Feed-in Tariffs in Victoria - Frequently asked questions

What is a feed-in tariff?
How will feed-in tariffs work in Victoria?
When will the premium feed-in tariff start?
Over what time period do feed-in tariff run?
A solar salesman is telling me that I must purchase a system now as the premium scheme is close to reaching the state-wide cap and I may miss out on the premium solar feed-in tariff. How will I know if my system, that may take up to 3 or 4 months to order and install, will still be eligible?
Who is eligible for the premium rate?
What sized solar system do I need to be eligible?
I have a solar-wind hybrid system. Am I eligible for the premium solar feed-in tariff?
How is excess electricity fed to the grid measured?
I currently have off-peak metering. Will this be impacted if I install a solar PV system?
How much energy does an average system generate? How much will I get back?
How is the premium tariff credited to customers?
Why does the feed in tariff operate with a credit system?
What will the premium feed-in tariff mean for payback periods?
Why can’t systems bigger than 5 kilowatts receive the premium feed-in tariff?
How will smart meters help me access the feed-in tariff?
What is meant by ‘net tariff’?
Why was a net tariff model chosen in Victoria?
How is the Victorian government ensuring support for solar PV, while protecting low income members of our community?
What else are the State and Federal Governments doing to support the development of small scale solar?
How much does Victoria invest in renewable energy?
What other assistance is available for households who want to do their bit to tackle climate change?
How will this system encourage solar technologies and investment in this state?
Do household solar PV systems reduce the frequency/impact of blackouts?
Will my small business or community group be able to receive the premium feed-in tariff?

What is a feed-in tariff?
A feed-in tariff is a payment to households, community organisations and small businesses from power companies for electricity that is ‘fed into’ the power grid. Customers that install small-scale renewable energy systems can sometimes produce more energy than they can use. If connected to the power grid, these customers can feed this electricity back into the grid.

How will feed-in tariffs work in Victoria?
Victoria has both standard and premium feed-in tariffs for people with small scale renewable generation systems that feed power into the electricity grid. The payment that a customer receives will depend on the type of renewable energy that they are generating, the size of the system and their own electricity consumption.

The premium feed-in tariff is available for households, as well as community organisations and small businesses with energy consumption of less than 100 MWh a year, and with small-scale solar photovoltaic (PV) systems with a capacity of up to 5 kilowatts. The premium rate is fixed at a minimum of 60c per kilowatt hour and is paid for the excess power that the customer does not use and instead feeds back into the grid. This premium rate is over three times higher than the standard retail rate consumers pay for electricity.

The standard feed-in tariff is available for people producing power for their homes or small businesses using renewable energy systems with a capacity of up to 100 kilowatts. This includes people generating their own wind, solar, hydro or biomass power. The excess power fed back into the grid is credited at the same retail rate charged for electricity consumed.

When will the premium feed-in tariff start?
The premium feed-in tariff for small-scale solar photovoltaic (PV) systems is available from 1 November 2009.

The standard feed-in tariff for solar and other forms of renewable energy has been available since 2008.

Over what time period do feed-in tariffs run?
The premium feed-in tariff scheme will run for 15 years from its start date (1 November 2009). There is an overall state-wide cap of 100MW. Once generation capacity installed under the scheme has reached this cap, the scheme will be closed to new applicants.

The standard feed-in tariff does not have a time limit – it is ongoing.

A solar salesman is telling me that I must purchase a system now as the premium scheme is close to reaching the state-wide cap and I may miss out on the premium solar feed-in tariff. How will I know if my system, that may take up to 3 or 4 months to order and install, will still be eligible?

A lot of people may be feeling pressured to ‘buy now’ or put a deposit down on a solar PV system fearing they may miss out on the new solar premium feed-in tariff due to the state-wide cap of 100 megawatts (MW) of generation capacity.

The Department of Primary Industries (DPI) will request updates from electricity distributors on a regular basis, and will publish the level of generation capacity accumulated under the scheme. Once the scheme is getting close to the 100MW state-wide cap, DPI will advise the Minister on giving effect to the current legislative requirement to close the scheme to new applicants.

DPI urges consumers to do their homework, both in choosing an electricity retailer and in considering which solar PV system will best meet their needs. We also recommend you shop around for quotes from different solar installers. A list of accredited installers of solar PV systems is available at www.cleanenergycouncil.org.au (external link).

Who is eligible for the premium rate?
Residential homes, community organisations and small businesses across Victoria with solar PV systems of up to a 5 kilowatt capacity, who are connected to the power grid and who have the required metering, are eligible for the premium tariff.

The premium solar feed-in tariff can only be claimed for one solar PV system per site.

Where the customer is a residential customer, the solar PV system must be installed at their principal place of residence.

