Changes and cuts to Victorian solar feed-in tariffs

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Victorian solar power customers can expect sweeping changes to feed-in tariffs (FiTs) from July 2018.

The Essential Services Commission (ESC) – Victoria’s chief energy policy regulator – has released its final decision on solar feed-in tariffs. In its decision, the commission has set two feed-in tariffs, of which retailers must offer at least one. They are a standard single-rate FiT and a new time-varying FiT.

Single-rate feed-in tariff

The single-rate FiT is what most Victorians are on. It means you get paid the same amount for your solar power regardless of the time of day. At the moment, the current minimum FiT in Victoria is 11.3c/kWh, however, the ESC has decided to reduce this to 9.9c/kWh – representing a 1.4c reduction. ESC says this reduction is caused by daytime electricity prices falling relative to prices during the evening peak period. Essentially the price reduction is because solar only produces electricity through the day, rather than at night when it’s needed most.

Time-varying feed-in tariff

Time-varying feed-in tariffs work similarly to electricity time-of-use tariffs. Essentially, the rate that you receive for exporting solar power to the grid depends on the time of day. The tariff is broken into three periods, peak, off-peak and shoulder. Peak hours are between 3pm and 9pm weekdays when electricity is in high demand. In this period, customers receive a whopping 29c/kWh. The off-peak period applies all week from 10pm to 7am. You will receive a minimum 7.1c/kWh for electricity exported in this period. In between off-peak and peak is what’s called a “shoulder” period. This is from 7am to 3pm and 9pm to 10pm weekdays, and 7am to 10pm weekends. Most solar power will be exported in these hours and customers receive a modest 10.3c/kWh.

How will this affect my power bill?

At the moment, Victorians receive a minimum single-rate FiT of 11.3c/kWh – the highest mandated FiT in the country. The reduction of the single-rate FiT will certainly sting for Victorian solar households, but keep in mind the new rate of 9.9c/kWh is only a minimum standard. Some smaller retailers like Diamond Energy and Globird Energy usually offer FiTs well above the minimum.

It is likely that most retailers will offer both the traditional single-rate FiT and the new time-varying FiT. But it is unclear whether the time-varying FiT will be better or worse as it almost exclusively depends on when your home receives sunlight – something that is out of your control. If you have access to a solar monitoring technology, then be sure to use it to see how much solar power your panels are generating and when, and use this information to optimise your tariff. If you’re concerned about changes to your FiT, be sure to compare electricity companies to get the best price for your solar power.

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