Feed-in tariffs in Australia

Main articles: PV financial incentives and Feed-in tariff

Feed-in tariffs feed-in tariffs (FIT) can be defined as a premium rate paid to producers of renewable energy. Feed-in tariffs are a way of subsidising renewable energy and can be implemented in conjunction with mandatory renewable energy targets. The two main types are Gross and Net FIT's. Net FIT's generally pay comparatively little to the producer (generally a household) because electricity produced by solar photovoltaic (PV) or other renewable energy just offsets the producer's usage. Gross tariffs provide a more certain financial return and pay the household for all electricity produced, even if it is consumed by the producer, reducing or helping meet peak demand on the grid caused by air conditioning during hot summer months.

Limited PV FIT's have been enacted by several State Governments in Australia and several have proposed feed-in tariffs schemes, the principal purposes of which are to encourage the adoption of renewable energy, to assist in meeting peak demand and to provide distributed electricity generation, reducing dependence on grids and major utilities. A uniform federal scheme to supersede all State schemes has been proposed by Tasmanian Greens Senator Christine Milne, but not enacted. Only the ACT, has formerly enacted a gross feed-in tariff, although the Western Australian Government has promised a limited offer of 60 cents per kWh for gross PV production funded for four years and the NSW Government announced in November 2009 that it will now provide a gross FIT, giving an expected payback period of 8 years. Other State Governments have enacted net feed-in tariff schemes which have been criticised for not providing enough incentive for households to install solar panels and thus for not effectively encouraging the uptake of solar PV.

In August 2008, a Senate Committee (the ECITA Committee) began examining a Bill for a federal solar feed-in tariff. The bill remains before the Senate.

The feed-in tariff system has been enacted in Austria, Brazil, Canada, China, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Ireland, Israel, Italy, the Republic of Korea, Lithuania, Luxembourg, the Netherlands, Portugal, Singapore, Spain, Sweden, Switzerland, and in some states the United States Hans-Josef Fell, a Greens MP in the German parliament who pioneered their feed-in tariff electricity system, claims that this is because it led to a 100 million tonne reduction in carbon emissions in Germany whereas emissions trading only led to a 9 million tonne reduction.

Proposed Federal gross feed-in tariff scheme

The Federal Parliament has not yet enacted a national gross feed-in tariff scheme for renewable energy. However, a capital grant/rebate was offered of up to $8,000 per household for domestic installations and 50% for school installations up until June 2009.

In July 2008, a bill was introduced by Australian Greens Senator Christine Milne, (Tasmania), called the "Renewable Energy (Electricity) Amendment (Feed-In Tariff) Bill 2008". The bill is the subject of an inquiry by the Senate Standing Committee on Environment, Communications and the Arts.

18,000 people have signed a petition for a national gross feed-in tariff.

In a speech, the Federal Minister for Energy, Martin Ferguson, said that feed-in tariffs are technologically prescriptive and ideologically based, rather than being a market based mechanism. In response to the German feed-in tariff for solar, he suggested that Germany's solar subsidy meant German consumers paid more than €1 billion in additional power bills in 2007 to generate around 0.5% of Germany’s gross electricity consumption, suggesting that the policy does not deliver value for money. He also suggested than an Australian solar feed-in tariff may lead to greater PV panel imports rather than a significant expansion of Australian production.

State government feed-in tariff schemes

State	Current status	Max Size	Rate Paid	Program Duration	Model
VIC	Commences 2009	5 kW	60c	15 years	Net
SA	Commenced July 2008	10 kW	44c+	20 years	Net
ACT	Commenced March 2009	under 10 kW - premium rate; over 10 kW - 80% of premium rate; over 30 kW - to be determined.	50.05c/kWh up to 10 kW capacity and 40.04c/kWh up to 30 kW capacity	20 years	Gross
TAS	Commenced	under 10 kW - premium rate; over 10 kW - 80% of premium rate; over 30 kW - tbc	20c	tbc	Net
NT	Incentive is available for 225 rooftop PV systems in Alice Springs.	tbc	45.76 c/kWh. Capped at $5 per day, then reverts to 23.11c per kWh.	tbc	Net
WA - Synergy Supply	Commenced Aug 2010	5 kW	47 cents (from 1 Aug 2010)	10 years	Net
WA - Horizon Power Supply	Commenced Aug 2010	30 kW	47 cents (from 1 Aug 2010)	10 years	Net
QLD	Commenced July 2008	10 kW	44c+	20 years	Net
NSW	Commenced Jan 2010	10 kW	60c (From July 1, 2010. 66c)	7 years	Gross
Reference:

