Living With Low (Or Even Zero) Solar Feed-In Tariffs

Minimum solar feed-in tariff rates (such as they are) have been set for what could be the last time in Victoria. But smart solar ownership will still bring significant financial and other benefits; and this applies across Australia where rates have been reducing.

In mid-February we reported Victoria’s Energy and Climate Change Minister Lily D’Ambrosio was to announce on February 17 the Victorian Government would no longer set minimum solar feed-in tariff (FiT) rates. This was during the period that the state’s Essential Services Commission (ESC) was deliberating on its final decision for minimum feed-in tariffs for 2025/26 following a public feedback period on their draft decision.

Minister D’Ambrosio’s announcement didn’t eventuate, and yesterday the ESC released its final decision for minimum rates for 2025/26. In a nutshell:

• The minimum flat feed-in tariff rate is 0.04 cents per kWh (currently 3.3c). That’s four one-hundredths of a cent – basically zero.
• The two time-varying feed-in tariff options range from 0.00 cents per kWh during the day to 6.57 cents per kWh in the late afternoon/ evening peak (4 pm to 9pm). Few retailers are offering time-varying options.

The ESC also stated:

“The tariffs will apply from 1 July 2025 unless the Electricity Industry Act 2000 is amended to deregulate the setting of feed-in tariffs.”

So, getting rid of minimum feed-in tariff rates in Victoria is still on the cards and *could* happen before July 1.

The ESC received more 300 submissions following the release of its draft decision and no doubt copped an earful (eyeful?). The reason given for the low rates was the ongoing rise of home solar pushing down daytime wholesale electricity prices; which have been increasingly going negative.

While a bitter pill to swallow for owners of rooftop PV systems, the upside is solar households have helped rein in retail electricity prices for all, and slashed related emissions in the state. Take a bow, solar owners.

No Minimum Doesn’t Necessarily Mean Zero

Should it eventuate, Victoria wouldn’t be the first jurisdiction to not set minimum feed-in tariff rates. South-East Queensland, New South Wales, the ACT and South Australia haven’t had a minimum for years – but retailers in those jurisdictions can and often provide payments.

Let’s take a look at New South Wales. While a minimum isn’t set, the NSW Independent Pricing And Regulatory Tribunal (IPART) publishes a recommended range. For the 2024-25 financial year it’s 4.9 to 6.3 c/kWh.

SQ’s Ronald recently went over all feed-in tariff rates in New South Wales and found:

• One retailer offering a standard rate of 8.1c/kWh.
• Several offering 8c – 14c for the first X kWh daily (8 – 14 kWh) and then 5c after that.

I took a look at the average rate among a bunch of retailers we list that offer feed-in tariffs, and it worked out to be 4.18c/kWh. Of the plans analysed:

• 76 had some sort of feed-in tariff of 1c or higher.
• Only eight offered 1c.

Keep Tabs On Electricity Plans

Each market is different, and it remains to be seen what will happen in Victoria if a minimum rate is removed. But a good way to keep track of how feed-in tariffs are tracking across Australia is by using SolarQuotes’ electricity plan comparison tool.

Bear in mind the highest feed-in tariff doesn’t necessarily represent the best deal on electricity overall – look at consumption rates, daily and other charges to determine what is a good balance for you. Generally speaking, solar owners are better off on a flat rate electricity plan, whereas households with solar  panels and a battery may find Time-of-Use (ToU) plans to be the best option. Also remember that given the situation, rates may change in Victoria en masse on July 1 or soon after.

Solar Energy Self-Consumption Is King

Generous (conventional) feed-in tariffs in Australia are dead and buried, aside from some legacy programs still to wind up. They served their purpose, encouraging Australians to install solar panels at a time when systems were comparatively very expensive.

Disappointment in no and low feed in tariffs is totally understandable – and some owners may decide to zero-export their systems rather than let electricity retailers have their solar energy goodness for nix or next to nothing. Others may take things a step further and disconnect from the grid altogether; although going off-grid done right remains very expensive.

Others will go with the flow – but smart solar owners will be looking at ways to boost self-consumption of the electricity their systems generate to minimise what spills into the grid.

Here are some ideas.

Boost Appliance Use Time-Shifting

A solar household can maximise the value they get from their system by shifting as much of their power usage as possible to daylight hours when it is generating electricity. For example, running pool pumps and laundry/dishwasher cycles during peak solar energy production.

You can also use a home energy management system to monitor solar generation and activate loads accordingly. On the software side of things an example is Home Assistant, which is open source (free) home automation software supported by a global community of tinkerers and DIY enthusiasts. Note that there is a learning curve, but if you’re a tinkerer, it could be an interesting exercise.

Install A Home Battery

Realistically speaking, there’s no escaping needing mains grid power at night – unless you have a solar battery. Batteries bring other benefits too, such as blackout protection (assuming you buy the right type).

There’s also the potential to play on the wholesale market through services such as Amber. Amber’s “real-time” feed-in tariff reflects the actual market value of exported solar energy at the time it is exported. Via Amber, battery owners can also top up when grid prices drop – and sometimes go negative; meaning they can get paid to charge their battery. This cheap energy can then be sold back to the market when prices peak. But Amber customers can be exposed to high consumption charges and negative export prices (i.e. you’ll pay to export); although there are some protections in place.

Currently, there are zero interest battery loans of up to $8,800 available from Solar Victoria to help with a battery purchase. But before you run out and buy a battery, crunch the numbers. SolarQuotes makes this easier with a whizz-bang home battery calculator that uses your smart meter data to assess whether a battery may provide the financial benefit you seek.

Get Into (Electric) Hot Water

Home batteries are a great bit of tech, but still expensive. But there’s another type of battery that is comparatively cheap – an electric hot water system. If you have a gas hot water service that’s reaching the end of its life; consider a switch to electric and then use a timer or PV diverter to “charge” it with your solar power system. Or you could opt to replace it with a heat pump hot water system.

There are subsidies available in Victoria for electric hot water systems (including heat pumps), under the Solar Homes and Victorian Energy Upgrades (VEU) programs.

EV Charging

Electric vehicles are great solar soakers assuming you’re at home at a time of the day when yours can slurp the surplus up. Look at when you are charging at home and your travel requirements and try to tweak your approach to better fit in with the solar window.

Lighting

While lighting accounts for a small proportion of an average Australian home’s energy use, switching to energy-efficient lighting is a low-cost way to shave a bit off your power bill. It’s particularly important for solar owners as lighting is usually used when the sun ain’t shining. And in the evenings is when mains electricity is most expensive if you’re on a time-of-use plan.

Heating And Cooling

Gas heating is still pretty popular in Victoria, although its use will decrease due to increasing cost and the government phasing out new residential gas connections. It’s time to think about taking your foot off the gas and consider a reverse cycle air-conditioner. You can set it to pre-warm or pre-cool a house during hours of solar generation, reducing running costs outside those times. (In Victoria, there are also generous VEU subsidies available for making the switch).

General Energy Efficiency

In amongst all this, don’t forget about energy efficiency generally. For solar owners, this especially applies in the evenings and overnight – and energy efficiency often dovetails in nicely with PV ownership.

Solar Is Still Worth It

If you’re yet to install a solar power system and have been put off by low or pretty much zero feed-in tariffs, don’t abandon the prospect. Try out the SolarQuotes solar calculator to get an idea of the financial returns and estimated simple payback with various feed-in tariff rates, and other aspects relevant to your circumstances.

While a low (or no) feed in tariff will increase simple payback time, installing solar panels will still be very much worth it for many Australian households.