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Feed-in tariff for grid-connected solar power systems

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 panel system or wind turbine. At present, feed-in tariff regulations for renewable energy exist in over 40 countries around the world and they are widely considered one of the most effective ways to increase solar energy uptake.

State specific feed in tariff details

Victoria
South Australia
ACT
Tasmania
Northern Territory
Western Australia
Queensland
NSW

Feed in tariffs in Australia - at a glance

Australia currently has no nationalised program, only state run schemes. Here's an at-a-glance look at state arrangements.

Please note: Energy Matters advisers consumers to shop around for solar-friendly electricity retailers when considering accessing feed in tariffs to ensure they won't be penalised in other ways in regards to their electricity bill once they have a system installed. Some retailers also offer an additional incentive over and above the legislated amount.

State	Current status	Max Size	Rate Paid	Program Duration	Model
VIC	Commenced November 2009	5 kW	60c/25c (credit/cash)	15 years 5 years	Net
SA	Commenced July 2008	30kW (10kW per phase)	44c/23c	Varying	Net
ACT	Commenced March 2009	200kW**	30.16c/1:1	20 years	Gross
TAS	Commenced	tbc	1:1	tbc	Net
NT	Commenced	tbc	Same as consumption rate	tbc	Gross
WA	Finished August 1, 2011	See Western Australia notes below***	20c/kWh ***	10 years	Net
QLD	Commenced July 2008	5kW	44c+	20 years	Net
NSW	Closed	10 kW	60c/kWh & 20c/kWh	7 years	Gross
view grid connect solar power specials for your state or get an instant, obligation free online quote for home solar power!

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 hour produced by a grid connected system. It's a very important difference.

Is an income from a feed in tariff taxable?

At this point, there doesn't appear to be any specific taxation legislation dealing with income derived from feed in tariffs. Whether it is assessable income depends on the income producing nature of the activity. If it can be demonstrated that the system was installed with a view to making a profit, then receipts under the feed in tariff would be considered assessable income while all expenses associated with the income generating activity would be deductible (eg depreciation).

In most cases, systems installed at domestic sites would not be taxable as they would be considered personal use / hobby (i.e. not in the nature of a business or profit making scheme). If the system is installed at a commercial site, it will most likely be considered taxable. However, system owners should consult their accountant for advice or can also request a private ruling from the ATO. An example of an ATO private ruling result in relation to feed in tariffs can be viewed here

Feed in tariff income and social security

According to a May 2010 announcement from Centrelink, feed in tariff credits where applied as a credit on an electricity account are not included in Centrelink's income test for pensioners, but credits converted to cash payments such as a cheque or direct deposit will be. The adjusted policy applies from 14 May 2010 and is relevant to not just pensions, but all Social Security income support payments such as NewStart. However, we are still unclear if this applies to payments such as Family Tax Allowance and Parenting Payments. We advise people who may be affected should consult with their local Centrelink Office.

Is GST payable on feed in tariff revenue?

Individuals will not need to pay/remit GST from their feed in tariff income. The reason being that selling electricity back to the utility providers is considered an enterprise but you need to receive $75k per annum from this source to be required to register for GST. However, businesses will need to pay/remit GST for their feed in tariff income.

Victoria net feed in tariff

NEWS: On September 1 2011, the Victorian Government announced the Premium FiT would be closed to new applications from the end of September 2011. The Government is establishing a new transitional scheme that pays 25c per kilowatt hour for surplus electricity. The new program will commence January 1, 2012 and will available for 5 years.

On January 12, 2012, the Victorian Treasurer directed the Victorian Competition and Efficiency Commission (VCEC) to conduct an inquiry into feed-in tariff arrangements in the State. The terms of reference ask the Commission to recommend whether existing feed-in tariffs should be continued, phased-out or amended. Read more.

Victoria feed in tariff history

Victorian households with solar power systems have been paid a feed in tariff from November 2009. Legislation for the Victorian feed in tariff was introduced on March 10, 2009; then revised and passed on June 25, 2009.

Under the program, Victorian households, community organisations and small businesses who consume less than 100 megawatt hours of electricity a year will be credited a minimum 60 cents for every unused kilowatt hour of power fed back into the state electricity grid. Some electricity retailers may offer a higher amount.