Australian Capital Territory

Under the Electricity Feed-in (Renewable Energy Premium) Act 2008, Canberrans can install photovoltaic (solar) cells or other renewable sources, produce their own energy, and sell it back to the power grid but perhaps not until July 2009. They'll be paid a tariff 3.88 times the retail cost of electricity (60c/kWh Jan 2009) for the energy they feed back into the electrical grid for up to 20 years from the date they sign up to the scheme. It is a gross metered scheme meaning that owners get paid a premium rate for all electricity produced by their installation with their own usage being metered separately. The ACT scheme will be the most generous feed in scheme in Australia when it comes into operation some time after March 2009.

As the ACT scheme is a gross feed in scheme, it is a relatively easy task to estimate the payback time for various system sizes because the calculation is independent of electricity consumption. e.g. a well positioned location in the ACT could produce approximately 1800 kWh per year from a 1 kW system or $1,080 AUD per year at a price of 60 c/kWh. On this basis payback for a 1 kW system costing $5,000 net (includes $8,000 federal rebate & 22 RECS) would be around 5 years. Larger systems would take longer but would have a larger income stream over the life of the system.

The Australian Capital Territory ("ACT") Government established an inter-departmental committee to look at feed in tariffs in November 2007. There is some concern that a proposed commercial solar power plant, the feasibility of which is to be examined by a joint study be ACT government and ActewAGL, may undermine the proposed feed in tariff proposal.

The submission of the Independent Competition and Regulatory Commission 25 February 2008 was that there were issues to be resolved including:

• overall effectiveness and efficiency
• cross-subsidy elements
• equity issues particularly for households suffering financial hardship
• a gross or net approach is adopted
• a clearly predefined finite life (no more than 5 years);
• a partial subsidy rather than full cost recovery
• ability to terminate if national policies are introduced e.g. carbon tax
• transparency of tariff setting

South Australia

Announced: September 2006 Come into force: The first of July this year, 2008. Name of Law: "Electricity (Feed-In Scheme-Solar Systems) Amendment Bill 2008" Runs out: 30 June 2028. Normal tariff for electricity: $0.22 / kWh Feed-in tariff: $0.44 / kWh.[4] Result: Not only will thousands of South Australian homes have solar systems installed, but many businesses will now have the opportunity to embrace this technology and turn their roofs into mini-renewable power stations. The South Australian Premier, Mike Rann, wants the government to be carbon neutral by the year 2020.

Note it is not clear whether there is a provision for the feed-in tariff to increase with natural increases to the price of electricity, at a multiple of two. This was the original intent, but may have got negotiated out. The 44 cent tariff is only paid for any electricity exported, so only when the system output exceeds domestic demand.[5]

Rebates: The South Australian government does not offer any additional rebates or incentives to domestic customers, it’s a solar schools program. Estimated payback: It’s very hard to calculate, but it will be best for systems of largest eligible size, where the domestic demand is smallest, or mainly occurs at night and low power consumption during the day. Houses without air-conditioning would seem to fit the bill.[6]

Note: Whilst this, and many other schemes, on the surface, appear cost effective and even perhaps lucrative, at the current rates the reality is that it is no more financially effective than leaving your money in the bank, and less effective than investments. This is especially the case for the individual citizen. In addition to this, it is the citizen that has, so far, invested most in this technology. The only real benefit is the reduction in emissions, which in itself is debatable as production of panels and green technology takes place in developing countries that do not have regulatory control. Many citizens have therefore opted to not invest in this technology until feed-in rates are substantially increased, and/or major corporations, including the governments themselves lead by example.

New South Wales

On 8 May 2008 NSW government announced that it intended to introduce feed in tariffs but failed.