Where the customer is a small business or community organisation, their annual electricity consumption must be 100 Megawatt hours or less. For small business and community organisations operating across multiple sites, the premium rate can be claimed once for each site, as long as the other eligibility criteria are met. The 100 MWh consumption limit applies to the relevant connection point at each site.

The scheme has a state-wide cap of 100 MW of installed generation. This could potentially see 100,000 households with 1 kW systems benefit from the scheme.

As of September 2009 there were 10,470 grid connected solar panel systems installed in Victoria.

What sized solar system do I need to be eligible?
Solar PV systems of up to 5 kilowatts capacity and who are connected to the electricity grid will be eligible for the premium feed-in tariff.

I have a solar-wind hybrid system. Am I eligible for the premium solar feed-in tariff?
No. The premium solar feed-in tariff is available for solar PV systems (of up to 5 kilowatts capacity) only, not for hybrid systems using a mix of technologies. You may, however, be eligible to receive a standard "one-for-one" offer which is available for wind, solar, hydro and biomass systems of up to 100 kilowatts capacity.

How is excess electricity fed to the grid measured?
To access feed-in tariffs you will need a new meter that is capable of recording the electricity used and exported for each half hour interval during the day. This means that if, during any part of any half hour period, your PV system is generating more power than you are using, you will get the premium feed-in tariff for the electricity exported to the grid.

Overall a household would generally use more electricity than it produces from solar PV cells. However a household is likely to export some electricity into the grid at some times of the day and will therefore be paid the premium feed-in tariff for these exported volumes.

The amount of electricity exported from solar panels for community groups and small business depends on their electricity usage patterns.

When you receive a new “smart meter” as part of the Government's separate advanced metering infrastructure rollout program, this meter will be fully capable of supporting feed-in tariff payments.

I currently have off-peak metering. Will this be impacted if I install a solar PV system?
If you currently have two meters, one of which is dedicated to hot water or space heating and is charged at an off-peak rate, these meters, for feed-in tariff purposes, will generally need to be replaced by a single new interval meter. An interval meter allows for half hourly readings of electricity exported to and imported from the grid, and is a prerequisite for any customers wishing to connect their solar PV system to the grid and benefit from either a standard or premium feed-in tariff offer.

This also means that you will most likely move from a dedicated off-peak tariff to a comparable time-of-use (TOU) tariff. A time-of-use tariff allows for different rates to be applied depending on the time of day at which electricity is consumed. While this time-of-use rate may not be exactly the same as the off-peak rate, it has the advantage that it applies (at the relevant off-peak times) to all appliances within the home, not just the hot water or space heating.

Check with your electricity retailer before installing solar PV panels to see whether this could impact on your current rates.

How much energy does an average system generate? How much will I get back?
In Victoria, an average residential solar electricity system (1.5 kilowatts in size) produces over 2,000 kilowatt hours of energy per year. Even if only 500 kilowatt hours were returned to the grid per year, the owner would be eligible to receive feed-in payments of $300 per annum. The system would also be reducing the amount of electricity consumed in the owner’s household by 1,500 kilowatt hours per year, saving about $300. So in total, these solar households would be about $600 better off per year.

The amount a household returns to the grid will depend on how much energy is consumed and when the solar panels are generating power. Owners will be able to maximise the credit from their solar system by improving their energy efficiency and returning more power to the grid.

For example, people can switch off appliances which aren’t needed, shift some tasks to the evening, shade windows to minimise the need for air-conditioning and so on. For more advice on ways to save energy go to www.saveenergy.vic.gov.au (external link).

The amount of electricity exported, and thus the amount of feed-in tariff received from solar panels for community groups and small business depends on the electricity usage pattern at those premises.

How is the premium tariff paid to customers?
Electricity retailers can choose to offer the feed-in tariff as a direct payment or as a credit to electricity bills, with any one bill credit accruing for a maximum of 12 months.

A household installing an average sized system (1.5 kilowatt) is expected to receive credits of around $300 per year as well as reduce their own energy consumption by another $300. This will effectively halve an average annual power bill which is currently around $1200.

Why does the feed in tariff operate with a credit system?
Electricity retailers can choose to offer the feed-in tariff as a direct payment or as a credit to your electricity bill. The Victorian Government cannot oblige electricity retailers to offer it as direct payment, as it is contrary to the Commonwealth Constitution.

Consumers should ask each electricity retailer if they will offer the feed-in tariff as a direct payment or as credits, and also check what happens to any accrued credits if you wish to change electricity retailer.

The average household electricity bill is around $1,200 per year and the average benefit to households from a solar PV system will be around $600 per year – so in practice most households will use the credits within a 12 month period.

What will the premium feed-in tariff mean for payback periods?
Currently, the financial payback period (15+ years) on solar panels, in terms of the need to purchase less electricity from the grid, is one of the main obstacles to increasing take up. The Victorian premium feed-in tariff will reduce the payback period, making installing solar panels more affordable for households, community groups and small businesses.