While electricity companies are only obliged to offer the 60c rate and as only a 12 month credit, some are now offering cash payments at higher rates:

	FiT offer inc. GST	Availability	Cash or Credit?	Payment frequency and method	Additional fees
AGL	68c	All premises	Cash	Payment can be received annually via EFT	$10 admin fee
Origin	66c	Primary residence and eligible business and community organisations	Cash	Once annually when in credit for more than $50 via cheque	None
Country Energy	66c	All premises	Cash	Payment can be made every billing period via cheque	None
Energy Australia	66c	Primary residence and eligible business and community organisations	Credit only	NA	None
TRU Energy	66c	Primary residence and eligible business and community organisations	Cash	Case by case basis (generally when over $100 credit) via cheque	None
Red Energy	66c	Primary residence and eligible business and community organisations	Cash	1 free refund per year via EFT / cheque	$10 admin fee after annual refund
*As at December 9 2009. Information obtained through sales consultants and data from official company websites

The tariff will only be available until a total capacity of systems participating reaches 100 megawatts total capacity.

PV systems larger than 5 kilowatts in size and other renewable energy systems up to 100 kilowatts in size remain eligible for the standard feed-in tariff. On July 21, the Victorian Government also announced new initiatives for medium and large scale solar power installations - details to be come.

PFiT vs SFiT in Victoria

In Victoria, electricity distributors (upstream from electricity retailers) Powercor and Citipower have created confusion regarding FiT issues by introducing their own terminology � PFiT and SFiT, which stand for Premium Feed In Tariff and Standard Feed In Tariff.

Essentially, they are two different options offered to solar power system owners with different rates for electricity consumed, depending upon usage pattern.

The terms are defined as follows:

PFiT � This plan offers to pay you for the electricity you feed back into the Victorian grid, over and above what you use at home, at a premium of $0.60 per kWh. Most electricity retailers in Victoria offer a premium of between $0.06-0.08 and you should contact your retailer to find out how much their premium is. Whenever your home electricity demands are less than what your solar panel is producing, you will be feeding electricity into the grid.
SFiT � This plan offers to pay you for the electricity you feed back into the electricity grid, over and above what you use at home, at the same rates as you pay to purchase electricity under your current electrical services contract. The plan is available for electricity generated from any renewable resource, such as the sun or wind.

PFiT vs SFiT - what should you choose for consumption?

Bearing in mind the PFiT and the SFiT options have been imposed at the electricity distributor level, the general rule of thumb is:

If you have more than one meter and it�s being used to operate appliances during daytime such as dual element electric hot water, underfloor slab heating or an air conditioner, then you are likely best to choose the standard feed in tariff option (SFiT)
If you have two meters & one applies to a single element HW system you will likely benefit most from the premium feed in tariff (PFIT) option.
If you have one meter, then you would likely be best to opt for a premium FiT (PFiT)

Which distributor should you choose?

Unfortunately, you have no choice. A distributor is assigned to specific geographic areas:

Citipower
CitiPower distributes electricity to Melbourne's CBD and inner suburbs.

Jemena
Jemena Electricity Networks distribute electricity to the north-west greater metropolitan region of Melbourne.

Powercor Australia
Supplies electricity to Melbourne's outer western suburbs and regional and rural centres in the central and western areas including Ballarat, Bendigo and Geelong.

SP Ausnet
Supplies electricity to eastern metropolitan Melbourne and eastern Victoria.

United Energy Distribution
Supplies electricity to south-east Melbourne metropolitan area and the Mornington Peninsula.

Which retailer should you choose?

While you cannot change distributors, you can switch retailers.

At the electricity retailer level, whether it is Victoria or any other state, we always suggest for people to shop around � some retailers are far more solar friendly than others and will offer better rates, higher payments for the power your system produces and/or better arrangements regarding your account generally.

Further details on Victoria's Feed in Tariff

View solar power specials for Melbourne and Victoria.

South Australia net feed in tariff

South Australia's solar feed in tariff is comprised of two components; the distributor (ETSA Utilities) contribution, plus a minimum electricity retailer contribution.

