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.
About Michael Bloch
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One thing not mentioned in this piece that may be worth considering is custom offers.
If you’ve been a loyal customer but your current provider isn’t offering a great deal, shop around, see who’s offering better deals, then ask your current provider what they can offer in comparison.
In my case they dropped the usage and supply charges by 10% or so, whilst more than doubling the base FiT. I did lose the bonus rate, but there’s not a lot of difference so ultimately I should come out far far ahead.
The cost reduction isn’t enough to offset the 20% increase in power prices I’ve heard talked about, but if it’s lower I may hold my ground. And of course with a better average FiT …
We just need the government to introduce a GENEROUS subsidie for HOME BATTERIES and install as many Neighbourhood Batteries as financially possible. Doesn’t take much intelligence to work this out, unfortunately Peter Dutton wants to go completely the opposite Way.
Hi Barry,
We should note that recently the climate council showed the LNP nuclear scheme, designed to extend the life of business as usual fossils, will end up as a self defeating carbon emissions bomb.
Now the LNP aren’t going to address the report because they know it can’t be argued but they will try to sack the head of the climate council.
Talk about shooting the messenger…
And where would these neighbourhood batteries go? Foreigners want to build one in my area, but locals are protesting loudly. Council appears ambivalent, but it’s not clear they actually have the power to refuse. I believe there’s precedent with councils refusing and state government or courts overruling councils and locals to mandate batteries be accepted.
Hi George,
Community batteries can be mounted on power poles and at local substations.
There’s a few at shopping centres already. Chadstone in Melbourne and Castle Plaza in Adelaide to name two off the top of my head.
They’re also well situated at the nodes in the network which are old coal burners and new solar farms too.
Hey Barry QLD had a $6K EV rebate which was a subsidy of $6K towards a 60kWh battery.
Bang for buck with CO investment of ~$55K from the vehicle purchaser has helped get a heap of old cars off the road and replaced them with ultra low emissions cars they can power from their own solar.
this is in my opinion a vastly better use and provides much better storage per dollar and reduces Australia’s dependence on imported fossil fuels, something that home batteries can’t.
Home batteries are the cherry ontop of the icing ontop of an all electric 5 layer cake.
in order of importance – get rid of gas appliances, get a PV system that produces enough energy to run your house and hopefully your EV for 10 months of the year. This dropped our family outgoings $16K a year (EVs do 55,000kms 4+2+1 living in the house)
the home battery offers increase in self consumption, total insulation from peak rate pricing, flexibility in when we use energy.
Quote from a mate “Anyone can manage their energy to avoid peak rates, Just ask either of my two ex wives”.
The “savings” from battery represent just 5% of the savings of going electric
So now they sucked everyone In to paying for generation the only way out is a battery with ongoing costs if replacement. Royalty screwed whilst our cheap energy is exported for cents in the dollar and no royalties to boot. Sold out by the very ppl played to represent us, if that doesn’t tell us all we need to know then we deserve what we get. Don’t vote the uniparty or greens ever again.
Hi Wake up Oz b4 it’s 2 late,
I think you may be confused with the current state of Australia’s gas market?
Sadly many people are in a comfortable slumber about the PRRT, even when the previous Federal Labor government tried to increase it and the mining industry campaigned against them.
I wonder if the electorate was awoken to the fact that the price of gas sets the price of electricity, they might vote differently?
If there’s one thing we are doing truly execrably it’s alerting Australians to the scale on which they are being rorted by the gas industry:
1. $1,000 per head per year on lost royalties
2. Paying at least triple what we should for domestic gas
3. Gas balloons our electricity prices through marginal pricing (and high fuel cost)
Perhaps we should pay Tony Abbott whatever it takes to build an attack campaign on the gas industry …
Cheers
To put some numbers for those with surplus PV that they don’t know what to do with their excess electricity (and will not get paid to export), consider upgrading your expensive and noisy heat pump HWS when it needs replacing or repairing with a resistive element hot water service. While it might appear contrary to energy efficiency buffs, a large pv system will offset more of the power you would otherwise have to buy on cloudy or low energy times of day (when power is bought at peak rates of 50 to 60c and is a huge plus in itself), but can use the excess solar at midday at no cost,… and to help stabilize the grid also.
$1500 spent on a resistive element (the old style ones which can last for over 40 years like mine did) and a timer or energy diverter/ controller, will then cost $0 in running costs, while a $3000 to $6000 Heat pump will use 1/4 the energy on good days and will also cost $0 to run until it breaks down (much earlier and will cost a bomb to fix or replace).
Perhaps the government should introduce a subsidy to encourage commonsense to utilise this energy rather than the opportunity lost by curtailment and heightened grid instability risk.
Very good point Tim,
The issue as I see it is that once coal burners like Eraring close, or ones like Calide blow up, we’ll really need this energy curtailed by zero export. At that point the old resistive hot water is more difficult to justify.
I totally get the idea about simplicity though, it’s the ultimate refinement.
Most things you talk about are when normal people work.
If you drive to work how do you charge your ev during the day, or are you saying workers must stay home on the weekends and notgo out to charge their ev
Hi John,
Many people work from home and would find just one day is enough to fully charge an EV slowly, giving them a weeks worth of average range commuting. Many can also charge at work and I know some of them who take electricity home in the car and then siphon it off to run the fridge & lights overnight. There’s no universal solution but in any case petrol is going the way of horses… a weekend hobby.
As the FIT is gradually being reduced and the relevant authorities are complaining that their systems are not able to handle the electricity produced by solar, I’m wondering if I should just turn my exports off. Is that an easy thing to do?