In addition, consumers may be able to access the Federal Government’s Solar Credits program. Solar Credits have a multiplier effect on the value of Renewable Energy Certificates (RECs). For further information on this scheme, please refer to: www.orer.gov.au (external link)

Why can’t systems bigger than 5 kilowatts receive the premium feed-in tariff?
Victoria’s feed-in tariff is designed to support the community access solar PV systems and help reduce our carbon footprint.

The average size of residential PV systems is 1.5 kilowatts and over 99 per cent of currently installed PV systems are at or below 5 kilowatts. Choosing a 5 kilowatt capacity threshold means that most small electricity consumers will be able to benefit from suitably-sized solar PV systems under the premium feed-in tariff. Solar PV systems that exceed the 5 kilowatt threshold will remain eligible for the standard feed-in tariff, which offers a payment equivalent to the retail rate charged to consumers. These systems can also create valuable renewable energy certificates under the national Renewable Energy Target (visit www.environment.gov.au/rebates (external link)).

How will smart meters help me access the feed-in tariff?
Over the next four years, every Victorian home and small business will have their current meter upgraded to a smart meter – which will fully support feed-in tariffs, as they will be able to measure electricity usage every half hour and record both power being used and power being sent to the grid.

What is meant by ‘net tariff’?
A ‘net’ feed-in tariff provides households, community organisations and small businesses with a payment for the excess generated electricity that is not used by the customer, and which is instead, fed back into the electricity grid.

A net metering model is an equitable and cost effective way to make solar PV more affordable for Victorians; helping households, community organisations and small businesses to make a contribution to tackling climate change.

Why was a net tariff model chosen in Victoria?
A net feed-in tariff is an equitable and cost effective way to achieve the scheme’s objectives because:

• it encourages people to better manage their electricity usage – especially at times of peak load such as hot summer days;
• it does not require national agreement in order to be implemented; and
• it does not place a disproportionate and unfair cost burden on low income earners.

• The premium feed-in tariff is an important part of a suite of actions the Victorian Government is taking to ensure that solar energy is a key part of Victoria’s energy future. The Government:
• is encouraging small-scale applications of solar in households, small business and the community (premium feed-in tariff, standard feed-in tariff, solar hot water rebates, Solar in Schools Initiative)
• is investing in new solar technologies to bring down their costs and make them commercial (a $6 million grant to develop and increase the efficiency of organic solar cells as an alternative to silicon based cells in the generation of solar power)
• has committed $100 million to develop a solar energy generator capable of producing enough power to supply 50,000 homes. Equal or greater funding is expected from the Commonwealth Government's Solar Flagship Program, and further investment from the private sector
• is providing $72 million to support large-scale demonstrations of leading sustainable energy technologies in Victoria
• is collaborating with the Queensland state government to develop a solar atlas which will provide an important tool to help promote Victoria's solar generation potential both here and overseas
• is creating a market for large-scale solar generation (Victorian Renewable Energy Target, support for a national emissions trading scheme and national renewable energy target).

• The Commonwealth’s expanded Mandatory Renewable Energy Target, under which the PV system earns Renewable Energy Certificates;
• The National Solar Schools Plan which allows any school in Australia to apply for grants of up to $50,000 to install 2 kilowatt solar panels;
• Support of Solar Cities trials around Australia, which includes support for installation of solar PV systems; and
• Green Loans, which will provide low interest loans of up to $10,000 for households to undertake energy measures, including installation of PV panels.

• Victoria’s standard feed-in tariff is available for all small renewable energy systems up to 100 kilowatts, at a rate that is equivalent to the retail rate for electricity,
• The Victorian Energy Saver Incentive will help families reduce greenhouse gas emissions and cut their power bills. This program sets a target for energy savings, initially in the residential sector, and requires energy retailers to each meet a target through supporting household energy efficiency activities. These include providing households with energy saving products and services at little or no cost. The first phase will save 8.1 million tonnes of greenhouse gas – the equivalent of around 675,000 households going carbon neutral for a year. For further information go to www.saveenergy.vic.gov.au (external link)
• A Victorian Government rebate is available to assist households in Melbourne and regional Victoria to install solar hot water systems. For more information go to www.resourcesmart.vic.gov.au (external link)
• GreenPower is a national government accreditation program for renewable energy. It is bought by the energy provider on the customer’s behalf. Renewable energy is generated from sources like mini hydro, wind power and biomass which produce no net greenhouse gas emissions. When customers choose to buy a GreenPower product, the few cents extra paid in addition to electricity costs are invested in the renewable energy sector. On a per capita basis, Victoria has the most number of GreenPower customers in Australia, accounting for some 28% of national sales in 2008. For further information see www.greenpower.gov.au (external link).