Victorian energy regulator sparks controversy over doubling of solar feed-in tariff

Victorian homeowners with solar panels will be in for a pleasant surprise come July 1, with the state electricity regulator The Essential Services Commission’s decision to more than double the minimum feed-in tariff. 

The tariff, which applies to households who feed power back into the grid from sources such as solar panels, will increase by 6.3 cents from 5 cents per kilowatt hour to 11.3 cents per kilowatt hour. 

The increase comes after changes to the Electricity Industry Act 2000 which require the regulator to consider the social and health benefits of renewable energy, in addition to factors such as market price and supply.  

In an interview with the Australian Financial Review Bruce Mountain, Director of energy and utilities consultancy firm CME, stated that the change was likely to, “significantly accelerate rooftop solar and possibly also battery uptake by households and small businesses."

"It's a substantial change and higher than the market is currently offering in Victoria and, with a few exceptions, anywhere elsewhere in the national electricity market.”

While the feed-in tariff increase is likely to be beneficial for the 200,000 households in Victoria with solar panels, critics have slammed the move for disadvantaging those who can’t afford to install solar systems, with the price rise likely to be passed on by providers to consumers. 

Tony Wood, Director of the Grattan Institute's Energy Program, suggested that pricing should be flexible instead of fixed in order to encourage users to adopt the more energy efficient dynamic pricing options. 

"Someone is going to have to pay for this and it's other Victorians that don't have solar panels that are going to have to pay for it,” Wood told the AFR. 

The new 11.3 cents per kilowatt hour feed-in tariff reflects the minimum rate in Victoria, with households on the Premium Feed-in Tariff (PFiT) set to receive 60 cents per kilowatt-hour until 2024.

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