Feed-in tariffs

This article will shine a light on what solar feed-in tariffs are, why they exist and how they work. We’ll also cover some scenarios in which a feed-in tariff might better suit your home than a discounted rate, and vice versa.
Feed-in tariffs
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If you’re a renter, you can find out if it’s worth considering a feed-in tariff on a solar energy plan, and if so, we’ll do what iSelect does best and guide you in the right direction to help you find a great deal on solar.

What is a solar feed-in tariff (FiT)?

When people have solar energy at home, the energy generated has to be used immediately, unless the homeowner has a solar battery. Without a solar battery, this excess energy is automatically fed back into the electricity grid to be used by other properties.

If you choose a feed-in tariff solar plan, you’ll generally be paid a credit on your energy bill for the excess energy which has been fed back into the grid. The feed-in tariff is a few cents per kilowatt hour (kWh) of electricity produced, and these tariffs can vary between providers.

A high feed-in tariff can work to help reduce your energy bills. But, as you’ll see, there may be other options to consider. The trade-off is between choosing a feed-in tariff or a discounted electricity rate. We’ll get to that later.

Why do we have feed-in tariffs?

An overview of feed-in tariffs from the Australian parliament outlines that FiTs are designed to meet economic, industrial, and environmental objectives.

They say that the primary goal is to encourage people to take up renewable energy. Making solar systems more affordable for the owner stimulates demand. They also encourage people to be energy efficient, as using less power themselves means they ‘sell’ more back to the grid.

Lastly, feed-in tariffs help decentralise electricity production. This is good because it makes our electricity network less vulnerable to natural hazards or maintenance issues, which can affect a centralised power supplier.

How do solar feed-in tariffs work?

Once you’ve installed your solar system, you need to check your eligibility for a solar feed-in tariff. This varies from state to state, and could involve an application to a state authority or an electricity provider.

If you are eligible, you can then enter into a contract, the majority of which are for a fixed term, to receive a feed-in tariff for the electricity you export to the grid. The government overview deals with this in more detail.

If you choose to opt for a feed-in tariff, you may then have the choice of ‘gross’ or ‘net’ metering. What’s the difference?

Gross metering

Simply put, with gross metering, you ‘feed-in’ to the grid, all of the electricity you generate. You are then credited for every kWh produced and pay the normal rate for every kWh you use from the grid.

Net metering

With net metering, the homeowner only feeds into the grid the solar energy they don’t use. They get a feed-in tariff credit for that energy, then pay normal electricity charges for the power they use from the grid.

Should you choose a discounted energy rate or a higher feed-in tariff?

Mmm, good question. There’s not really a straightforward answer, but here are some things to consider:

  • How big is your solar system? If it’s over 5kW, then you might benefit from a feed-in tariff, because you’ll be producing a fair amount of excess energy.
  • How much electricity do you use? If you’re not home much when the sun’s out, then you’ll be generating lots of electricity you’re not using. If so, a feed-in tariff could be worth more than a discounted rate.

The converse is also true. If you have a smaller solar system, or if you are home most of the day and use a lot of electricity, a discount rate could be worth more to you.

If you are tempted by a discount rate, always pay attention to any conditions that apply. For example, sometimes discounts are only available for a limited time.

Can renters benefit from feed-in tariffs?

In most cases, if your rental property is powered by solar, yes.

Unless there are special conditions in your lease – make sure you check – if your electricity bills are in your name, you will be credited as if you owned the property.

The Victorian government advises renters to check that the bills relating to a renewable energy system are in their own names. They also say that renters living in a shared unit or apartment block should make sure they have a separate electricity meter to the rest of the block. This will allow measurement of electricity generation and usage.

How can I find a good deal on solar energy?

A high feed-in tariff can help drastically reduce what you pay for electricity, which is why it’s so important to shop around for solar deals. We’ve discussed the trade-offs with tariffs and usage rates and the impact your own usage patterns can have on the cost of your electricity. It’s important to find a good deal and then balance the feed-in tariff against the discount rates available.

When it comes to feed-in tariffs, there’s a bit to understand, but we’re here to help. We have a range of quality solar providers and we’re ready to help you compare available plans now*. So, get started online or give us a call on 13 19 20.

Last updated: 15/11/2021