Further details of the solar feed in tariff in NSW were announced on 23rd Nov 2008

NSW Feed-in Tariff Taskforce was established to advise the NSW Government on the details of a feed-in tariff scheme for NSW. Its representatives are from the Department of Water and Energy, the Department of Environment and Climate Change, the Department of Premier and Cabinet and NSW Treasury . In January 2009, the Taskforce issued a submission on the design of a feed-in tariff scheme for NSW.

On 23 June 2009, the government of New South Wales announced Solar Bonus Scheme. This is a net feed-in tariff for the state rather than a gross tariff. Under this 20-year scheme, some residents, schools, small businesses and community groups will be paid $0.60 per kwh for the net amount of electricity sold back into the grid. As few as 42,000 households are expected to take advantage of the scheme. The scheme will begin on 1 January 2010 and will be reviewed in 2012. The scheme applies to solar systems up to 10 kW. The Solar Bonus Scheme will be payable to energy customers with solar panel systems up to 10 kW in size;.

The NSW Opposition criticised the government for failing to adopt a gross feed in tariff.

On 10 November 2009 it was reported that NSW will switch to a Gross feed in tariff. This is expected to increase the average amount received by a household with solar panels by $1500 pa, a 60% increase, highlighting the difference in effect of Gross compared to Net feed in tariffs. This is expected to reduce the payback period for installation costs to about 8 years. The gross tariff will cost all households about $2 pa.

On 28 October 28 2010 New South Wales government has cut solar feed in tariff to 20¢ a kilowatt hour.

Western Australia

The Western Australian Government had committed to a limited Gross feed in tariff for household scale PV. The scheme was to be funded for four years to the tune of $13.5m and based on a payment of 60c kW/h to re cover the capital cost of the system after any rebates. After the capital cost is paid back the tariff will be reverted back to a lower rate or the existing Renewable Energy Buyback Scheme (REBS).

On 2 June 2009 the state government backflipped on this promise and has deferred the introduction of the scheme for 1 year until July 1, 2010. In the new scheme a net metering system would be applied rather than gross. The $13.5m of funds had already been allocated to systems installed prior to the July 1, 2009 implementation date in a public display of support for the concept. The over-subscription highlighted the imbalance between public and state support for the renewable energy industry.

On 1 August 2010, the net feed in tariff commenced and existing customers can migrate to the new billing system. New customers will need to sign up the Renewable Energy Buyback Scheme from the state electricity provider, Synergy.

In Germany, a guaranteed PV tariff means that Germany now has the highest PV capacity per capita – at 10W for every person in Germany compared to Australia at 2.6W per capita.

Queensland

The Queensland Government Solar Bonus Scheme is a program that pays domestic and other small energy customers for the surplus electricity generated from roof-top solar photovoltaic (PV) systems that is exported to the Queensland grid. It commenced on 1 July 2008. The scheme provides for 44c/kWh (around three times the current general domestic use tariff of 18.84c/kWh (inc GST))on the net amount exported to the grid, subject to having proper metering installed.

A feed-in tariff will ensure that Queenslanders benefit from the federal Photovoltaic Rebate Program. [7]

Victoria

Victoria has legislated a net metered feed-in tariff scheme, which is expected to commence in November 2009.

On 25 June 2009 it was announced that under the new net feed-in tariff scheme, households will be paid 60 cents for every excess kilowatt hour of energy fed back into the state electricity grid. This is almost four times the current retail price for electricity (but nothing is paid for energy used by the owner of the system). The feed-in tariff scheme is expected to run for 15 years. The scheme would apply to all household systems of up to 5 kW capacity and have a cap of 100MW of generating capacity.

The feed-in tariff system originally announced on 7 May 2008 had been described by environment groups as ineffective, as the then proposed 2 kW cap on array size, combined with net metering, meant that very little surplus power would be put into the grid so very little of the high tariff would actually be paid. Environment groups and renewable energy companies called for the Victorian feed-in tariff to be paid on gross metering with a 10 kW cap on array size to overcome these problems, but these concerns were only partially addressed in the system now legislated.

Tasmania

On Tuesday, 3 March 2008, the Premier of Tasmania announced that the Government will consider a mid-year report on the introduction of minimum feed-in tariffs to support householders and small energy consumers using solar panels and other forms of domestic renewable energy and that provide surplus energy into the electricity grid.

