Five feed-in tariff myths busted

Posted in Feed-in tariffs & energy prices

Birds eye view of suburb

If you have solar panels, the rate your power company pays you for the solar electricity you export is called the feed-in tariff (or FiT). 

Many people don’t know much about feed-in tariffs, even those who’ve had solar panels for years. So let’s bust some of the big myths.



Myth #1: There’s only one type of feed-in tariff

Reality: There are two main types of feed-in tariffs

Standard feed-in tariff

Over three-quarters of solar households get a standard feed-in tariff. Depending on the state, electricity companies are either regulated or recommended to provide a certain feed-in tariff by state governments.

What does that mean in your state?

  • VIC: minimum FiT of 9.9c (regulated until 1 July 2019, then goes up to 12.0c)
  • NSW: recommended range of 6.9 to 8.4c (until 1 July 2019, unknown after that)
  • SE QLD: power companies can choose their own rate
  • Rest of QLD: minimum FiT of 9.4c (regulated)
  • SA: power companies can choose their own rate
  • TAS: minimum FiT of 8.54c (regulated until 1 July 2019, unknown after that)
  • ACT: power companies can choose their own rate
Premium feed-in tariff

You may think a premium feed-in tariff is just a really good one, but that’s not the case. To encourage people to install solar panels between 2009 and 2011, state governments offered an extra FiT to add to what electricity companies provide.

In Victoria and Queensland, people who installed solar systems within this period and got the premium FiT, still receive it.

What’s your state’s premium FiT?

  • VIC: 60c, paid until 2024.
  • QLD: 44c, paid until 2028.

As a general rule of thumb if your feed-in tariff is higher than around 40c, you’re likely on a premium feed-in tariff. If your feed-in tariff is below around 25c, you’re likely on a standard feed-in tariff.



Myth #2: If I change power companies, I’ll lose my premium feed-in tariff

Reality: You can take your premium FiT to any power company you choose

Your premium feed-in tariff goes with you when you switch energy providers. Some electricity company’s don’t give you anything on top of it, so look out for ones that do.



Myth #3: If you have solar, you should choose the electricity plan with the highest feed-in tariff

Reality: You need to look at everything when choosing a power company

While a high FiT is great, you need to look at a few other things before you switch.

  • Is getting the high FiT dependent on other factors?

If you see a high FiT offer, make sure you look for any conditions that apply. For example, do you have to buy solar panels through that electricity company?

  • Are the other rates exorbitantly high compared to other offers?

Make sure you check the usage rate and daily supply charge. Some power companies offer a really high FiT, then bump up their other rates to compensate.

  • Do you only get it for a limited time?

Some high FiT offers only last for 6-12 months and then you’re put back on a lower FiT. While this isn’t the end of the world, you always want to know what you’re getting into. If the FiT is a limited time offer, make sure you’re comfortable with the amount it will return to after the promotional period ends.

  • Does the electricity company provide any services to get the most from your solar?

Most solar households need support to get the most from their system to maximise their savings. Before you switch, consider whether the power company provides this support.



Myth #4: Feed-in tariffs are so low these days, there’s no point having solar

Reality: It doesn’t matter whether you’re on a premium or a standard feed-in tariff, solar panels can deliver significant savings

It all comes down to how you use it.

If you have a standard feed-in tariff, use more electricity during the day when the sun is shining so you can minimise the amount of electricity you need to buy in the evening. Consuming your solar power could save you 20c/kWh or more, depending on how much you pay for electricity when you buy it back from the grid.  

If you have a premium feed-in tariff you’re being paid really well for your solar electricity, so focus on exporting as much of it as possible and use electricity at home after the sun has gone down.



Myth #5: My solar electricity isn’t valued, that’s why I pay more to buy electricity than I get with my feed-in tariff

Reality: Buying and selling electricity is complicated

The cost of buying and selling electricity

When you buy electricity, you have to pay for how much it costs to create it (generation), the cost of transporting it to your house (distribution) and other costs (e.g. metering). However when you sell electricity, you’re only paid for creating it, because the household that uses that electricity pays their power company for transporting it and the other associated costs. It’s pretty complicated, but you can read more about it in our blog about the value of solar.

The supply and demand equation

Supply and demand plays a key role in determining the value of your solar power. You’re exporting your solar electricity to the grid in the middle of the day at the same time as all of the other solar systems in Australia. That means there’s an excess of power available at that time so the value of that electricity is lower (high supply, low demand).

But when you buy electricity in the morning and late afternoon and evening (which is when most households need and want electricity), there’s not much electricity being fed into the grid so it’s more expensive. This is why we have to pay more for it (high demand, low supply).


Beat declining FiTs with a solar battery

We mentioned previously that the solution to declining feed-in tariffs is to use more solar power at home – it’s the best way to get the most from your solar system.

The best way to maximise your home’s use of solar power is to invest in a solar battery. With a battery, we estimate you can increase the amount of solar energy you’re using at home from around 25% to over 80%.

The DC Power Co battery package is our powerful yet simple and affordable battery package that’s compatible with any existing solar system. Starting at just $6750 plus installation, it’s a modular battery package that comes with great warranties and blackout protection included at no extra cost.

Find out more about our battery package

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