The federal reduction in feed-in tariffs for solar systems makes batteries viable

The solar feed-in tariffs (FiTs) continue to decline across the country. In late February 2022, Victoria’s Energy Regulator announced a further cut in the state’s FiT. The minimum rate that retailers have to pay to rooftop solar exporters has been reduced from 6.7 cents/kWh to 5.2 cents/kWh – and will come into effect in July. However, Victoria is not alone. Australia-wide FiTs are trending downwards due to the sheer number of solar homes that are now in place (Australia is the world leader in PV rooftop adoption).

Luckily, limiting sun exposure through the old, tight, rickety grid doesn’t mean the end of sun exposure is far from there. After all, the age of the solar household is not coming to an end, but the age of the solar+storage household is just beginning.

Over the past decade, solar energy prices have fallen dramatically, making installation a breeze for anyone under the sun, and the fall in solar feed-in tariffs is inevitable in a constrained grid. The same is happening now for home battery storage systems like Tesla Powerwall. And as FiTs decrease and it becomes less attractive to feed your excess solar energy into the grid, it makes more and more sense to store all the excess solar energy that the household does not use during the day for the night. After all, you generate solar power, which you can also use sensibly!

In this blog we take you through the FiT prospects across Australia and how combining battery storage with your solar panels can offset the lost savings on your electricity bill and further reduce your carbon footprint.

Batteries fit the bill

According to the Essential Services Commission, the decline in solar feed-in tariffs is “mainly due to lower wholesale electricity prices. Wholesale prices have fallen the most at lunchtime, when most solar energy is exported.” So the downward trend in Victoria since 2020 is a story that is playing out across much of the nation.

Image: Essential Services Commission

In some places, where the network is particularly congested, no FiT yields are reported at all. But even if you live in a jurisdiction where FiTs continue to be lucrative, or you have an existing solar installation and are thus locked into a long-term FiT, a home battery can still make the most of your renewable energy for household use and export. A Tesla Powerwall’s time-based control capability means it can learn and predict energy costs over time, allowing it to charge when the sun is plentiful or grid power is cheap, and discharge that energy at times when the price is peaking is highest.

Unfortunately, at the time of writing, there are no federal rebates for battery storage systems, although the Cheaper Home Batteries Act 2022, currently in Parliament, could change that. If passed, the law could reduce the cost of home battery storage systems like Tesla Powerwall by as much as $3,000. However, there are a number of state-level options that will ensure a Tesla Powerwall is worthwhile in 2022.

Below is a look at the drop in solar feed-in tariffs in your jurisdiction.

What are the solar feed-in tariffs in Victoria?

As mentioned above, the Essential Services Commission in Victoria sets a mandatory minimum residential feed-in tariff and this minimum feed-in tariff will drop from 6.7 cents to 5.2 cents per kWh on 1 July 2022. However, maximum FiTs are in the range of 7 – 10 cents/kWh is still available from some retailers depending on the size of the installation and if you can meet certain special conditions. Attention, some of these special regulations are only in the small print of your electricity contract!

Image: Essential Services Commission

What are the solar feed-in tariffs in New South Wales?

There is no set minimum FiT rate in NSW, although the benchmark range is between 4.6 and 5.5 cents/kWh according to the NSW Independent Pricing and Regulatory Tribunal (IPART). IPART notes that its benchmarks have been falling for three years “because wholesale prices are falling”. This is being driven by increasing solar penetration, which has stifled demand for electricity from the NEM. IPART also observed that FiTs are likely to remain relatively low in the medium term due to the low wholesale prices at lunchtime thanks to the use of solar energy.

Image: Independent price and regulation court

What are Queensland’s solar feed-in tariffs?

In Queensland, solar FiTs are split between regional tariffs and tariffs for customers in South East Queensland (SEQ), the latter being deregulated.

For regional customers, a new feed-in tariff for small PV owners for 2022-23 is due in May 2022. Until then, the 2021-22 feed-in tariff is 6.583c/kWh. The Queensland Competition Authority (QCA) found this figure to be 16.2% lower than the previous FiT, in line with the downward trend, “primarily driven by a decrease in both wholesale energy costs and ancillary service charges … mainly due to the large volume of renewable energy entering the NEM.”

Image: Queensland Competition Authority

For SEQ customers, according to the QCA’s latest October 2021 report, the number of retailers offering plans with FiTs has continued to increase in 2020-21, but the “average residential FiTs in SEQ in 2020-21 are lower than wholesale energy costs.” further decreased declined. By the June quarter of 2021, the market average had dropped to 6.8 cents/kWh (from 8.5 cents/kWh in the June quarter of 2020).”

Image: Queensland Competition Authority

What are the solar feed-in tariffs in the Northern Territory?

The Northern Territory Government announced in April 2020 a new FiT standard of 8.3 cents/kWh that will apply to all commercial and residential solar systems rated up to 30kW. This was a significant drop from the previous standard FiT of 26.05c/kWh, which does not exist as a “Premium”. However, the commercial “premium” is 30.32 c/kWh.

What are the feed-in tariffs for solar energy in South Australia?

There is no minimum FiT rate in South Australia, although the Essential Services Commission of South Australia (ESCOSA) has a monitoring system. ESCOSA’s latest monitoring report found that the highest and lowest FiTs have gradually decreased over the past three years. During this time, the range of FiTs has decreased from 6.8-23 cents/kWh (2018-19), 5-23 cents/kWh (2019-20) and 2.1-22 cents/kWh (2020-21).

What are the solar feed-in tariffs in Tasmania?

In Tasmania, the Office of the Tasmanian Economic Regulator (TER) has set a minimum adjustment of 6.5 cents/kWh until 30 June 2022. The TER noted that the “2021-22 feed-in tariff is 23% lower than the 2020-21 rate. The lower rate is due to a 24% fall in the wholesale electricity price.”

Image: Tasmanian Office of Economic Control

What are the solar feed-in tariffs in Western Australia?

Like some other jurisdictions, Western Australia’s Distributed Energy Buyback Scheme (DEBS), launched in November 2020, has different rates for different times of the day. According to the Australian Government’s Department for Industry, Science, Energy and Resources, electricity exported between 3pm and 9pm earns 10 cents/kWh through DEBS, while electricity exported at other times earns 3 cents/kWh. kWh earned (this rate is only 2.75 cents/kWh for Synergy customers).

These prices represent significant discounts over the previous Renewable Energy Buyback Scheme (REBS). Under REBS, the FiT in Perth and the South West region was 7.135 c/kWh. While Horizon REBS solar customers received between 7.14 and 51 c/kWh depending on location.

What are the feed-in tariffs for solar energy in the Australian Capital Territory?

If you completed your solar system before July 2021 you should still be on a FiT between 30-45c/kWh. But ACT no longer regulates its FiTs and now the average FiT in the ACT is somewhere between 6-9c/kWh.

Image: ACT Government

Stay fit with Tesla Powerwall

As you can see, the overall trend for FiTs is down nationwide, but the solar boom is far from over. In fact, the rise of solar energy is just beginning, thanks to the falling cost of battery systems for home use.

FiTs aren’t the solar stimulus they once were, but that’s not the case if the energy you’re exporting is during peak periods of energy demand (when a solar system without a battery would end the night). More importantly, with solar power coupled with a home battery storage system like Tesla Powerwall, you’ll get far more out of your solar investment than electricity traders are willing to give you back. One of the great things about combining your solar system with Tesla Powerwall is that you will never feel under the thumb of electric companies again!

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