Victorian Feed-in Tariff open to low-emissions technology applicants

Anyone interested in installing small and medium sized commercial solar systems in Victoria should take note that the Victorian Government introduced a new minimum feed-in tariff rate in 2013 based on the wholesale cost of electricity, adjusted for avoided transmission and distribution losses.

All Victorian electricity retailers with more than 5,000 customers must offer a minimum 8 cent feed-in tariff in 2014, but they may offer different packages and terms and conditions.

For 2013 and 2014, this minimum rate has been set at 8 cents per kilowatt hour for excess electricity fed back to the grid and will be reset on an annual basis by the Essential Services Commission (ESC) until 2016. The fund is open to renewables and low emissions technologies and the application process for low-emissions technologies begins on 1 February 2014 and closes on 30 April 2014.

Interestingly, the Energy Legislation Amendment (Feed-in Tariffs and Other Matters) Bill 2013, which came into effect on 10 July 2013, amended the definition of eligible technologies by removing the restriction on energy created using fossil fuels or materials and waste products derived from fossil fuels. Therefore, technologies of less than 100 kilowatts in capacity and which may be considered ‘low-emissions’ are now eligible to apply for Victoria’s Feed-in Tariff scheme provided they meet the eligibility criteria outlined in this document.

Just why it was opened up to other low emissions technologies is another matter, but ultimately applicants need to provide an emissions intensity measurement that has been verified (or performed) by a nationally accredited laboratory.

According to the International Energy Agency (PDF), on average around the world the only non-renewable energies that might come close are Gas generation in their various forms. However, one suspects that given the scheme is restricted to <100kW and the cost of gas is rising rapidly, it is unlikely that gas generation will compete for this scheme. It will definitely be interesting to watch what happens.

Emission factors from electricity generation

While many could very reasonably argue that 8 cents per kilowatt hour is a pittance and well below the real value solar energy, the good news is that at least there is a minimum rate in Victoria; in some states this mandatory minimum is not even available.

Although it will depend on the package terms and conditions, for the majority of Victorian small business customers solar still makes huge sense.

According to published electricity offers on the Victorian Government web site (YourChoice), the average peak daily price that small business customers pay is $0.23ckWh excluding daily charges and GST. The range is quite wide depending on circumstances; we measured a minimum price of $0.17ckWh and a maximum price of $0.32c kWh. This correlates well with information from the Australian Energy Market Commission who estimated (PDF) in December 2013 that the average Victorian price was around $0.28c kWh in 2013/2014.

So, although you may only get $0.08ckWh for exported (excess) energy by choosing a well designed solar system that matches your demand profile and minimises exports, you can expect to offset demand at an average of around $0.23c kWh. If you do go over occasionally at least you know what you’ll get.

Shop around, choose a great solar supplier and make sure that your deal is structured right.

© 2014 Solar Choice Pty Ltd

Nigel Morris

Nigel is one of the foremost solar energy analysts in Australia, having worked in the industry for over two decades.
Nigel Morris

Comments

  1. The way I look at it, the energy retailer benefits more from the solar power generated and fed back to the grid than I would. I work during the day and the only appliance using power at that time is my refrigerator. Therefore most of the power generated would be fed back to the grid, for which I would only receive 8 cents per kw. And then when I get home in the evening and use my lights and appliances I would be buying power at around 31 cents per kw. So the excess power I generated during the day is bought at 8 cents per kw and then sold back to me at 31 cents per kw. This is not a good deal for customers. It would only be a good deal if I was getting 31 cents per kw of power fed back to the grid. In this way I would be offsetting the power I use at night. I know people who have 16 panels on their roof and their power bills are still between $250 – $300 per quarter for a two person household. I don’t have solar panels and my bills are not much more for a two person household and same size house. The new FIT are a rip off. I wouldn’t spend the money on solar panels and I know people who wish they hadn’t spent the money.

    Explain to me why getting solar is a good idea, apart from helping the environment. Why should energy retailers benefit more from the solar power I generate than I do? And why is the government making the option of installing solar a less attractive? Why give in to pressure from the polluting industries? The government should be encouraging installation of solar panels. If I ever get solar panels, I will be installing a generator to store the power I generate for my own use.

    1. Hi Miryana,

      Thanks for commenting. We totally agree with you that the buyback rate should be much higher than the 8c/kWh currently on offer–as you’ve pointed out, it seems ridiculous that retailers can pay so little and then sell back power later in the day for so much more.

      That being said, investing in solar panels does still make sense for the right households. Since the feed-in tariffs in pretty much every state have fallen well below the cost of retail electricity, solar panels are for those who can use power during the day and ‘self-consume’ the electricity that their panels produce. We here at Solar Choice are very clear about this: solar power is for offsetting electricity bills. Thankfully the cost of going solar has come down so significantly (check out recent prices) that it can be a good investment, but you have to be smart about it and know what you’re getting!

      Also, as time goes on, energy storage for solar is becoming more affordable, so it’s not unthinkable that more people going solar will turn to this as a way to increase their solar energy self-consumption. Keep an eye out!

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