Solar panels on rooftop.

Victoria’s minimum solar feed-in tariff to drop to less than 5c from July 1

Victoria’s minimum solar feed-in tariff (FiT) is set to cop another decrease from July 1, 2023, with the state’s regulator claiming low daytime wholesale electricity rates are to blame.

The Essential Services Commission (ESC) – Victoria’s independent energy regulator – has announced that the new flat rate minimum for single rate solar FiTs will drop to 4.9 cents per kilowatt hour (kWh) in the new financial year.

The minimum FiT rate refers to the lowest amount a retailer can charge a solar customer for exporting their excess solar energy back into the grid. Currently this rate is set at 5.2c/kWh in the state, although retailers can choose to offer a higher FiT in its place.

The driving factor behind the decrease is lower daytime wholesale electricity rates, which according to the ESC, conflict with traditional export and solar energy usage times.

ESC Executive director of pricing, Marcus Crudden said solar power exports helped to keep daytime wholesale electricity rates down but hold little impact for more expensive evening peaks.

“We’ve had lots of great questions from stakeholders asking why the minimum flat rate feed-in tariff is falling when average wholesale electricity prices have climbed in recent months, with forecasts suggesting ongoing higher wholesale prices in the short-medium term,” he said.

“But daytime wholesale prices are still low. This is because rooftop and utility-scale solar systems kick in during daylight hours, providing lots of relatively cheap electricity to the market. Solar’s contribution increases supply and lowers demand, ultimately leading to lower daytime prices.”

This meant the value of daytime solar exports had slowly diminished from what it once was, Mr Crudden added.

“To unpack that further, solar customers reduce electricity demand from the grid during daylight hours by supplying their own energy needs,” he said. “At the same time, they increase electricity supply by exporting any excess solar power to the grid. This increase in supply and decrease in demand keeps daytime wholesale electricity prices low.

“Low daytime demand and low daytime wholesale prices lower the value of daytime solar exports. This continuing trend of increased solar power leading to low daytime wholesale electricity prices is driving a lower minimum flat rate feed-in tariff.”

It has, however, sparked a conversation around the use of time-varying solar feed-in tariffs in the state, with the ESC introducing a secondary option for customers who are willing to shift their export times to align with those of peak demand.

The new options would see customers charged between 4.4c/kWh and 11.3c/kWh, or between 3.9c/kWh and 10.6c/kWh depending on the tariff chosen and the times exported on that tariff.

Mr Crudden said it could pay off for solar customers to consider switching to a time of use solar FiT.

“Ultimately, the enduring value for solar customers is avoiding paying retail prices for their energy usage,” he said. “Make the most out of your solar power by planning for your daily energy usage to be met as much as possible during daylight hours when your solar system is hard at work.

“Run power-hungry appliances during the day to avoid paying higher evening peak prices charged by retailers. Any leftover energy is then exported to the grid, and you get paid via the feed-in tariff.”

What will the new minimum solar feed-in tariffs in Victoria look like from July 1?

From July 1, 2023, the minimum single rate solar feed-in tariff for Victoria will be reduced to 4.9c/kWh.

As for the time-varying options, we’ve listed the new rates below.

Option 1:

  • Overnight (10pm to 7am): 11.3c/kWh
  • Day (7am to 3pm, 9pm to 10pm weekdays, 7am to 10pm weekends): 4.4c/kWh
  • Early Evening (3pm to 9pm weekdays only): 9.3c/kWh

Option 2:

  • Shoulder (2pm to 4pm and 9pm to 10am every day): 5.5c/kWh
  • Off-peak (10am to 2pm every day): 3.9c/kWh
  • Peak (4pm to 9pm every day): 10.6c/kWh

Can you still get a good solar feed-in tariff in Victoria?

Despite the minimum solar feed-in tariff being on the decline, there are still a handful of energy retailers offering higher feed-in tariffs to eligible customers with solar panels installed in Victoria. We’ve collated some of these available offers below in reference to the Melbourne area. Keep in mind however, that these offers may come with higher base rates than standard plans, so always check the energy price fact sheet before making a purchase decision.

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. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Image credit: iyks/

Kelseigh Wrigley
Energy Specialist
Kelseigh Wrigley was a content producer at Canstar Blue for three years until 2024, most recently as an Energy Specialist. She holds a Bachelor of Journalism from the Queensland University of Technology.

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