Victorian regulator confirms feed-in tariff to be slashed to 5c/kWh

Victoria’s Essential Services Commission has confirmed it will slash the feed-in tariff for solar power exported to the grid to 5c/kWh, starting January 01, 2016.

The ESC announced the decision in in a statement on Monday,  less than a week after the Victorian Andrews government promised to fight network discrimination against the state’s rooftop solar households.

The ESC said it had come to this price by weighing up the marginal cost of the equivalent amount of electricity that would otherwise need to be purchased from central generators, as well as “the locational value of electricity produced close to the final consumers compared to relatively distant central generators.”

It said the energy value of PV electricity had been calculated as a weighted average of the forecast spot market prices for Victoria for each half-hour period of 2016, as prepared by ACIL Allen Consulting.

Ironically, the Commission also said part of its decision to go with the lower 5 cent rate, rather than the proposed 6.2c/kWh figure, was due to a lower forecast wholesale market price of electricity, particularly during daylight hours when PV electricity was being generated.

For many Victorian PV owners, the tariff cut amounts to a 20 per cent reduction to the rate they currently get for their exported solar generation.

“This decision delivers a transfer of wealth from solar PV owners to electricity retailers,” said Australian Solar Council chief John Grimes.

“Solar energy exported to the grid is sold to your neighbors at the full retail rate, often upwards of $0.25 per kilowatt-hour. So paying a solar owner $0.05 cents per kilowatt hour for that exported energy is simply unfair.”

Solar Citizens national director Claire O’Rourke said the ESC had got its decision wrong, and was sending a starkly different message to Victorians than the state government, which just last week announced a Renewable Energy Roadmap aimed at achieving a renewable energy target of no less than 20 per cent by 2020 and with the stated goal of promoting rooftop solar uptake, and protecting the rights of existing rooftop solar households.

“The slashing of the feed-in tariff by the ESC is extremely unfair and risks undermining increased renewable energy as part of Victoria’s energy mix,” O’Rourke said in a statement on Tuesday.

“The Victorian government has committed to a review determining what a fair price should be later this year, but this could be too little too late if the ESC feed-in tariff cuts get the green light.

© 2015 Solar Choice Pty Ltd


  1. I have put in a 5kw only to find that I put back over 2000kw back into the grid and still get a bill every quarter . I believe that we are being ripped of by power companies as I understood that vic has a nett feed in tariff and all electric usage was to be taken off than left over kw to be credited; and on top of this we were only home for 9 weeks on this quarter

    1. Hi John,

      This is exactly the reason that so many homes are thinking about turning to battery storage – there is absolutely no incentive for solar homes to put their solar into the grid these days (the last solar feed-in tariff program was closed to new applicants several years ago). Alternatively, you can aim to find more ways to ensure you’re consuming all of your solar energy as it is being produced – either by setting up timers or with software platforms like Carbontrack.

      As unfortunate as this may be, it’s the reality that Australia’s solar households are dealing with. Fortunately, low solar system prices and high retail electricity prices still make it worthwhile for many homes (and businesses), but this usually means making sure that the solar system is appropriately sized for the home or business’s energy consumption patterns.

  2. Don’t forget that not only is the solar feed back rate in Victoria dropping down to a massively unfair 5 cents/Kw but all the retailers are increasing their rates as well from the 1st of january-How is this helping the renewable energy target?
    This-“Solar energy exported to the grid is sold to your neighbors at the full retail rate, often upwards of $0.25 per kilowatt-hour. So paying a solar owner $0.05 cents per kilowatt hour for that exported energy is simply unfair.”
    The Victorian government is playing with fire as the voters(ever increasingly have solar) will not accept this as good for Victorians or for the renewable energy target.
    The distributors appear to own Victoria’s Essential Services Commission not the people of Victoria.
    When ? and how ? is solar energy actually going to benefit the average household when the essential services Commission allows distributors to dictate how our solar inputs are priced.
    This is comparable to a business paying only 25% of the minimum wage to it’s employees-they are prosecuted-isn’t it about time the value of solar inputs into the grid is regulated for it’s actual value compared to retail rates.
    These are questions that the Governments are ignoring but very soon will determine the fate of existing or incoming government parties who continue to let distributors and retailers determine the market rates.
    Solar energy is the future-Why are we being penalised?

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