With power bills putting enormous strain on household budgets around the nation, uptake of rooftop solar panels has skyrocketed. But with new solar feed-in tariffs expected to be announced next week, will it be cost-effective to generate your own power?
Take a look at the Australian economy over the past few years and you’ll notice inflation has infected just about everything. From groceries to fuel to transport, it seems every aspect of society is becoming more expensive.
Energy bills are no exception, with consumers hit with two annual increases to the default market offer (DMO) of more than 20 per cent each over the past two years. In fact, increasing energy costs are behind the price increases of many other products.
So, in a bid to escape the new higher prices, more and more households and businesses have been installing rooftop solar panels. Customers win by reducing their bills, while retailers win by having more electricity in the system, which drives the wholesale price down.
Now, these consumers look set to have their bills drop a little bit further when solar feed-in tariffs for 2023-24 are announced next week.
Industry experts told The Australian newspaper the draft ruling is likely to show at most only a small increase to feed-in tariffs and they may even remain unchanged as wholesale power prices tumble amid private and government measures to curtail escalating prices.
What is a solar feed-in tariff?
When you feed electricity back into the network from your solar panels, energy retailers pay you for that power. The minimum rate they have to pay you varies by state and is known as a ‘feed-in tariff’.
The idea behind the scheme is to encourage uptake of renewable energy sources and reduce cost-of-living pressures at the same time. The tariff applies to small-scale home solar producers located in the ACT, NSW, QLD, SA and Tasmania.
The price is set once a year by the Australian Energy Regulator (AER), through its Energy Made Easy program. The tariffs apply to solar systems in those jurisdictions connected to the National Energy Market power grid.
In the NT, state-owned electricity retailer Jacana Energy sets the feed-in tariff, while Victoria has a separate Essential Services Commission (ESC) which sets the price in that state.
But despite industry insiders flagging a modest increase to national feed-in rates, Victoria’s ESC announced its tariffs for the year late last month – and the rate will actually go down to its lowest level since being introduced.
Victorian customers will get 3.3 cents for each kilowatt-hour (kWh) exported back into the grid, with the 33 per cent reduction continuing a downward trend that’s been going on for three years now.
Back in 2021-22, customers in Victoria were credited with 10.2c/kWh, which fell to 6.7c/kWh in 2022-23, 5.2c/kWh in 2023-24 and the new lower amount will come into effect from 1 July for the 2024-25 financial year.
So, it remains to be seen if the drop seen in Victoria’s tariffs will be replicated nationally.
Also read: Too many Aussies ignoring valuable energy rebates