How Do Solar Feed-In Tariffs Work in Victoria?

Energy providers in Victoria allow solar owners to reduce the cost of their power bills by feeding their excess electricity into the grid. This increases the amount of clean energy available for other homes to use and helps the public at large. The rate and eligibility criteria for feed-in tariffs vary across different providers, and the best one for you will depend on your circumstances.
With Plico’s recent expansion into Victoria, we thought it would be a great opportunity to outline the ins and outs of solar feed-in tariffs throughout the state. Read on to learn more!

What is a solar feed-in tariff?

A solar feed-in tariff provides financial compensation to home solar system owners for their electricity. When a solar system generates more electricity than it needs, homeowners have the option to feed it back into the grid. They receive credit based on the amount of electricity and the time of day it’s fed back into the system network. This is used to lower their energy bills.
To learn more, check out our article about solar feed-in tariffs.

What factors affect solar feed-in tariff rates in Victoria?

There are a number of factors that contribute to the rate of feed-in tariffs in Victoria. The Essential Services Commission sets the minimum rate. While different providers may offer their own tariff rates and conditions, they must at least meet this minimum. Another important thing that affects solar feed-in tariff rates is whether they are flat or variable. Flat rates pay you the same amount for your electricity, regardless of the time of day. Meanwhile, variable tariffs pay you based on what times of the day have the highest demand. This means that during minimum demand periods, the rate is low, and it increases during periods of high demand. Deciding whether a flat rate or a variable rate is a better financial option depends on your energy use habits.

What are the minimum tariff rates in Victoria?

The minimum ‘flat rate’ set for feed-in tariffs in 2024-2025 is 3.3 cents per kilowatt hour (kWh). Flat-rate tariffs use the same rate regardless of the time of day. There is also the option for time-variable tariffs. As part of this, customers can either use a minimum rate between 2.8 and 7.6 cents an hour, depending on the time of day. Alternatively, customers must receive a minimum between 2.1 cents and 8.4 cents per kilowatt hour, varying by the time of day. What differentiates the two options is the time blocks used. Below is a table that illustrates this.

What solar feed-in tariffs are available in Victoria?

There are a wide variety of solar feed-in tariffs available in Victoria. Every energy provider has their own system and specific policies surrounding these tariffs. Tariffs from different providers vary according to their rates and whether they are flat or variable. Additionally, some have specific conditions that limit eligibility based on size and who your system was purchased from.

Premium feed-in tariff

The premium feed-in tariff functions slightly differently from regular solar feed-in tariffs. It was set up by the Victorian state government in 2009 as a way to incentivise households to install solar systems. The premium feed-in tariff uses a rate of 60 cents for every excess kilowatt hour of energy fed back into the grid. This is entirely independent of regular tariffs from energy providers, and households with solar can take advantage of both. However, the scheme is set to end in November of 2024.

What is the best solar feed-in tariff in Victoria?

The best solar feed-in tariff in Victoria is based on your individual circumstances as well as your location. Depending on your home solar system setup, you may not meet the eligibility criteria of some tariff providers. In terms of the maximum rate possible for a feed-in tariff, that would be the variable tariff from Origin Energy, which caps out at 18.0c/kWh (as of July 2024). However, this does require a system size that is no larger than 7 kW. Meanwhile, the highest minimum tariff rate comes from Indigo power at 7.2c/kWh. But it is worth noting that this is a flat rate that also doesn’t increase above 7.2c/kWh.

You will also need to consider changing tariffs and eligibility if you are changing feed-in providers. The best way to determine the ideal solar feed-in tariff for you is to discuss it with professionals like Plico. By looking at your electricity usage, we can determine the most advantageous option for you. We have managed to help a range of our customers in WA with their feed-in tariffs.

How do I apply for a solar feed-in tariff in Victoria?

You can apply for a solar feed-in tariff by contacting your chosen energy provider in Victoria. However, you want to do adequate research beforehand. There are a wide variety of energy retailers in Victoria with their own rates and eligibility criteria.

Eligibility criteria encompass a range of conditions you must meet before getting the benefits of the tariff. They may be based on the size of your solar system, while some companies require that the system and or/ the installation must go through them. Make sure to see which ones you qualify for or can become qualified for.

Beyond eligibility, you should examine the types of tariffs offered by energy retailers. Your household's energy usage patterns may mean that you are more suited to a flat tariff compared to a variable one or vice versa. Looking at your last few power bills and doing some calculations will give you an idea of how much you stand to gain with each provider.

How do I calculate my solar feed-in tariff in Victoria?

To calculate your solar feed-in tariff, you need to know the type of tariff, the rate and your excess electricity generation. If the type of tariff is flat, then it is easier to calculate because it will be the same rate throughout the day. A variable tariff will change rates throughout the day. Then, you must weigh up the rate itself at each part of the day. And finally, you need to have an idea of the amount of excess electricity you can send  into the grid. This is calculated by subtracting the amount of power used by your household from the amount of power generated by your solar system.

Calculating a flat tariff

Calculating a flat tariff simply involves adding up the amount of excess kilowatt hours (kWh) generated by your system within a span of time and multiplying it by the flat rate. For example, if you exported 2kW in a day at a flat rate of 5c/kWh, you would multiply them. 2kWh multiplied by 5 cents would result in a 10-cent decrease in your power bill for that day. Note that there are significant seasonal differences to consider when estimating potential buyback from solar exports. 

Calculating a variable tariff

Calculating a variable tariff is a bit more involved but relatively straightforward if you know the details. Let’s assume that the rate is 3c/kWh between 12 pm and 5 pm and 9c/kWh between 5 pm and 8 pm. Then let’s assume you exported 2kWh of power between 4 pm and 6 pm. For the hour between 4 pm and 5 pm, you would use the first-rate, at 3c/kWh. The second hour, between 5 pm and 6 pm, uses the second rate of 9c/kWh. Therefore, the first hour generates 3 cents, and the second hour generates 9 cents, resulting in a total of 12 cents in savings for your power bill.

If you want a helpful tool for these calculations, check out this solar savings calculator from Victorian Energy Compare.

Are feed-in tariffs increasing in Victoria?

Solar feed-in tariffs are on a downward trajectory in Victoria and Australia at large. Over the years, tariffs have consistently decreased, becoming less and less profitable. While some fluctuation is expected, and there can be stability over short periods, the macro trend is a decrease. Because of this, they might not yield the kind of bill savings solar owners are expecting. While even a modest decrease in energy bills adds up over time, there are other options available that offer better financial rewards.

Installing a solar battery

One of the most effective alternatives to the solar feed-in tariff is a solar battery. Solar batteries give you the ability to save by storing your excess energy during the day to power your home at night. This lets you significantly lower your reliance on the grid. Additionally, they allow you to join a Virtual Power Plant (VPP), with the potential for better financial compensation than solar feed-in tariffs. You can even earn money switching your solar off when you’re part of a VPP!

How can Plico help?

If you’re looking for information on anything related to solar power, look no further than Plico. Our solar experts can give you helpful advice before installing the solar + battery,  battery-only and solar-only systems that best suit you. Our energy solutions are affordable and reliable to give you peace of mind and greater energy independence. Chat with our switched-on team on 1300 175 426 to explore your solar + battery future. 

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