Update 3 Sept 2012: The Victorian government has announced that systems must be installed and all paperwork submitted by 30 September 2012 in order to secure eligibility for the Transitional or Standard Feed-in Tariffs. Once secured, rates will remain in place until 31 December 2016. Read more.
Although the Victoria Premium Feed-in Tariff came to a close at the end of September 2011, the state still offers some of the most generous incentives for home solar photovoltaic (PV) power installations in the country: a 25c/kWh rate on a Transitional Solar Feed-in Tariff scheme for systems 5kW or less, and a one-for-one rate on its Standard Feed-in Tariff for systems over 5kW and up to 100kW. This article is an overview of the two schemes.
How do the Victorian solar PV incentive schemes operate?
Transitional Feed-in Tariff for solar PV systems up to 5kW: 25c per kilowatt hour, net
The Transitional Feed-in Tariff is the scheme that comes into effect from 1 January 2012 and is designed to replace Victoria’s now concluded Premium Feed-in Tariff. It only applies to solar PV systems. Citing the falling price of solar PV installations, which it says have dropped by 50% since 2009, the government decided that it was appropriate to more than halve the subsidy rate to 25c/kWh.
Payback periods under the new scheme are expected to be the same as those of systems installed under the former 60c rate–10 years or less. The 25c/kWh rate is slightly higher than the cost of residential solar electricity in Victoria, and will remain available for eligible signed-up customers until the end of 2016–5 years. As the Transitional FiT is a net scheme, solar power generating customers will be credited by their electricity retailer on their bills for each unit of electricity that they feed in to the grid. They will also reap the benefits of offsets on electricity bills when solar electricity is used directly in the home.
Transitional Feed-in Tariff eligibility requirements:
-Systems must be no larger than 5 kilowatts (kW) based on their ‘nameplate capacity’–i.e. the total nominal power of the solar modules combined. A 5kW system will usually produce sufficient power to significantly reduce electricity bills for most residential households. (Systems over 5kW are still eligible for the Standard Feed-in Tariff.)
-The system must be installed on your principal place of residence (if it is for a household).
-If the system is to be installed on a small business or community organisation, there is a limit of 100 megawatt-hours (MWh, or 1,000kWh) of electricity consumption per year. If consumption is above this level, you are not eligible for the Transitional FiT
–Residences may only claim one solar system per site.
–Businesses and organisations that operate across multiple sites may claim one system per site.
–Premises must have bi-directional metering in place. Bi-directional meters measure electricity flows to and from the grid and records them on a half-hourly basis.
–Your electricity retailer must have more than 5,000 customers to be required to provide the Transitional Feed-in Tariff to you. Smaller companies are not required to do so.
–The scheme will have a capacity cap of 75MW (compared to 100MW under the previous scheme)–customers must enter the scheme before the cap has been reached.
Read more about the Victorian Government’s Transitional Feed-in Tariff Scheme
Standard Feed-in Tariff solar systems, wind power, hydro, and biomass generators above 5kW and up to 100kW: One-for-one, net
Under the Standard FiT, for every unit of electricity exported to the electricity grid, homes with solar systems will be credited at the same rate as their retail electricity tariff. Retail rates in most of Victoria currently hover between 17 and 23c/kWh, depending on the retailer and the plan (with ‘green’ electricity plans coming in significantly higher), and are on the rise.
Those who operate systems that feed into the electricity grid under the Standard FiT would be set to receive more than 25c/kWh when prices eventually reach this level. As with the Transitional scheme, solar feeders-in will benefit financially in two ways: credit for exported electricity, and a reduced amount of electricity that needs to be purchased from the grid. The Unlike the Transitional scheme, whose 25c rate is locked in until 2016, the Standard FiT has no end date. However, under a recent government inquiry the scheme may be relegated to a NSW-style, ‘competition-based’ scheme, with the rate being reduced significantly for those who are currently receiving it.
The purpose of the Transitional scheme, therefore, is to encourage the uptake of small-scale solar PV in the short-term, whilst the purpose of the Standard scheme is to incentivise installation of larger systems and more varied technologies in the longer term.
Standard Feed-in Tariff eligibility requirements:
–Operating a grid-connected solar PV system of over 5kW and up to 100kW in capacity. Smaller PV systems are only eligible for the Transitional FiT scheme.
-Alternatively, operating a non solar PV system (e.g. wind and hydro power) of any capacity up to 100kW and that feeds electricity into the grid. (Additional eligibility criteria may apply.)
–Both residential and business customers may apply
–Can be claimed on holiday homes
Read more about the Victoria Standard Feed-in Tariff
© 2011 Solar Choice Pty Ltd
He is now the communications manager for energy technology startup SwitchDin, but remains an occasional contributor to the Solar Choice blog.
