and do vary over time. The duration, value, rules and conditions vary.
In 2013, most State based Feed In Tariff policies distinguish the value of energy you generate between;
• Solar energy generated while you are consuming energy (off-set energy)
• Solar energy generated while you are not consuming energy (exported energy)
Currently in all States, you can receive the same value for self-consumption as what you pay for electricity. Therefore, if you are generating (say) 1000W of solar energy and using 1000W of energy, at (say) $0.24c kWh, you will offset the energy cost of $0.24c kWh with your solar system.
This is also sometimes called “net billing” because you net-off the generation against the cost. However, if you are generating (say) 1000W of solar energy and using 0W of energy then you will be exporting your solar energy and the rate you get varies considerably by State, although in most cases you will get around $0.08c kWh for this exported energy.
The Northern Territory, Tasmania and the Australian Capital Territory are the only States which currently offer the same rate irrespective of whether you are self-consuming or exporting – sometimes called “1 for 1”. In these cases, irrespective of how much energy you are consuming, you will receive the same rate which normally applies for energy you use.
This is an important aspect which ultimately determines the economic outcome of owning a solar system and what the ideal size of a system should be in your individual case. Good solar designers should offer a detailed analysis of what they expect your particular self-consumption to export ration to be, and what your economic outcome will be.
These offers also vary from electricity retailer to electricity retailer and change over time, so it is important to be 100% clear what offers are available at the time you are considering solar. The table below provides an indicative guide to the value you will receive under the different State schemes and a variety of self-consumption and export ratio’s, however, it is vital that you get up to date advice at the time you are ready to proceed, from your solar supplier and electricity retailer.
Feed in Tariff’s are an important mechanism to help provide a fair value for electricity generated and exported by solar systems. Whether they remain in place and at what value is an issue currently being considered and debated at a Federal and State level and more changes are quite likely in the future. Their importance and relevance is linked to the economic proposition for solar and power and the willingness and ability of Governments to support solar power.
From the industry’s perspective, Feed In tariffs are considered an excellent way to help consumers get a reasonable return on their purchase cost and thus help the industry to grow and reduce costs.