Feed in tariffs

If you are building a new home or thinking about installing a solar system on your existing property, you’ll need to get your head around solar and renewable energy FAQ. A useful term to begin with is feed-in tariff. This is the rate paid for the electricity that is pumped back into the power grid from a designated renewable energy source like your rooftop solar panel system.

In simple terms, solar panels sometimes end up generating more electricity than what you need at home. Instead of letting this clean energy go waste, you can send it back to the electricity grid and earn credit on your energy bill.

You can earn a feed-in tariff if you are a homeowner, small business or community group that has installed a renewable energy system such as solar panels. Depending on the rules for feed-in tariff in your state, you can submit an application for the feed-in tariff to the relevant authority once the installation is complete.

There is no nationalised feed-in tariff scheme currently in Australia. Whether you are eligible for a feed-in tariff depends on the scheme implemented in your state. The scheme could be funded by your state government, your energy retailer or shared by both parties. Energy retailers sometimes also refer to this reimbursement as ‘solar buyback’ instead of feed-in tariff.

VIC

Minimum feed-in tariff rate of 7c

SA

NSW

No minimum retailer payment

QLD

No minimum retailer payment for South East Queensland, 6.34c for regional Queensland customers

ACT

No minimum retailer payment

TAS

WA

Different solar buyback schemes under Western and Horizon

NT

No minimum retailer payment

*NOTE: These rates provide a general overview of the state-wide feed-in tariffs and are subject to change.

Net feed-in tariff, also known as export metering, pays you for the surplus energy that your solar panels generate. This means that you need to first use the electricity produced through your solar system at your home and then you can be eligible for a feed-in tariff for the excess energy that is pumped into the grid. On the other hand, a gross feed-in tariff pays for each kilowatt hour produced by a grid connected system regardless of whether it is supplied to the grid or used within your home. While this used to be an option available previously, at the moment, most feed-in tariff schemes in Australia offer a net tariff.

Currently, there isn’t any specific taxation legislation in terms of income generated from feed-in tariffs. Generally, if the solar system has been installed with the aim to earn a profit, then receipts under the feed-in tariff would be considered assessable income and all expenses associated with this income generating activity would be deductible. However, solar systems installed at home are usually considered to be for personal use or hobby and not for profit making. In this case the income from the feed-in tariff should not be taxable. In any case, you should consult your accountant for advice.

While feed-in tariffs can serve several objectives including environmental as well as economic, its main purpose is to promote the use of renewable energy. Feed-in tariffs make the installation of sustainable energy systems more affordable for people by reducing the overall cost through regular savings. Apart from reducing electricity bills in the long run, this is also meant to encourage consumers to become more environmentally conscious.

Curious as to whether your energy provider is using green energy or not? Compare electricity providers to find out.