If you’re a solar homeowner and you’re connected to the grid, you may be very familiar with the concept of feed-in tariffs. While you are still charged for your energy consumption from the grid and a daily supply charge, most electricity retailers offer a feed-in tariff, or FiT, as the payment that you receive in exchange for any excess energy you feed back into the grid. Consider it an incentive for generating clean energy and allowing others to use it.
However, as solar becomes more popular, FiT’s have been steadily decreasing. More than 10 years ago, FiT’s that residential households were eligible to receive were a lot higher than what’s offered today. Take the state of Victoria for example, where this tariff has gone from 60 c/kWh back in 2009 to 5.20 c/kWh starting 1 July 2022 – a reduction of over 91%!
We have talked before about solar batteries being a great way of maximising your PV generation, as they allow you to store some of that excess energy and use it when you need it most, like at night.
Even so, especially with a big enough solar system, you might be able to charge your storage AND still send some excess energy to the grid. When it comes to clawing back from rising electricity costs, every single cent counts.
Who sets the feed-in tariff you get paid?
Minimum feed-in tariffs are updated every year by governmental bodies or independent regulators depending on your place of residence – like the IPART in NSW or the ESC in VIC.
However, the entity that ultimately pays you a FiT is the one that also sends you a bill: your electricity retailer. Electricity retailers must offer the minimum FiT mandated but can offer any amount above that if they choose to do so.
Therefore, the feed-in tariff you get paid can vary from retailer to retailer, and in some instances, from plan to plan even within the same retailer. There is a myriad of options out there, with some rates tied directly to the wholesale market spot price, time-varying vs flat or plans that require the household to have a solar battery or electric vehicle. So how do you go about choosing what’s best for you?
Fortunately, there are tools to help you navigate these complexities and compare between retailers’ offers like the Victorian Energy Compare and the Energy Made Easy websites (for VIC and non-VIC residents respectively). You usually enter information about your address and current energy usage, and in exchange will get a list of different energy plans available to you.
If you identify a more suitable plan for you, you simply need to contact your new chosen retailer and arrange for your electricity service to be switched over.
So, a plan with higher feed-in tariffs is better?
Not quite. Some retailers may offer a high feed-in tariff in a plan that has higher electricity rates too. Before switching it is important you analyse the rate plan as a whole, taking into account:
- Electricity rates and your usage times (especially important for time-of-use plans)
- Any limits to export at certain feed-in tariff rates. There are plans in the market that offer a tempting FiT that is limited to a capped amount of kWh’s a day
- Daily supply charge, which you pay regardless of the amount of electricity you consume from the grid
- Any conditional discounts (like ‘pay on time’ or ‘bundled’ plans)
- Early termination, late payment or disconnection fees
- Other relevant terms and conditions
Is there an easier solution?
No matter how hard you look, feed-in tariffs are designed to be lower than the electricity rates you pay to your retailer. That is why using as much of that free energy you already generate at home is a more straightforward way to save on rising living costs.
By using your own solar power, there are no overheads, no transmission costs, no tricky sales conditions. Solar PV requires little maintenance and is an investment you can maximise for decades.
Even better, solar batteries allow you to squeeze the most out of your solar, gain independence from the grid (and those pesky electricity retailers), as well as providing other bonuses like protecting your home from blackouts and added monitoring capabilities that put you behind the steering wheel of your life once again.