Feed in tariff

Notice in The Age about Victorian feed in tariff, August 2008
Notice in The Age about Victorian feed in tariff, August 2008

A feed in tariff provides a fair price for solar electricity generated on rooftops and fed into the electricity grid.

Moving towards renewable energy is an essential means of addressing climate change, and solar photovoltaic (PV) micro-generation has an important role to play in boosting renewable energy.

By offering a premium price for electricity generated on rooftops and fed directly into the grid, feed-in tariffs recognise the wealth of benefits which arise from the adoption of this technology. These include:

  • environmental benefits from reduced emissions of carbon dioxide and other pollutants
  • network benefits from reduced transmission losses and generation closer to the source of consumption;
  • supply benefits from producing clean power for the grid during peak load times on very hot days
  • economic benefits through lowering of peak wholesale electricity prices
  • social benefits via diversified electricity generation and job creation.

However, for a feed-in tariff to create the level of take-up required to achieve these benefits, it is essential an adequate rate is paid, for a long enough time, and on the total production of the solar system. A reasonable feed-in tariff (for Australia) would be:

  • 60 cents per kWh;
  • for at least 15 years; and
  • paid on the entire output of a system via gross production metering

A feed-in tariff set at this level will provide the necessary incentive for individuals to invest their personal finances into solar PV systems, safe in the knowledge that the price paid for electricity generated will adequately pay back this investment over the next 15 years.

Feed-in tariffs have been remarkably successful in over 40 countries internationally, and an adequate feed-in tariff has the potential to build an industry in sustainable solutions to climate change, provide an alternative to polluting brown coal, and position a country as a leader in renewable energy.

For example, feed in tariffs in Germany encouraged the installation of 900MW of solar power in 2006 alone, compared with the total of 40MW of solar power installed on Australian roof tops over a 10 year period.

Climate change is one of the greatest threats facing humanity. A feed in tariff policy measure will deliver a major expansion of renewable energy leading to real reductions in greenhouse gas pollution. There are two distinct types of feed in tariff which will impact the take up and pay back rates of any new Feed in Tariff schemes. A ‘net’ feed in tariff provides a rebate for all energy exported to the grid after the generated power has been used in the home. A credit is applied for the excess which is exported to the grid. A ‘gross’ feed in tariff exports all the generated power straight back into the grid, and will lead to more power being exported as it doesn’t take into account the in home use.

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