What is a Solar Feed-in Tariff?
Learn how Feed-in Tariffs work, the different types available, and how they can help you maximize the return on your solar investment.
Understanding Feed-in Tariffs
What is a Feed-in Tariff (FiT)?
A Feed-in Tariff (FiT) is the credit you receive from your electricity retailer for excess solar energy that your panels generate but you don't use. When your solar system produces more electricity than your household consumes, this excess energy is exported back to the grid, and your retailer pays you for it through a Feed-in Tariff.
How is FiT Measured?
Feed-in Tariffs are typically measured in cents per kilowatt-hour (c/kWh). For example, if your retailer offers a FiT rate of 10c/kWh and you export 5 kWh of solar energy in a day, you would receive a credit of 50c on your electricity bill for that day.
Types of Feed-in Tariffs
There are several types of Feed-in Tariffs available in Australia:
- Flat Rate FiT: Offers the same rate for all electricity exported to the grid, regardless of the time of day.
- Time-of-Export FiT: Offers different rates depending on when you export electricity, with higher rates during peak demand periods.
- Tiered FiT: Offers different rates based on the amount of electricity exported, with higher rates for the first few kWh per day.
- Bill Credits vs. Direct Payments: Some retailers offer bill credits that offset your electricity charges, while others provide direct payments or a combination of both.
Note: Policies and rates change frequently. Always verify current FiT rates and conditions with your electricity retailer and local energy regulator before making decisions.
How Feed-in Tariffs Work
Understanding the mechanics of Feed-in Tariffs can help you make informed decisions about your solar investment and maximize your returns.
Solar Generation
Your solar panels convert sunlight into electricity during daylight hours. The amount of electricity generated depends on factors like system size, panel orientation, weather conditions, and time of year.
Household Consumption
Your household uses electricity for appliances, lighting, and other devices. When your solar generation exceeds your consumption, the excess electricity is available for export to the grid.
Export to Grid
Excess solar electricity that isn't used by your household is automatically exported to the electricity grid through your bi-directional meter, which measures both imports and exports.
Receive FiT Credit
Your electricity retailer pays you for the exported energy at the agreed Feed-in Tariff rate. This credit appears on your electricity bill, offsetting the cost of any electricity you import from the grid.
Benefits of Feed-in Tariffs
Feed-in Tariffs offer several advantages for solar households, helping to improve the return on investment and encourage renewable energy adoption.
Financial Returns
FiTs provide ongoing financial returns for your solar investment, helping to offset the initial installation costs and improve the payback period.
Reduced Electricity Bills
FiT credits directly reduce your electricity bills by offsetting the cost of grid electricity you consume when your solar system isn't generating enough power.
Environmental Impact
By incentivizing solar energy exports, FiTs encourage more renewable energy generation, reducing reliance on fossil fuels and lowering carbon emissions.
Grid Support
Solar exports help support the electricity grid during peak demand periods, reducing strain on infrastructure and contributing to a more stable energy system.
FiT Rates by State
Feed-in Tariff rates and structures vary across Australian states and territories. Explore state-specific guides to find the most relevant information for your location.
Frequently Asked Questions
FiT payments are typically credited directly to your electricity bill, offsetting the cost of any electricity you import from the grid. Some retailers may offer direct payments to your bank account instead of or in addition to bill credits. The payment method depends on your retailer and the specific plan you're on.
No, FiT rates vary significantly between retailers. Each electricity retailer sets their own FiT rates based on market conditions, wholesale electricity prices, and their business strategy. This is why it's important to compare plans from multiple retailers to find the best FiT rate for your specific circumstances.
Yes, you need a bi-directional or smart meter that can measure both the electricity you import from the grid and the excess solar energy you export. Most solar installations include this type of meter, but if you have an older solar system, you may need to upgrade your meter to access current FiT rates.
FiT rates can change frequently, with some retailers adjusting their rates quarterly or even monthly. Changes are influenced by factors like wholesale electricity prices, government policies, and market competition. It's important to regularly review your plan and compare alternatives to ensure you're receiving competitive rates.
Not necessarily. A higher FiT rate doesn't always result in the lowest overall electricity bill if the plan has high daily supply charges or expensive import tariffs. When evaluating plans, consider the total impact on your bill rather than focusing solely on the FiT rate. Use comparison tools to calculate the net effect of different plans based on your specific circumstances.
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