Victoria solar feed-in tariffs to more than double


Victorian households with solar panels are set to have their power bills slashed from July 1 after the Essential Services Commission moved to increase the minimum feed-in tariff that electricity retailers must pay from 5c/kWh to 11.3c/kWh – an increase of 6.3c/kWh. If you’re not sure what a feed-in tariff is, you can read about it in our solar guide.

The decision to increase the minimum feed-in tariff follows an inquiry from the ESC into the feed-in tariff framework. It cites rising wholesale electricity prices and the environmental benefit as the two key reasons for the dramatic tariff increase, stating that: “Of that increase, 3.8 cents is a result of wholesale market price increases and 2.5 cents is attributable to the avoided social cost of carbon.”

Pursuant to the ESC recommendations, the Victorian government recently passed an amendment to the Electricity Industry Act 2000, which not only increases the minimum feed-in tariff, but also allows the ESC to later introduce multi-rate tariffs. This will mean retailers may be required to supply a time-of-use feed-in tariff, but there’s little more information about this available at this time.

Am I eligible for the increased feed-in tariff?

The new feed-in tariff minimum rate only applies to electricity retailers with more than 5,000 customers, which excludes some smaller retailers. For most electricity customers, however, anyone receiving a feed-in tariff lower than 11.3c/kWh will automatically be lifted to the new set minimum come July 1, 2017.

Customers receiving a large retailer-funded tariff, or households benefitting from a premium 60c/kWh tariff under the Solar Bonus Scheme will not be affected.

What does this mean for non-solar households?

While this news is music to the ears of the 210,000 Victorian households with solar, critics claim that the increased tariff will drive up electricity bills for households without solar panels. Policy Manager for St Vincent de Paul, Gavin Dufty, told the AFR that the move will hit low income households who can’t afford solar the most, at first costing them an additional $20 per year, and potentially more in the future.

Of course, the core motivation behind increasing the minimum FiT is to improve the investment value of solar in order to encourage its uptake. If the cost of purchasing and installing a solar system has turned you off the idea, you might be interested to know that prices have fallen considerably in recent years, so it’s worth reconsidering, particularly in light of the increased FiT.

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