The main value of solar to me is the savings made during the day. The value of the exports is nice to have, but if the people receiving them, don’t want to pay, why give it to them!
I don’t have a battery and the exports are up to a few hundred dollars a year, which is important with cost of living issues being what they are. But my main advantage is in reducing my imports and with the payment for exports being so low, they are just a bonus. Not essential.
If a lot of people did this, who knows what would result.
Hi Mick,
The good thing about export is that it depresses prices for everyone and drives more coal out of the market sooner. If you were going to be billed for putting energy into the grid then I suppose setting zero export would make sense, but you need a solar consumption meter to make it work.
These feed in tarriffs that were first brought in were never going to last as they were to generous.in queensland it was 44 cents that is plain stupidity as it is well above market value.i think the 44c runs out in 2028 and perhaps some sort of reality will start.the problem with you solar people is you want the grid to be there just in case but don.t want to pay for the upkeep of it.
“…and some owners may decide to zero-export their systems…”
If you do, then you may want to consider setting your solar export limit to something slightly higher than zero (i.e. 1% or 50W), as this will stop a lot of small amounts of grid usage from occurring, whenever you turn ON an appliance or a light* (*while the solar system is still producing power). This small amount of grid usage occurs because it takes a tiny amount of time (milli seconds) for a solar inverter (or battery) to catch up and match the new amount of consumption onsite.
I see this with my battery – technically I should use 0Wh per day from the grid, but because of this slight delay in matching power consumption. Overnight I end up using around 200Wh per day from the grid (because of the fridge, lights, and other appliances turning ON and OFF).
And yes, a small amount of export can occur when things turn OFF again.
Note: 1% or 50W may not be enough to cover heavier loads (like fridge motors starting). If you are one of the UN-lucky ones already getting slugged +1c for exporting your good clean energy during 10am-2pm. Then it should still be better (cheaper) to export a small amount each day, verses using a few hundred extra watts at 30c to 50c per kWh each day.
I think the public have sold pup with solar panels as the following points show.
1. I Fitted a 20 to 25 kw system on my north & western roof to get the maximum benefit with feed in tarrifs.
2. The feed in tariff has reduced over time but I still get 15 cents for the first 10kwh/ day.
3. Because our village is in an embedded circuit Ausgrid decided to change the rules on this and we as a community had to find a solution to sort it with Ausgrid unable to help. Additional cost /household $1,700 + $45,000 by our community to upgrade our switchboards. So beware of this impost if you are in an embedded circuit.
4. A battery is not viable with my average use around
5kwh/ day over most qtrs. The high cost in excess of $12,000 & an expected life of around 10 years is not viable.
5. The current recall on LG & other brand batteries due to a fire hazard makes one wonder as after some 18 months most cannot be located until they explode or catch fire.
6. Sorry about the long winded discussion but someone smarter than me needs to get a handle on the facts and give the public an honest answer on the current con by various Governments
In other words put your money up and after a few years we the Goverment be they Federal or State will rip the financial benefit off you as a stealth tax.
.
The obvious solution to this situation is the elephant in the room.
Storage is the answer BATTERIES but why are retailers shifting the problem to home solar.
Far more effective if the huge solar producers also put in huge batteries.
The current so called crisis, too much power, is that a joke and if not why are massive solar
projects still being built and more planned.
The real problem is retailers producing nothing other than profits while continuing to manipulate the market with propaganda and mysterious pricing formulas.
Too many retailers all playing games with our lives and our governments are just as guilty. What happened to essential services they are fast becoming a luxury.
The gas situation demonstrates that our governments are hopelessly out of touch.
With huge gas reserves we should have the cheapest power in the world. A fact
With elections on the horizon no party is presenting policy aimed at a solution. This tells us that political parties are happy with the situation. Think about why, donations, shares, promises, post political positions?
Surely not. How cynical.
We need a political party for the people 100%.
But that would be populist politics, which of course is not acceptable so we are told.
I thought it was democracy.
Sorry
Grae – we have to build more renewables as existing generators are worn out and coming to end of life. renewables are cheaper. My all electric home saved me north of $15K last year not buying fossil fuels from others.
Batteries cant store energy for winter- they can practically store enough for peak times and overnight but thats about all thats even remotely economically viable.
Spilling energy or not generating it when you have excess available is normal way to run a grid, with intermittancy of renewables we need to build excess.
As we come off fossil gas we transition to RCAC for our heating and hot water, this increases our winter demand (for electricity) in particular for a typical Vic home by 50% but it also decreases our total energy demand by 50kWh a day. (180 days of the year!)
so now we need double the supply we needed before.
Then you’ll be wanting an EV because Australia’s imported oil is simply imported and costs us alot.
now we need triple the supply.
We haven’t needed a battery yet – no point if we cant generate enough to meet those needs first.
for the most part our energy is privately owned and thats good as they make decisions to get us the cheapest possible rates and compete with each other. thats why building wind and solar is the right answer
My EV on a smart charger took self consumption from 35% to 70%, saved about $1500 a year in fuel and a few tons of CO2.
Zoom Zoom.
in Qld we are limited to 5kwh feed in, a 4c feed in rate is pretty typical.
I have a decent battery and very rarely have to buy power.
I have come to the conclusion that the best bang for my buck comes from the company offering the lowest daily charge for grid connection, their charges for power are pretty meaningless. The daily connection fee varies from about 90c to nearly $2.
Even if you can feed in 25kwh for the day, best case scenario is you can barely cover the cost of the cheapest daily connection fee, worst case scenario you are about a $1 dollar a day in the red. So the cheapest grid connection fee saves me about $350 a year over the dearest.