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Feed-in tariff for grid-connected solar 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.

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

State	Current status	Max Size	Rate Paid	Program Duration	Model
VIC	Commences in 2009	5 kW	60c (credit only)	15 years	Net
SA	Commenced in July 2008	10 kW	44c+	20 years	Net
ACT	Commenced March 2009	under 10 kW - premium rate; over 10kW - 80% of premium rate; over 30 kW - tbc	50.05c/kWh up to 10kw capacity and 40.04c/kWh up to 30kW capacity	20 years	Gross
TAS	Commenced	tbc	20c	tbc	Net
NT	Incentive is available for 225 rooftop PV systems in Alice Springs.	tbc	45.76 c/kWh. Capped at $5 per day, then reverts to 23.11c per kWh.	tbc	Net
WA	tbc	tbc	tbc	tbc	Net
QLD	Commenced in July 2008	10 kW	44c+	20 years	Net
NSW	To commence January 2010	10kW	60c/kWh	20 years	Net
view grid connect solar power specials for your state or get an instant, obligation free online quote for home solar power!

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 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 it's solar market and currently has around 2,500 MW of solar power capacity.

Based on exchange rates as of mid-February 2009 and under the new tariff structure introduced in 2004, the base level of compensation for grid connected solar power installations on homes and buildings is up to AUD$ 1.12 per kWh.

Austrailia's solar market share

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.

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.

Victoria net feed in tariff

Victorian households with solar power systems will be paid a feed in tariff commencing some time in 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 residential grid connect system owners will be credited 60 cents for every unused kilowatt hour of power fed back into the state electricity grid. However, this will only be as a credit on their bill, rather than as a cash payment. If the system owner generates credit from the feed-in tariff exceeding the cost of their electricity consumption during the billing period, the additional credit is rolled over to the next billing period up to a maximum of 12 months from the generation date. Depending on the electricity provider, accumulated credit may voided after the 12 months.

View solar power specials for Victoria.

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.

View solar power specials for 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, which will pay 50.05c/kWh for systems up to 10kw capacity and 40.04c/kWh for up to 30kW capacity, with a system capacity cap at this point of 30kW. The system cap may also be increased later in 2009. The program was rolled out on March 1, 2009.

This is the most generous feed in tariff program in Australia! Install a 1 kW solar power system now for under $4,000 and EARN over $15,000 over the life of the system! Learn more.

View solar power specials for Canberra and the ACT.

Tasmania net feed in tariff

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

View solar power specials for Tasmania.

Northern Territory net feed in tariff

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

View solar power specials for Northern Territory.

Western Australia gross feed in tariff

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 says it will be instead introducing a net feed in tariff model. Dates and rates of the revamped program are unknown at this point in time.

View solar power specials for 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 Queensland.

New South Wales feed in tariff

The New South Wales Government announced details of the state's feed in tariff scheme on June 23, 2009:

� 20 year program
� Pays 60 c/KWh on a net basis
� System eligibility up to 10 kW in size
� Commences 1 January 2010
� Reviewed in 2012

View solar power specials for New South Wales.

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's called 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 strongly believes that an effective scheme would involve a feed-in tariff of at least 80 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 80 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 and there should be a crossover period where the rebate is still available.

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.

You can also sign our petition at FeedInTariff.com.au! Your voice will be heard!

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.