Understanding Feed-in Tariffs (FiTs) in Australia: Are They Still Relevant?
So, you've got solar panels on your roof, or you're thinking about getting them. Great! You're joining the clean energy revolution and saving money on your electricity bills. But what about those feed-in tariffs (FiTs) you've heard about? Are they still worth getting excited about in 2024? Let's dive in. If you are trying to determine if solar is worth it in Australia, read our Complete Guide.
What is a Feed-in Tariff Anyway?
Simply put, a feed-in tariff (FiT) is the payment your electricity retailer gives you for any excess solar power your system generates that you don't use yourself and send back to the grid. Think of it as a small payment for sharing your green energy with your neighbours. Your home will have a smart meter installed that measures how much electricity you use, and also how much you export to the grid.
For example, let’s say your solar panels generate 10 kWh (kilowatt-hours) of electricity in a day. You use 7 kWh to power your home during the day. That leaves 3 kWh that gets sent back to the grid. Your FiT applies to these 3 kWh. Your electricity bill will then show any export credits minus what you paid for the electricity you did draw from the grid, along with your daily supply charge.
How FiTs Work
When you install solar panels, your electricity retailer will typically set you up with a bi-directional meter (also known as a smart meter). This meter accurately tracks both the electricity you import from the grid and the electricity you export back to it. The FiT is calculated based on the amount of electricity you export.
It's crucial to understand that the FiT is separate from any government rebates or incentives you receive for installing solar panels in the first place. Rebates like the Small-scale Technology Certificates (STCs) scheme help lower the initial cost of your solar system, while the FiT is an ongoing payment for the electricity you generate.
The Rise and… Moderation of Feed-in Tariffs
Back in the early days of solar, FiTs were much more generous, sometimes as high as 40-60 cents per kWh. These high rates were designed to encourage early adoption of solar technology. However, as solar became more widespread and the cost of solar panels decreased, FiTs have gradually come down.
Today, in 2024, most feed-in tariff rates across Australia range from around 5 to 12 cents per kWh, depending on your state and retailer. Some retailers may advertise higher FiTs (around 10-15 cents/kWh), but these often come with catches, like only applying to a limited amount of exported electricity per day or requiring you to purchase your solar system from that specific retailer.
So, Are FiTs Still Relevant?
The short answer is: yes, but their role has changed. While FiTs might not be the main driver of savings they once were, they still contribute to offsetting your electricity costs. However, it's essential to have realistic expectations.
Think about it this way: the electricity you buy from the grid usually costs significantly more than what you get paid for exporting solar power. You might pay around 25-35 cents per kWh for electricity from the grid, while your FiT might only be 5-12 cents per kWh. This means every kWh of solar electricity you use directly in your home is worth much more to you than a kWh you send back to the grid.
Maximising Your Solar Savings: It's All About Self-Consumption
The key to getting the most out of your solar system is to maximise your self-consumption of solar energy. This means using as much of the electricity your panels generate as possible, rather than exporting it.
Here are some tips:
- Run appliances during daylight hours: Schedule your dishwasher, washing machine, and pool pump to run when the sun is shining.
- Charge your electric vehicle (EV): If you have an EV, charge it during the day to take advantage of your solar power.
- Consider a battery: A home battery system allows you to store excess solar energy generated during the day and use it at night when your solar panels aren't producing power. This further reduces your reliance on grid electricity and increases your self-consumption.
Choosing the Right Electricity Plan
When selecting an electricity plan, don't focus solely on the highest FiT. Look at the overall picture, including:
- Usage rates: How much you pay for electricity you draw from the grid.
- Daily supply charge: A fixed daily fee charged by your retailer.
A high FiT might seem attractive, but if the plan also has higher usage rates or a higher daily fee, you might end up paying more overall.
Review Your Plan Regularly
The electricity market is constantly changing, so it's wise to review your electricity plan at least once a year, especially if your solar setup changes (for example, if you add a battery). Don't be afraid to switch retailers if you find a better deal. Just be mindful of any contract exit fees.
The Future of FiTs
Feed-in tariffs are likely to remain at their current levels or even decrease slightly in the coming years. While they still offer a small financial incentive, the primary benefit of solar power remains in reducing your reliance on grid electricity and lowering your overall energy bills through self-consumption. Emerging technologies like Virtual Power Plants (VPPs) may offer new ways to earn credits, though they often involve some flexibility in your energy exports.
In Conclusion
Feed-in tariffs are still relevant in Australia, but their role has evolved. Don't expect them to be a major source of income. Instead, focus on maximising your self-consumption of solar energy and choosing an electricity plan that offers a fair FiT and competitive usage rates. By taking these steps, you can get the most out of your solar system and contribute to a cleaner, more sustainable future.
