Electricity prices in Australia have been spiralling out of control with prices in all major capital cities recording an average increase of well above 30% in recent years.
Worst yet, this is set to continue for the foreseeable future (with or without a price on carbon emissions).
To combat this relentless rise in electricity prices, many Australians have decided to take matters into their own hands and install solar panels on their roof in order to generate their own free power from the sun.
Federal and state governments offer rebates to offset some of the upfront costs of getting a solar power generation system installed.
However, even after those rebates (which have been on the decline for some time), the out-of-pocket expenses still amount to thousands of dollars for most people, therefore making those systems out of reach for many Aussie families.
Another way in which state governments are trying to assist owners of solar power generation systems to recoup the cost of their investment is by offering what is known as a solar feed-in tariff
With this scheme, people are given credit, through their electricity retailer, for the electricity their systems generates but they don’t end up using. This is also known as ‘exporting’ energy to the grid.
This credit is used as an offset against the cost of electricity they ‘import’ which is the power they get from the grid to supplement the generation capacity of their system or when their system is not operational at all (e.g. at night or on a cloudy day).
The pricing model for the solar feed-in tariff scheme is Cents per Kwh (Kilowatt Hour) which is the same pricing model electricity companies use to charge us all for our usage.
This means that the higher the solar feed-in tariff is, the quicker owners of Solar power generation systems can recoup their investment.
Alternatively, they can also increase the amount of Kwh they end up exporting to the grid by either increasing the generation capacity of their system (by getting a bigger system with more solar panels for example) or reducing their own consumption, or both.
Doing this will mean there will be more Kwh that can be ‘exported’ to the grid thus increasing the overall solar feed-in tariff credit amount.
This is the second way owners of solar power generation systems can reduce their ‘payback period‘ and recoup the cost of their systems (the first one being upfront government rebates as discussed above).
A new option has emerged relatively recently which is storing electricity your system generates instead of exporting it to the grid so that you can use it later (like in the evening after you come home from work) instead of drawing power from the grid, for which you get charged.
Storing power for later use is done using advanced battery systems like the Powerwall from Tesla but as this short news clip shows, these systems are currently still very expensive and there are also other potential issues associated with them (mainly due to inconsistent government regulations).
Feed-in tariffs are not what they used to be
Solar feed-in tariffs, which are state-based, have been falling across the board and owners of Solar Power systems are constantly paid less and less for the electricity they ‘export’ to the grid, thus making their ‘payback period’ longer.
So what is one to do? Is there a way to squeeze some extra dough from each Kwh your system exports to the grid?
Well, actually there is!
However, this solution will only work if you live in an area where you are able to choose your electricity retailer.
If you can’t then unfortunately your options are somewhat limited and essentially you need to either get off-grid completely by adding a storage system (no more electricity bills and dealing with electricity companies!), or explore other alternatives to sell the excess power your system generates directly to other people.
You can read the solar power guide to get more information about some of those innovative solutions which are starting to come out.
Feel free to do it now as the rest of this article is not really relevant for you (sorry!).
Get a higher feed-in tariff through your electricity company
Great! Let’s continue 🙂 .
First of all, despite the relatively bleak situation feed-in tariffs are currently at, rest assured that you can still make decent money from ‘exporting’ your excess generation capacity to the grid, as this video demonstrates:
Like pretty much with anything else in life, knowledge is power and if you get savvy, you win! 🙂
Getting savvy with your feed-in tariff
You may not be aware of that but one of the biggest areas electricity companies differentiate themselves from their competitors is through the feed-in tariff.
Most of the electricity retailers now have special plans for people with solar power systems and those plans often offer feed-in tariffs which are above and beyond the feed-in tariff mandated by the local state government (if there is one).
The plans vary based on the solar feed-in tariff and the percentage of the ‘pay on time’ discount you get on the electricity that you end up ‘importing’ from the grid.
The higher the solar feed-in tariff (i.e. what you get for ‘exporting’ power), the lower the discount on electricity the household draws from the grid (i.e. what you pay for ‘importing’ power).
In order to secure the highest solar feed-in tariff, you will need to opt for the plan that offers the lowest discount on electricity imported from the grid.
This means that if you usually export a lot of power to the grid, you should go for the highest feed-in tariff.
If you end up using most of the power your system generates and only export a little bit on occasion, you should go for the highest discount.
If you have the means to combine your solar power generation system with a power storage system (such as the Powerwall), you can reduce your need to ‘import’ power from the grid or even eliminate it altogether.
Another thing worth knowing is that the feed-in tariffs in Victoria and Queensland are net feed-in tariffs. This means they only apply to the excess electricity that you export to the grid (i.e total Kwh exported – total Kwh imported).
In New South Wales on the other hand, you are paid a gross feed-in tariff which means you get paid for each Kwh you export regardless of how many Kwh you import (and for which you are obviously charged separately by your electricity retailer).
Based on our research, Comparison Site Canstar seem to have the most comprehensive and up-to-date list of the feed-in tariffs on offer by the various retailers in each state (scroll to the bottom past the promoted results and you’ll see the complete lists for each state).
You can also use the government comparison sites (this one if you live in Victoria and this one if you live anywhere else) but from our experience, they are a bit confusing when it comes to taking into account the feed-in tariff and therefore their results may be a bit hard to understand.
The Canstar list presents things in a much better way because they show the actual feed-in tariff you get paid for each Kwh exported, including any bonus rate offered by the electricity company.
Got any questions or comments.?
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