Northern Territory

Northern Territory is yet to make an announcement on feed-in tariffs as a means of subsidising and encouraging solar PV, other than in relation to Alice Springs.

In 2006 there was a bid to make Alice Springs a Solar City. Australian Government funding would give four different regions in Australia the chance to become a Solar City and share $75m funding to make solar power projects a reality. If successful, the Alice Springs project would involve solar power generation plus investigating energy efficiency, smart metering and tariff pricing.

In Alice Springs, an official Solar City, from May 2008 people with grid connected PV systems can sell all the solar electricity they generate back to Power and Water Corporation at 45 cents per kilowatt–hour, which is more than double the cost of purchasing electricity from the grid.

Outside of the Alice Springs Solar City area, people with Solar PV in the NT can arrange to sell their gross electricity production to the Power & Water Corporation of the Northern Territory at 14.38c. They can effectively use the grid as a bank and notionally re-purchase the electricity at night.

Electricity Retailers

Some electricity retailers are offering feed in tariff rates above the minimum stipulated by government. Many of the larger corporate retailers offer these incentives to capture larger proportions of the green electricity customer base, who are known to have lower churn rates.

Retailer	NSW	VIC	QLD	SA	WA	ACT	NT	TAS
Government Minimum	60c	60c	44c	44c	40c	50.05c/40.04c*	45.76c/23.11c**	None
AGL	68c	68c	52c	52c	-	-	-	-
ActewAGL	-	-	-	-	-	50.05c/40.04c*	-	-
Australian Power and Gas	-	60c	-	-	-	-	-	-
Aurora Energy	-	-	-	-	-	-	-	At purchase rate
Country Energy	62c	60c	-	-	-	-	-	-
EnergyAustralia	60c	60c	44c	-	-	50.05c/40.04c*	-	-
Energex	-	-	44c	-	-	-	-	-
Ergon	-	-	44c	-	-	-	-	-
Horizon Power	-	-	-	-	58.93c	-	-	-
Integral Energy	60c	-	44c	-	-	-	-	-
Jackgreen	-	-	44c	-	-	-	-	-
Origin Energy	66c	66c	50c	50c	-	-	-	-
Red Energy	-	66c	-	-	-	-	-	-
Simply Energy	-	60c	-	44c	-	-	-	-
South Australian Electricity	-	-	-	44c	-	-	-	-
Synergy Energy	-	-	-	-	47c	-	-	-
NT Power and Water Authority	-	-	-	-	-	-	45.76c/23.11c**	-
Queensland Electricity	-	-	44c	-	-	-	-	-
TRUenergy	-	66c	-	50c	-	-	-	-
Victorian Electricity	-	60c	-	-	-	-	-	-

* 50.05c below 10kW / 40.04c below 30kW system
** 45.76c capped at $5 per day, 23.11c for each kWh above $5 per day in Alice Springs, At purchase rate elsewhere in NT

Council Of Australian Governments

According to the COAG communiqué released in November 2008 COAG agreed to a set of national principles to apply to new feed-in tariff schemes and to inform the reviews of existing schemes. These principles will promote national consistency of schemes across Australia. According to the Communique the basic principles are:

1. Micro renewable generation to receive fair and reasonable value for exported energy
2. Any premium rate to be jurisdictionally determined, transitional and considered for public funding
3. Ministerial Council for Energy (MCE) to continue to advance fair treatment of small renewables
4. FiT policy to be consistent with previous COAG agreements (particularly the Australian Energy Market Agreement)

These principles do not appear to support a gross feed in tariff as exists in Germany, but rather a net feed in tariff.

Opposition to Feed-in tariffs

A Bill for a national feed-in tariff introduced by Senator Milne has not progressed after the Rudd government indicated it would not support such legislation. Some reasons were provided through the majority report of a Senate Committee examining the Bill. In the ACT, in February 2010, the ACT Independent Competition and Regulatory Commission proposed reducing the amount paid to RE generators under the Territory's FIT law.

See also

• Energy policy of Australia
• Mandatory renewable energy targets
• PV financial incentives
• Renewable energy law
• Renewable energy in Australia