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What is solar feed in tariff

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Solar feed in Tariff

Have you heard of ‘feed-in tariff’(FIT), ‘buy-back rate’ and solar tariff’? If you have solar panels; then maybe, yes! But what do these terms mean? It is vital to understand them to get the best value from your solar.

So,let’s start with Feed-In Tariff.

Households and businesses installed with solar panels can be categorized as “off-grid” and “on-grid” Off-grid” system is when the generated electricity is used and power is stored in batteries for night use or in other words. “On-grid” system only generate power when the power grid is available. It must be connected to the grid and any excess power generated is also send back to the grid.

The customer receives a small credit on their bill for every kilowatt-hour(kWh) they export. Feed-in tariff (FIT) is the amount paid for electricity sent back to the grid . Most FIT in Australia are net tariffs: credited for surplus electricity fed into the grid after subtracting household use. Household bills are credited for all the electricity generated by their solar panels, and usage is charged separately.

Now, let’s talk about Feed-In Tariff Rates

Retailers fund majority of (FIT) which are between 6 cents/kWh and 30 cents/kWh. However, solar panels installed in some areas from 2007-2011 may be entitled to higher feed-in tariffs in excess of 40 cents/kWh.

FIT can vary with every retailer, state and distribution network. Energy providers tend to offer special deals for solar customers that include a higher FIT in exchange for increased electricity rates and lower discounts. However, a higher FIT does not mean you will receive a better deal.

FIT: If I am Renting

If you are renting a house with solar panels, you will receive the FIT for the electricity the house sends back to the grid. If you live in an apartment or townhouse, you need an electricity meter which is separate to the rest of the building in order to have a FIT. Also, have a discussion about the FIT agreement with your landlord.

How To Sign Up For A Feed-In Tariff?

Firstly, you must have solar panels or some other renewable generator installed although size requirement varies with every state. Contact your retailer once it has been installed and signed off. You will be required to a solar connection form, submit supporting documents that show that the installation was conducted by a licensed professional.

Your meter may also need to be upgraded or reconfigured to measure solar exports. Finally, sign up to a new energy contract suitable to your needs.

Time-Varying Feed-In Tariffs

Traditional FIT are single-rate which means that you will receive the same price for solar regardless of when you send back to the grid.  However, energy retailers in VIC and rural QLD are now required to offer what’s called a ‘time-varying feed-in tariff’ or ‘variable rate feed-in tariff’.

Variable-rate solar customers in VIC receive the highest FIT for exporting in peak demand periods (3 PM-9 PM weekdays) and the lowest FIT in off-peak times (10 PM-7 AM). During the shoulder period, customers receive a higher FIT compared to off-peak, but a lower FIT than peak. In regional QLD there is no shoulder period only peak and off-peak. Peak time (3 PM-7 PM) pays the highest FIT, while off-peak times (7 PM-3 PM) pay the lowest FIT.

The type of FIT suitable for you depends on your usage. If you have a solar battery, a time-varying tariff could be the best since you can store electricity generated through the day and export it during peak times when the FIT is highest.

For solar customers who want to maximize the return of their investment, Feed-in tariffs are important. Although, higher FIT does not always lower power bills. Couple of relevant factors are your usage, electricity usage rates, supply rates, discounts, contract periods, feed-in tariffs. We can help you find the best energy plan for your needs, click here