About Tariffs and Rebates

There has been a fair bit of media coverage about feed-in-tariffs and rebates ending unfairly lately, as well as some dubious scare-campaign marketing from the big solar retailers. I’d like to discuss the details of the money side of a solar installation here:

There are two ways that you will be paid for your panels, the government rebate (also known as Small-scale Technology Certificates, or STCs).

STCs are based on the kW output of the panels multiplied by the number of years until 2030, and are paid upfront at the completion of the installation. Each year, this rebate reduces, as there are less years until 2030. This year (2017) it is multiplied by 14, next year it will be 13. It may seem like you need to rush to install a system before the rebate reduces on the change of the year, however the truth is that the reduction is fairly insignificant and is often covered by the ever reducing cost of panels; you mightn’t be getting as much of a rebate, but the panels cost less, so you break even.

The STC rebate is often factored into the installation quote and is paid directly to the installer. It can be arranged that you can be paid for these STCs directly, but you will be paying more upfront at the beginning and it will take a while to get all the paperwork through if it’s your first time. There really is little point or gain in claiming STCs yourself, just let your installer handle it for you.

The other way that you might get some money out of your panels is through the feed-in-tariff. This is the money paid for each kWh of power that you feed back into the grid. Only the excess power that you generate will be fed into the grid. As an example, if you are generating 3kW of power and using 2kW at the time, then 1kW of power will be fed into the grid. If you do this for one hour, you will have fed in 1kWh and be credited for that.
Currently the standard feed-in-tariff is set by the State Government at a minimum of 5c per kWh, and your electricity retailer can choose to pay more than this minimum (be careful when selecting energy retailers as they may look to pay more for solar, but charge more for power consumed from the grid – more on that in a future blog).
Back in the day a premium feed in tariff (PFIT) of 60c per kilowatt hour was offered, and will continue to be paid to those customers until 2024. This was due to the high cost of panels and inverters at the time, however most of the people who took up solar at this time will well and truly have paid off their systems and will likely be making good profit. Then there was a 25c per kWh feed in tariff which recently ended, with those customers reverting to the current rate.

Whether or not these rates are fair is beyond the discussion here; I’ll leave that to the people on the online forums to fight out. My advice though, is to install a system that has been sized to your consumption. By using solar generated power, rather than paying for it from the grid, you will save more than you will make by exporting it. Think of it in terms of savings, rather than the profits.

More info about feed-in-tariffs in Victoria can be found here.