Households that joined the program before October 31 2011 receive 44c per kilowatt hour from ETSA Utilities for a period of 20 years. Households joining after that date receive 16c until 30 September 2016.

Additionally, the electricity retailer contribution is as follows:

27 January 2012 to 30 June 2012 - 7.1c per kilowatt hour
1 July 2012 to 30 June 2013 - 9.8c per kilowatt hour
1 July 2013 to 30 June 2014 - 11.2c per kilowatt hour
30 June 2014 onwards to be determined

View solar power specials for Adelaide and South Australia.

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 and originally paid 50.05c/kWh for systems up to 10kw capacity and 40.04c/kWh for up to 30kW capacity. The program was revised in April 2010; from 50.05c/kW to 45.7c/kWh for all systems up to 30kW capacity installed from July 1 and that price will remain in place for two years. All contracts are valid for 20 years from the date of contract.

In September 2010, the ACT government released details of a proposed expansion of its feed in tariff scheme that may incorporate medium and large-scale generators, up to 200kW capacity and beyond.

In April 2011, the ACT government announced the new medium scale solar power payment percentage would remain set at 75% of the micro-generator category rate, a price of 34.27 c per kilowatt hour

On June 1, 2011, the A.C.T's micro solar feed in tariff (systems under 30kW) was closed to new connections; but a 1:1 feed in tariff was announced by ActewAGL for residential system owners. The medium scale program for commercial solar power remains open and unchanged.

On July 1, 2011, legislation was passed to allow small scale generators to receive the same rate as systems covered under the medium scale program; and to share the medium scale cap.

On July 14, 2011, the ACT Government announced the program had reached capacity and was closed to all new connections of medium-scale and small-scale systems. We are awaiting confirmation that the 1:1 feed in tariff previously announced by ActewAGL will be re-implemented.

View solar power specials for Canberra and the ACT or learn more about Energy Matters' commercial solar options.

Tasmania solar feed in tariff

Electricity generated by a solar power system in Tasmania up to 3kW capacity is credited by Aurora Energy at the same rate as the applicable supply tariff. For systems larger than 3kW, you'll need to contact Aurora for applicable feed-rates.

View solar power specials for Hobart, Launceston and Tasmania.

Northern Territory net feed in tariff

For new connections, the Northern Territory feed in tariff is 1-for-1 - whatever the customer's consumption tariff is:

residential customers: 19.23 c/kWh
commercial: 22.37 c/kWh
commercial time-of-use customers: peak 28.63 c/kWh and off-peak 16.12 c/kWh

Customers under the Alice Springs Solar City initiative receive 51.28 c/kWh, still capped at $5/day, but that rate is only for existing customers under the initiative. The funding has been fully allocated now, so no new customers can receive this rate.

View solar power specials for Darwin and the Northern Territory.

Western Australia net feed in tariff

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UPDATE August 1, 2011: Western Australia's feed in tariff installation quota has been reached and the program suspended for new connections. However, Synergy and Horizon Power will continue buying excess electricity fed into the grid from all residential solar power systems systems under the State Government�s Renewable Energy Buyback Scheme.
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After previously announcing a rate of $0.60 per kilowatt hour based on a gross model starting some time in 2009, the Western Australian government rescinded the rates and conditions in June 2009 and decided on a net feed in tariff model.

On May 27, 2010, the Western Australian Government announced the Residential Net Feed-in Tariff Scheme will commence August 1, 2010 and pay a rate of 40 c/kWh for net electricity exported to the mains grid; in addition to any schemes offered by electricity retailers.

On May 19,2011, the Western Australian government announced the State's solar net feed in tariff payment rate will be slashed from 40c per kilowatt hour to 20c for applications to join the program received after June 30, 2011. A firm overall capacity cap of 150MW was also put in place for the program. Read more

Residential Net Feed-in Tariff Scheme participants will receive the premium rate for 10 years. Solar power systems will be limited in size to 5kW for Synergy customers and 10kW per phase (30kW in total) for Horizon Power customers.

