Time-Varying Solar Tariffs Explained

The way we get paid for solar power is about to get a shake-up as new ‘time-varying feed-in tariffs’ are being rolled out in some states and are expected to become compulsory in the near future.

When solar panels produce more electricity than what your home can use, the excess solar power is fed back into the electricity grid in exchange for what is called a “feed-in tariff” (FiT). This is a small rebate of a few cents for every kWh of electricity that your system exports. Feed-in tariffs have traditionally been ‘single’ or ‘flat’ rate, meaning solar panel owners were paid the same amount for their solar power regardless of when it was exported to the grid. But this is about to change, with Victorian and Queensland governments recently introducing a ‘time-varying feed-in tariff’ – a FiT that pays a different rate depending on the time of day that power is exported.

This article explains what a time-varying FiT is and what it means for your solar investment.

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What is a time-varying feed-in tariff?

time-varying feed-in tariff

Customers on a time-varying feed-in tariff are paid a different rate for exported solar power depending on the time of day. Similar to time-of-use electricity tariffs, a time-varying feed-in tariff is usually broken into three time periods: Peak, off-peak and shoulder.

The peak period is when most people use electricity – generally from around 3pm to 9pm on weekdays. Customers with solar power are paid the most for their exported solar energy during this time because there is high demand for electricity. The off-peak period runs from late night to early morning, usually around 10pm to 7am when everyone’s asleep and there’s a low demand for electricity. Customers are paid a small FiT in the unlikely event that solar panels are producing electricity during this time. All other times are referred to as the ‘shoulder period’ and customers are paid a medium-rate for solar power.

What are the time-varying feed-in tariff rates?

Victoria is pioneering these new time-varying FiTs by requiring all retailers to offer both a single rate and time-varying FiT from 1 July 2018. Victoria has also set minimum rates, requiring retailers to offer at least 29.0c/kWh during peak times, 10.3c/kWh during shoulder times and 7.1c/kWh during off-peak times. Keep in mind that these are only minimums and some Victorian retailers may offer special deals with even higher FiT rates. From July 2019, it is expected that single-rate FiTs will be phased out, leaving time-varying FiTs as the only option.

Victoria time-varying feed-in-tariffs

Period Weekday Weekend Rate (c/kWh)
Off Peak 10pm-7am 10pm-7am 7.1
Shoulder 7am-3pm & 9pm-10pm 7am-10pm 10.3
Peak 3pm-9pm n/a 29.0

The Queensland government is also introducing time-varying feed-in tariffs for regional solar customers on the Ergon Energy network. Queensland’s time-varying FiT is slightly different, however, in that there are only two time periods – peak and off-peak. Peak time runs from 3pm to 7pm and customers are paid 13.606c/kWh. An off-peak rate of 7.358c/kWh is paid at all other times.

Queensland time-varying feed-in-tariffs

Period Weekday Weekend Rate (c/kWh)
Off Peak 7pm-3pm 7pm-3pm 7.358
Peak 3pm-7pm 3pm-7pm 13.606

Unlike Victoria, the feed-in tariff rates just described are fixed – not a minimum. That’s because energy retail services in regional Queensland are non-contestable, customers are unable to shop around to receive a better price for their solar.

The alternative to a time-varying FiT is the single rate FiT. The single-rate FiT in Victoria will be reduced from 11.3c/kWh to 9.9c/kWh from 1 July 2018. In regional Queensland, the single-rate FiT is 10.102c/kWh.

Will a time-varying feed-in tariff save me money?

A time-varying feed-in tariff won’t be for everyone, however, there’s some incredible savings to be had for particularly energy-savvy customers. Solar panels will produce the most electricity between 8am and 4pm, depending on the location and season. This means that the majority of your solar exports would be during off-peak or shoulder periods. If you have a solar storage battery however, you could maximise the feed-in tariff by storing solar power produced through the day and exporting it during the peak period at night to receive the higher feed-in tariff rate. Alternatively if you haven’t installed solar yet, it’s worth enquiring about the feasibility of positioning solar panels to face westward, as this allows the panels to generate more power in the late afternoon.

If you have solar but never really think about it, then you are probably better off sticking to a traditional single rate feed-in tariff for now. Take the following examples:


Time-varying or Single-rate

Take a Victorian household with a 4kW solar system. Let’s assume that on a sunny day this system produces 16kWh of solar power – 2kWh produced in off-peak time, 2kWh in peak time, and 12kWh during the shoulder period. Let’s assume that this household exports EVERYTHING its panels produce into the grid. We also assume the household receives the minimum FiT in Victoria.

Time-varying tariff:

  • Peak – 2kWh x 29 cents = 58 cents
  • Off-peak – 2kWh x 7.1 cents = 14.2 cents
  • Shoulder – 12kWh x 10.3 cents = 123.6 cents
  • Total = 195.8 cents

Single rate tariff:

  • 16kWh x 9.9 = 158.4 cents
  • Total = 158.4 cents

In this example, a time varying tariff leaves the household better off by about 37 cents per day. However, this isn’t a particularly realistic example as most households use the majority of electricity in the evening when kids get home from school and parents get home from work. That means solar produced in peak periods will usually be consumed, not exported. So now let’s assume that the 2kWh of solar power produced in the peak period is consumed and NOT exported (for a total of 14kWh of solar exports per day).

Time-varying tariff:

  • Off-peak – 2kWh x 7.1 cents = 14.2 cents
  • Shoulder – 12kWh x 10.3 cents = 123.6 cents
  • Total = 137.8 cents

Single rate tariff:

  • 14kWh x 9.9 = 138.6 cents
  • Total = 138.6 cents

Now we see that it’s the single rate tariff that works out to be marginally better value.

If you have energy monitoring technology, use it to see when your solar panels are producing electricity. The more power your panels produce in the late afternoon, the better off you should be on a time-varying tariff. Regardless, Victorians will seemingly have no choice over their tariff from July 2019 and will be automatically placed on the time-varying FiT.

What does a time-varying feed-in tariff mean for my solar investment?

Time-varying feed-in tariffs appear to be the way of the future whether we like it not. As we’ve pointed out, time-varying feed-in tariffs may leave you worse off if you’re not smart about solar, but that is kind of the point. These new tariffs are designed to make us rethink how we use, store and share solar power. If you haven’t done so already, consider installing electricity monitoring. Also weigh up whether you could save with a solar storage unit. But for now, compare solar providers using Canstar Blue’s customer ratings to see if you’re with the best provider for your needs.

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