James lives in Newcastle in a house with a weird solar system.
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Hi I am with Red Energy and they have cut my FIT To 6 cents. how do I find a better deal as I feel I am being ripped off at this rate? Regards Col
Hi Colin,
Most of the feed-in tariff rates offered by retailers these days are in the 6-10c/kWh range, unfortunately. Regardless of which retailer you are with, this means that it’s in your best interest to try to ‘self-consume’ as much of your solar energy as possible – doing so lets you avoid the purchase of electricity from the grid in the first place, which saves you more money than feed-in tariff credits in the end. You can read more about this in our article series: “How to get the most out of your solar system” (Part 1 & Part 2).
Diamond Energy is a retailer that offers a slightly higher feed-in tariff rate than most others in the states where they operate. They also offer a number of ‘soft benefits’, which include competitive electricity rates, support through and after the installation of your system and advice on how to keep your bills low.
Best of luck!
i have heard that the fed.gov.au is paying 50% of installion costs.
is this true.?
Hi Michael,
The Federal Government have several incentives in place that offset the cost of installation but it’s not a flat 50% off.
You may have heard of the Renewable Energy Target (RET), this obliges power utilities to surrender a certain number of Renewable Energy Certificates (RECs) every year, and the number of RECs required increasing annually. RECs can be either purchased from 3rd parties (like yourself) or created by the utilities themselves by producing power from renewable energy sources such as solar power.
How this can save you money on the cost of your solar PV system is through the Small-scale Technology Certificate (STCs).
An STC is the equivalent of 1 megawatt-hour (MWh) of renewable energy. Solar systems and other renewable energy sources can be ‘deemed’ to have a functional lifespan of 15 years (in reality, solar panels can be expected to continue producing power for up to 30). This means that all STCs can be created as soon as your system is installed, even before you have produced any power.
As a result the an up-front discount can be issues for those who purchase solar systems for their homes or businesses, and this the ‘payment’ from Federal Government you have heard of. The size of the ‘payment’ depends on the size of your system and how sunny the place you live is. For more information you can visit the ‘Solar Rebates‘ page on our website.
If you haven’t already you can complete the ‘Solar Quote Comparison‘ form to the right of the page. You’ll get a comparison for up to 7 installers in your area and the discount you will receive is listed in the ‘Less RECs or Solar Credits’ row, you’ll also receive a call from one of our Solar Brokers who will be able to talk you through the quote and answer any questions you have.
I have a 5 kw system so i am not 100% sure where i stand. Can i apply for the standard FiT? and if so how do i do this? System is new.
Hi Daryl,
A call to the Victorian DPI reveals that your system size is determined by its ‘nameplate capacity’, which (although a bit vague) basically means the cumulative nominal capacity of the solar panels in the system.
If this figure 5kW or lower, you are only eligible for the Transitional Feed-in Tariff. If it is over 5kW, you can only apply for the Standard Feed-in Tariff. The Victorian government is clear in dividing eligibility for the two schemes along this 5kW line.
I am have a 3.5kw system on my home I am elegible for a transitional feed in tariff for 5 years am I then able to transfer to a standard feedin tariff if not what happens to the power I feed into the grid.
Thanks for the enquiry. The new rules make it clear that–at least for the time being–solar systems over 5kW in capacity are eligible only for the standard feed-in tariff, whilst systems smaller than 5kW are eligible only for the transitional FiT, unless they were already receiving the standard FiT prior to the introduction of the transitional scheme. If it’s any consolation/assistance, in a phone call conversation the DPI did confirm for me that if you upgraded your system from a 3.5 to 5kW or greater that you would be eligible for the standard FiT.
That being said, it’s hard to say what will happen in 5 years’ time regarding government policies of this sort. The carpet was effectively yanked out from underneath the solar industry in NSW after the government changed over from Labour to Liberal last year and all solar incentives were eliminated. A similar story unfolded in WA. Victorian politicians seem at least marginally more mature, and such a situation so dire as those of NSW and WA is unlikely to present itself there. That being said, an inquiry is already underway in the state to evaluate the effectiveness of the FiT schemes. Once completed, it will make recommendations about the optimal paths for promoting renewable energy and energy efficiency, and may mean significant changes to the FiT programs in their current form. This is something to watch out for.
It’s also important to note that even with out a feed-in tariff, there are significant financial benefits to having solar power, provided you time your electricity usage to coincide with your system’s generation. You can save a lot of money on your electricity bills this way, and after 5 years of the Transitional FiT you will likely have recouped a significant portion of your initial investment in the system, especially with electricity prices expected to rise and solar system prices at all-time lows.