*** Note: System size must be consistent with Renewable Energy Buyback Scheme (REBS) which is 5kW for Synergy customers and 10kW per phase (30kW in total) for Horizon Power customers (Horizon Power customers installing greater than 5kW must consult Horizon Power first). These are determined by the size of the inverter.

The feed in tariff is in addition to the price paid by Synergy and Horizon Power under the Renewable Energy Buyback Scheme.

Further information

View solar power specials for Perth and Western Australia.

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, plus local electricity companies may choose to over additional payments above that.

View solar power specials for Brisbane and Queensland.

New South Wales feed in tariff

UPDATE: June 14, 2011. While the Solar Bonus Scheme is now closed to new applications, the NSW Government says net metering will be available and recommends consumers research energy retailers offering separate financial incentives for customers with solar power systems. Solar Credits are also still available, offering thousands off the cost of new solar power system.

Program history

The New South Wales Government originally announced details of the state's feed in tariff incentive (called the Solar Bonus Scheme) on June 23, 2009, but on November 9 2009, made a decision to switch from a net feed in tariff to the gross model; a much more generous arrangement. The program was rolled out offering payments of 60 c/KWh on a gross basis (for new connections made up until October 27, 2010)

Rates for the hugely popular feed in tariff program were reduced to 20c/kWh for new connections after midnight, October 27, 2010. Read more here

Furthermore, in mid-January 2011, the NSW Government announced the 300MW of installed solar capacity under the program was rapidly approaching, with applications already in the system exceeding that amount. After the 300MW cap was reached, the program may be ended, however, some NSW electricity retailers are offering payments separate to the Solar Bonus Scheme and net metering is also an option for new connections whereby electricity exported to the mains grid is credited to an account.

On May 13, 2011, the NSW Government announced the NSW Solar Bonus Scheme was now closed to new applications and applications lodged from midnight 28 April 2011.

NSW gross feed in tariff and electricity meters

According to the information we had on hand, current as at late December 2009, there are 3 distributors who were handling the GFiT separately (for those who were eligible, prior to the program being changed/put on hold):

a) Integral (West & South Sydney) - Integral meters can be reprogrammed and the gross feed in tariff will be offered from 1/1/2010. Customers must apply for the gross feed in tariff and may need to pay a fee.

b) Energy Australia (North Sydney) � The gross feed in tariff will not commence until 1/7/2010 for Energy Australia customers, but the net feed in tariff will be available before this time. Energy Australia's meters cannot be reprogrammed. Customers will need to change to a net meter on 1/1/2010 and then to a gross meter on or around 1/7/2010. It is likely that customers will need to pay for 2 meter changeovers.

c) Country Energy (the rest of NSW) � As per Energy Australia; the only difference being since January 1 2010, all grid interactive metering became contestable works. This means that although there is no charge for the meter, customers are asked to engage a level 2 Accredited Service Provider (ASP) to complete the installation of the meters. This will incur a varied cost.

View solar power specials for Sydney and New South Wales.

Germany sets the feed in tariff example

Possibly the most famous and successful feed-in tariff arrangements would be those in Germany over the past 20 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 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 had 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 had in the order of 7MW of grid-connected solar power, or less than 0.5% of Germany�s capacity.

Germany has continued to grow its solar market and currently has around 18,000 megawatts of solar power capacity. By the end of 2010, the total installed capacity of PV based solar power systems in Australia was over 571 MW.

Germany's program has been so successful that in late 2011, 1 million solar panel systems had been installed.

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

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.

When electricity is transmitted over a distance, some is lost through what is known as line loss. By installing rooftop solar arrays on houses, the electricity can supply not only the house on which it's installed, but the surplus can feed other houses close by.

Centralised power generation facilities also provide a relatively easy target for hostile parties and can be destroyed in natural disasters such as cyclones or fires. A decentralised network or grid connected systems allows for better energy security as it's much cheaper and faster to repair a sub-station than it is to replace an entire plant. It's in the interests of our national security to decentralise power generation.

During the summer months, it's becoming increasingly common for blackouts to occur due to an overload of the mains grid. It's during these months that solar power installations can make their greatest contribution.

A feed-in tariff for grid connected systems redresses these systemic market failures and threats 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' 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.