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Home  ::  Government Rebates  ::  Feed-in Tariff

A feed-in tariff for grid-connected PV systems

 

What are feed-in tariffs?

 

A feed-in tariff is a premium rate paid for electricity fed back into the electricity grid from a designated renewable electricity generation source like a rooftop solar PV system or wind turbine. At present, feed-in tariff regulations for renewable energy exist in over 40 countries around the world and all involve the payment of a premium for the electricity fed into the grid from a variety of renewable energy sources including home solar power systems. 

 

Unfortunately, Australia is lagging behind other countries such as Germany who, while having half the sunshine of Australia, have 200 times the solar production capacity of our country due to a generous feed in tariff program.


Australian Feed in Tariff
Australia - a feed in tariff laggard - help change this!

 

Germany sets the feed in tariff example

 

Possibly the most famous and successful feed-in tariff laws would be those introduced in Germany over the past 15 years. In 1991 the German government introduced the Electricity Feed Act, legally regulating the feed-in to the grid of electricity generated from renewable resources such as solar power. This Act required utility companies to purchase electricity generated from renewable resources such as domestic solar power systems at set rates (feed-in tariffs).

 

The scheme, originally introduced in 1991, was expanded and enhanced in 2000, and has been responsible for the dramatic growth in Germany’s renewable energy market, particularly the solar photovoltaic industry. In the five years from 2000, the quantity of electricity fed into the grid from eligible sources has more than doubled, with a seven-fold increase in installed solar photovoltaic (PV) capacity to over 1,500 MW by the end of 2005. By comparison, at the same time Australia stands in the order of 7MW of grid-connected solar power, or less than 0.5% of Germany’s capacity.

 

Gross vs. Net feed in tariff

 

A net feed in tariff, also known as export metering, pays the PV system owner only for surplus energy they produce; whereas a gross feed in tariff pays for each kilowatt produced by a grid connected system. It's a very important difference. 

 

Victoria net feed in tariff

 

Victorian households with solar power systems will be paid a feed in tariff from 2009. Victorian residential grid connect system owners will be paid 60 cents for every unused kilowatt hour of power fed back into the state electricity grid, which is almost four times the current retail price for electricity and the highest feed-in tariff offered in Australia.

 

South Australia net feed in tariff 

 

From July 1 2008, qualifying South Australian residents will receive $0.44 per kilowatt-hour. Not all electricity companies may choose to offer contracts and those that do may add to this incentive.

 

ACT gross feed in tariff

 

In July 2008, legislation was passed in the ACT's Legislative Assembly for a gross feed in tariff to be implemented, which will pay 3.88 times the normal retail price; around 59 cents per kw/h.

 

Tasmania net feed in tariff

 

The current feed in tariff rate for Tasmania is $0.20 per kilowatt-hour

 

Northern Territory net feed in tariff

 

Alice Springs residents can receive a net feed in tariff rate of $0.45 per kilowatt hour produced. In other areas of the Northern territory, the rate is 14.38c. Further information (PDF)

 

Western Australia gross feed in tariff

 

On August 26, 2008, the West Australian government promised the introduction of a gross feed in tariff initiative if returned to power after the next election. A gross feed in tariff is a superior program to the net feed in tariff scheme that some other states are offering. A gross feed in tariff rewards grid connected solar power system owners for each kilowatt they produce rather than just surplus energy produced as is the case with a net feed in tariff arrangements. The premium rate will be 60 cents per kilowatt. However, the amount will only be payable until the cost of the system has been recuperated by the system owner. 

 

Queensland net feed in tariff

 

The Queensland Government Solar Bonus Scheme commenced on 1 July 2008. Grid connect solar owners  participating in the scheme will be paid $0.44 per kilowatt hour (kWh) for surplus electricity fed into the grid

 

New South Wales feed in tariff

 

The New South Wales government has stated it is not interested in implementing feed in tariffs. You can help change this by contacting your local Member of Parliament.

NEWS! While the NSW government doesn't offer anything to encourage the uptake of solar power - Energy Matters certainly does! Check out our special offer on grid connect systems for New South Wales residents!

