Victoria’s minimum solar feed-in tariffs to drop in 2021

A proposal by Victoria’s energy regulator means that minimum solar feed-in tariffs (FiTs) in the state could be dropping – and wholesale energy prices are to blame.

With wholesale energy prices across the National Electricity Market falling by up to 48 per cent compared to this time last year, Essential Services Commission (ESC) Pricing Director Marcus Crudden said that FiTs are largely affected by movements in the market, rather than independently.

“[The proposed FiT decrease] is being driven by a significant fall in gas prices, as well as an increase in solar installations across the state,” he said.

It means the regulator is proposing to lower Victoria’s mandated minimum single rate FiT from 10.2c/kWh to just 7.1c/kWh, with flexible rate tariffs also coming down.

How much will Victorian feed-in tariffs drop?

Rate Time applicable Current / kWh Proposed / kWh
Single All times 10.2c 7.1c
Peak 3pm – 9pm weekdays 12.5c 11.7c
Shoulder 7am – 3pm and 9pm –10pm weekdays,
7am – 10pm weekends
9.8c 6.5c
Off peak 10pm – 7am all days 9.1c 7.1c

Source: ESC, Minimum Feed-in Tariff Review 2021-22.

The news comes a year after the minimum Victorian single rate tariff was reduced to 10.2c from 12c/kWh.

This is a far cry from some of the FiTs on offer in the past, in particular the Premium Feed-in Tariff scheme which provided up 60c/kWh to eligible households. The program ran between 2009 and 2011, although those who participated should still receive the premium tariff until 2024.

Mr Crudden suggested that the main benefit of solar doesn’t come from the feed-in tariff, however, rather through avoiding paying for electricity from the grid.

“We need to shift the expectation that a feed-in tariff is a big part of the value of having solar power, the real and enduring value of renewable generation and storage is in not having to pay retail electricity charges for the electricity you use,” he said.

“Conservative estimates say installing solar panels will save a typical household around $890 per annum off their electricity bill.”

At the time of writing, the best solar feed-in tariffs in Victoria are 20c/kWh from Origin Energy and Tango Energy, however in both case these rates come with some conditions.

The ultimate decision from the commission will take effect from July 2021.

VIC Solar Plans

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Citipower network in Melbourne but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. This table may include products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Solar price competition could suffer

Canstar Blue Editor-in-Chief Simon Downes said that despite falling wholesale prices, Victorian households with solar will be disappointed by the reduction in the minimum rate, at a time when retailers are fighting hard to win over this highly engaged segment of consumers.

He said: “It’s telling that the highest solar feed-in tariffs around right now come with standard pricing that is equal to or just below the VDO, but some retailers are clearly still keen to market good solar deals as a way to attract energy savvy consumers.

“The hope is that this competition will mean decent feed-in tariffs of close to 20c will remain available, despite the drop in the mandated minimum.

“The retailers that get their solar offers right – striking the right balance between usage and supply charges and feed-in tariffs – will be onto a winner with a very engaged segment of customers.”

The proposal is open for consultation until 8 January 2021, with a final decision scheduled for February 2021.

Compare Energy Prices in Victoria

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. Costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision. The next three tabs feature products exclusively from AGL, EnergyAustralia and Origin.

Here are the AGL Energy plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are the EnergyAustralia plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are the Origin Energy plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower energy network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Image credit: Adam Calaitzis/Shutterstock.com

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