Feed-in-tariffs
A Feed-in Tariff (FiT) is an incentive structure that boosts the adoption of renewable energy by homeowners, small businesses, and community organisations through government incentive.
Under a FiT scheme, the regional or national electricity utilities are obligated to buy renewable electricity (electricity generated from renewable sources such as solar photovoltaics, wind power, biomass, and geothermal power) that’s fed into the electricity grid at a value above regular market rates.
There are currently feed in tariff schemes in place in over 40 countries around the world. Australia has yet to implement a national scheme; however each state has either implemented a scheme of its own or is in the process of doing so.
Feed in tariffs can be applied in two forms
- Gross FiT – under this application all electricity generated by a renewable energy system is directed to the main electricity grid and is purchased by the electricity retailer at a premium rate. Electricity required for use by the generator (homeowner/business/community organisation) will be purchased from the electricity retailer at the standard market rate.
- Net FiT – under this application electricity generated by the renewable energy system firstly supplies any electricity being used by the generator (homeowner/business/community organisation) at the time of electricity production, with only unused or surplus electricity being purchased by the electricity retailer.
Advantages of Feed in tariffs
- They are very effective in increasing the amount of electricity generated from wind and solar.
- They encourage a geographically widespread deployment of alternative power generation. Benefits of widespread and integrated power generation include reduced line losses via transmission and distribution networks, and minimise the problems associated with geographic concentration of such facilities.
- They spread the burden of adjusting the mix of energy generation across all consumers via a higher than otherwise overall electricity charge. The costs of adjustment are not just confined to governments and those individuals/businesses/community organisations who install alternative electricity generation equipment.
- Feed in tariffs are simple for governments and energy retailers to administer.
- They promote new and increasing activity in the renewable energy industry which will in-turn promote technological advances which are expected to increase system efficiencies and reduce manufacture costs ect.
| State | Current status | Maximum system size | FiT Rate | Program Duration | Fit Type |
|---|---|---|---|---|---|
| Qld | Commenced July 2008 | 10 kW | 44c+/kWh | 20 years | Net |
| NSW | To commence January 2010 | 10 kW | 60c/kWh | 7 years | Gross |
| ACT | Commenced March 2009 | Under 10kW = Premium rate Over10 kW = 80% of premium rate Over 30 kW – To be confirmed |
50.05c/kWh up to 10 kW system 40.04c/kWh up to 30kW system |
20 years | Gross |
| VIC | Commences mid-late 2009 | 5 kW | 60c/kWh (credit only) | 15 years | Net |
| TAS | To be confirmed | To be confirmed | To be confirmed | To be confirmed | To be confirmed |
| SA | Commenced July 2008 | 10 kW | 44c+/kWh | 20 years | Net |
| WA | To be confirmed | Proposed 01 July 2010 | To be confirmed | To be confirmed | Net |
| NT | Available to Alice springs residents | To be confirmed | 49c kWh capped at $5/day, then reverts to 23.11c/kWh for each kWh | To be confirmed | Gross |
Queensland
The Queensland Solar Bonus Scheme commenced on 1 July 2008 and has been legislated to operate for 20 years. The scheme is net metered with customers being paid 44 cents per kilowatt hour for surplus electricity fed back into the grid. Some electricity retailers have offered further incentive to the FiT and rates of up to 50 cents per kilowatt hour have been made available.
Under the scheme the maximum system size is 10 kW, and the FiT is available to residential and commercial customers who use up to 100 MWh/year (the average home uses 7.6 MWh/year)
New South Wales
A FiT scheme was announced on 10 November 2009 to commence on 1 January 2010. The scheme is Gross metered, with solar power systems up to 10 kW in size to receive 60 cents per kilowatt hour for electricity fed into the grid.
The FiT is available to residential and commercial customers who use up to 160 MWh/year. The scheme has been legislated to operate for 7 years, with a review to occur after 1 July 2012 or when solar capacity reaches 50MW – whichever comes first.
Australian Capital Territory
The ACT FiT is available to all ACT electricity customers (except non-educational Government agencies) with generation facilities of no greater than 30kW. From 1 March 2009 until 30 June 2010 a gross feed in tariff of 50.05 cents per kilowatt hour will be paid for all electricity generated up to 10kW in size. Systems from 10kW to 30 kW in size will be paid 40.04 cents per kilowatt hour. The premium rate of FiT is set annually, however agreements for the full 20 year period can be negotiated with electricity retailers.
Victoria
A FiT scheme for Victorian solar photovoltaic generators is due to commence mid to late 2009. The scheme will be net metered, and available for homeowners/small businesses/community organisations with solar power systems up to 5 kW in size and consume less than 100 MWh of electricity annually. The FiT will be paid at a rate of 60 cents per kilowatt hour for any unused electricity fed into the grid.
Payments created under the scheme will be applied as a credit towards the cost of electricity used by the household/business/community organisation only; no cash payments for excess will be paid. The scheme has been legislated to operate for 15 years.
Tasmania
In 2008, as part of its strategy to combat climate change, the Tasmanian State Government announced that it would be considering the merits of introducing a mandatory feed-in tariff for renewable energy generated by householders and small businesses where excess electricity could be fed back into the States electricity grid.
A discussion Paper was prepared outlining some of the issues, costs and benefits of a feed-in tariff scheme. Submissions were invited from interested members of the public to assist in the development of a Tasmanian policy. Submissions closed in November 2008. The OEPC received over 40 submissions which are presently being collated and reviewed by our unit.
South Australia
The Solar Feed-In Scheme was launched on 1 July 2008 and has been legislated to operate for 20 years. A net feed in tariff of 44 cents per kilowatt hour is available to homeowners/businesses/community organisations for electricity fed back into the South Australian electricity grid from a solar power system. Under the scheme the maximum system size is 10 kW, and is available to customers who use up to 160 MWh/year.
Western Australia
A net feed in tariff has been proposed with anticipated start date of 1 July 2010.
Northern Territory
The Alice Springs ‘Alice Solar City’ project has been launched and offers a gross feed in tariff of 49 cents per kilowatt hour for all electricity generated by solar power systems installed within the city of Alice Springs.
