Victoria’s Essential Services Commission determines the minimum rate that households receive for feeding power from their solar systems, back into the grid.
Unfortunately, the decision has been made to reduce the minimum rate (the rate most electricity providers offer) from July 1st, 2020. The current minimum rate is 12c per kWh which will soon drop to 10.5c per kWh and as someone who just invested in a 6.5kW solar system and 5kW inverter, this bloody sucks.
On December 3rd 2019, when most of us were planning our Christmas holidays with families, the draft was released. On January 17th, 2020, the consultation period closed. While the change in Feed-in-Tariffs will impact tens of thousands of families across Victoria, there were just 99 submissions (88 from individuals), showing how poorly this was publicised.
Amazingly on page 9 of the report, it confirms that:
Many solar customers stated that the minimum FiT rates should be higher to allow them to recover their investments and to encourage uptake of rooftop solar and batteries.
Apparently that feedback fell on deaf ears and the ESC has decided to lower the minimum FiT for solar customers anyway – so much for that consultation.
This reduction in FiT is completely counter-productive to the mission of SolarVictoria’s Solar Homes Program which provides grants to encourage renewable adoption in the state.
While the amount that you consume from the grid reduces when you add solar to your home, the amount you pay for consuming power costs significantly more than the FiT.
Personally I’m with Energy Australia and the first 11.178kW of usage is charged at 0.2765kW, while the FiT rate will soon be just A$0.105c, a difference of 17.15c per kW.
On top of that energy providers will still sting you with a daily supply charge, in my case, A$1.20 per day.
The ESC encourages customers to shop around as some retailers offer a better FiT. While that’s a nice idea, like switching banks, the energy sector is very different. Before getting solar, I researched extensively to find the best rate and even for someone determined to do the work, there’s a real lack of calculators to assist people in their decision making.
Of course, there are fringe examples of higher rates being offered, like $0.15 if you switch to Origin, or $0.20 if you buy solar from them, those rates are still impacted each year when the minimum FiT is re-evaluated.
Given leaving energy providers can incur fees, it often counters any potential savings you’d have by switching. There are also very few energy retailers that offer rates above the minimum FiT, so a change to the minimum rate is essentially setting a benchmark of what most customers will receive.
The whole thing is pretty depressing really and while we’re not down to the lows of 4-5c, we’re heading in the wrong direction and removing a key incentive of adding renewable energy.
The final decision PDF from the Essential Services Commission can be viewed in full here.