 

Why do we need feed-in tariffs?

 

Residential solar power is disadvantaged in Australia. The market fails to take into account the true value and many benefits to the electricity network which arise from the adoption of renewable energy technologies embedded within the electricity grid. Solar PV, like other renewable energy sources, provide environmental benefits through reduced atmospheric pollution, and social benefits through industry development and job creation - for example through the installation of grid connect solar systems, each with related economic benefit.

 

A feed-in tariff redresses these systemic market failures and rewards solar electric generation for its true value to the electricity market and wider society, by providing a financial incentive for the adoption of renewable energy.

 

Design of a feed-in tariff scheme

 

For a feed-in tariff to be effective, it is essential that the tariff offered is designed in a way as to adequately reward solar PV proponents. Energy Matters believes that in order to provide an incentive for people to install grid-connected solar systems, and thus achieve the goals of the scheme, there are three key elements of a feed-in mechanism which need to be considered: The price level of the tariff; the means of metering; and the duration of the scheme. It is the proper combination of these three elements, which will determine the success or failure of a feed-in mechanism.

 

Energy Matters strongly believes that an effective scheme would involve a feed-in tariff of at least 60 cents per kWh, paid on the entire output of a solar power system (via gross production metering), and offered for at least 15 years. Only a gross feed-in tariff set at or above these levels would adequately reward the adoption of solar PV for the range of environmental, social and economic benefits arising from this technology, and encourage the uptake at sufficient levels to achieve the policy goals.

 

It is important that the 60 cents per kWh gross production feed-in tariff is established in conjunction with the Australian Commonwealth Government’s Solar Homes and Communities Plan. Only then will a feed-in tariff scheme be effective in encouraging uptake of rooftop solar photovoltaic systems by helping owners to recoup the cost of their system.

 

However, for any feed-in tariff to totally phase out the federal means-tested $8000 rebate scheme, we believe a feed-in tariff mandated at 80 cents per kWh would be more effective.

 

Although several states in Australia already have feed-in tariff schemes in place, those introduced in South Australia, Queensland and Victoria recently are net feed-in tariffs, meaning they only pay homeowners for the electricity exported to the grid minus what is consumed in the home at the time of production. This system of metering significantly discriminates against both owners of smaller grid-connected systems and those who are more likely to consume electricity during the day, such as pensioners or stay-at-home parents.

 

Alternatively, double incomes families who are typically away from home during the day manage fine under net metering, but now it is these households who have become ineligible  for the solar rebate, due to the $100 000 per household income means test.

 

Energy Matters' feed in tariff standpoint

 

At Energy Matters we believe that for a feed-in tariff scheme to make the most impact in Australia it must be a gross ­feed-in tariff. When Germany introduced gross feed-in tariffs in 2000 it doubled the amount of electricity generated from renewable energy sources and adjusted its 2010 target of 12.5% of total energy consumption. It is now three years ahead of schedule. 

 

As a consequence of this success, Germany recently increased its renewable energy target to 27% of all electricity generation by 2020.  Also the gross feed-in tariff has created nearly 250,000 new jobs in the renewable energy industry, which will soon surpass the car industry as that nation’s number one employer. The German solar power sector is now creating three times the number of jobs per installed megawatt as the coal fired electricity industry - all of this in a country receiving half the sunshine Australia does. 

 

International experience tells us that gross feed-in tariffs can be very successful in stimulating the uptake of renewable energy, addressing climate change and creating strong local industries and employment. However our state governments, through inventing a net feed-in tariff have made a fine mess of a policy, which has delivered so much for the solar power industry overseas.

 

How you can help

 

If you care about fighting climate change, cutting Australia’s greenhouse gas emissions and encouraging our domestic renewable energy industry then please write to your local State or Federal members of Parliament requesting they consider gross feed-in tariffs as the most effective way to increase solar power use in Australia.

 

By introducing these incentives we will encourage the installation of solar panels on more homes around the country and increase the output and generation of clean renewable energy.

 

 

 

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