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Feed-in Tariffs















Home > Electricity > Feed-in Tariffs
Feed-in Tariffs

Introduction

A Feed-in Tariff (FiT) is a pricing mechanism whereby an electricity utility pays a customer for the excess electricity generated by the customer’s micro distributed generation systems and exported (ie "feed-in") to the grid.

The electricity produced by grid-connected customers is generally referred to as ‘distributed generation’, the most common form of which is small-scale, solar Photo Voltaic (PV) panels. Distributed generation systems are typically connected to the grid through ‘import/export’ meters. These meters record the quantity of electricity drawn from the grid separately from the amount that the micro distributed generation system feeds into the grid.

* Section 44B of the Electricity Supply Industry Act 1995 defines a “qualifying system” as a system that:

    • generates electricity from either solar, wind or water;
    • complies with Australian Standard AS4777; and
    • has a maximum generating capacity of 10kW (single phase) / 30kW (three phase).

Background

Up until 30 August 2013, the FiT offered by Aurora Energy on a voluntary basis was called the net metering buyback scheme (NMBS). The NMBS offered customers a ‘one-for-one’ (1:1) FiT at the regulated light-and-power tariff (Tariff 31 for residential customers) or general supply tariff (Tariff 22 for small business customers) for their net exported electricity.

In December 2012, the Council of Australian Governments (COAG) agreed on revised National Principles for Feed-in Tariff Arrangements (see Attachment B of the Regulator’s October 2013 Regulated FiT Final Report).

These revised principles outline, amongst other things, that all premium FiT arrangements were to be closed to new participants by 2014. Furthermore, all other FiT customers were to receive a ‘fair and reasonable’ value for their exported electricity. Consistent with this, premium FiT schemes are now closed to new participants and each Australian jurisdiction has determined new ‘fair and reasonable’ values for exported electricity for new FiT customers. Electricity retailers may voluntarily pass on a higher FiT amount as part of their unregulated market offers.

Government Policy

Consistent with the COAG reforms, and as part of the 2013 electricity reforms, the FiT rate applying in Tasmania was reviewed.

Following the release of an issues paper on 16 May 2013 and consideration of submissions received on that paper, the Government at that time announced the following policy position on 18 August 2013:

    • the then current one-for-one FiT arrangement would be closed at midnight on 30 August 2013 and would be grandfathered for existing until 1 January 2019;
    • customers applying to install eligible micro distributed generation systems on or after 31 August 2013 would be entitled to a feed-in-tariff rate of 8 c/kWh from 31 August 2013 until 31 December 2013;
    • the Regulator would determine the Standard Feed-in Tariff Rate to apply from 1 January 2014 for all new installations occurring on or after 31 August 2013 ; and
    • the Regulator would review the FiT rate on an annual basis.

Transitional Feed-in Tariff Rates

The following customers are entitled to a transitional Feed-in Tariff rate in accordance with section 44D of the Electricity Supply Industry Act 1995 :

    1. customers that had a qualifying micro distributed generation system installed as at 31 August 2013; or
    2. customers that entered into a contract to install a qualifying new micro distributed generation system or extend an existing micro distributed generation system before 31 August 2013 and the new system or extension was installed and connected before 31 August 2014 (for customers that had contracts to install or extend a system before 31 August 2013 an application must have also been lodged with and approved by the distributor (TasNetworks) by 31 August 2013).
That is, in respect of billing periods, and those parts of billing periods, that expire before 1 January 2019, these customers (‘transitional feed-in tariff customers’) will continue to be entitled to receive the FiT rates specified in the following table:

Table 1: Transitional feed-in tariff rates for transitional feed-in tariff customers

Customer Type
Column (1)
Column (2)
Column (3)
c/kWh
c/kWh for first 500 kWh supplied during each billing period
c/kWh for each kWh supplied after the first 500 kWh during each billing period
Residential
28.283 (including GST)
N/A - see column (1)
N/A - see column (1)
Small Business
N/A - see Columns (2) and (3)
38.577 (including GST)
28.319 (including GST)

Customers with systems with generating capacity greater than 10kW continue to be eligible for the transitional feed-in rate where, prior to 31 August 2013, an application to connect a larger capacity system was submitted, and accepted by the electricity distributor.

Standard Feed-in Tariff Rates

Regulated Feed-in Tariff rates for standard Feed-in Tariff customers

The regulated FiT rates for standard FiT customers calculated in accordance with the 2013 FiT rate Determination are as follows:

Table 2: 2013 FiT rate Determination - Regulated FiT rates for standard FiT customers by Period

Period
c/kWh (excluding GST)
1 January 2014 - 30 June 2014
8.282
1 July 2014 - 30 June 2015
5.551
1 July 2015 - 30 June 2016
5.500

The regulated FiT rate applying from 1 July 2015 is slightly lower than the rate that applied for the period 1 July 2014 to 30 June 2015 due to a small reduction in the wholesale electricity price (WEP) for the 2015-16 financial year. Movements in the WEP have a major impact on the calculation of the regulated FiT rate as outlined in the formula set out in the 2013 FiT rate Determination.

The regulated FiT rates for standard FiT customers calculated in accordance with the 2016 FiT rate Determination are as follows:

Table 3: 2016 FiT rate Determination - Regulated FiT rates for standard FiT customers by Period

Period
c/kWh (excluding GST)
1 July 2016 - 30 June 2017
6.671

The FiT rate for 2016-17 represents a 21 per cent increase over the rate of 5.500 c/kWh which applied for 2015-16. The increase is due to the increase in the Wholesale Electricity Price (WEP) which, in turn, is primarily due to higher Victorian wholesale contract prices. The Basslink outage did not affect the WEP or the regulated FiT rate. Movements in the WEP have a major impact on the calculation of the regulated FiT rate as outlined in the formula set out in the 2016 FiT rate Determination.


Investigations

2016 Regulated Feed-in Tariff Rate Investigation and Determination

The Regulator has completed its 2016 Regulated Feed-in Tariff Rate Investigation.

Further information regarding the Investigation and Determination can be found here.

2013 Regulated Feed-in Tariff Rate Investigation and Determination

In August 2013, the Regulator was required, by the Minister of Finance, to investigate and recommend to the Government a ‘fair and reasonable’ value, to apply from 1 January 2014, for regulated FiT for residential and small businesses customers.

The Regulator’s final report (released in October 2013) and determination (released in December 2013) set out the formula for calculating relevant FiT rates and the minimum FiT rate to apply for the regulatory periods.

Further information regarding the 2013 Regulated Feed-in Tariff Rate Investigation and Determination can be found here.











This page was last updated on 25 July 2016 by the Office of the Tasmanian Economic Regulator (OTTER). Questions concerning its content can be sent by mail to GPO Box 770, Hobart, TAS, Australia 7001 or by email to office@economicregulator.tas.gov.au or by telephone to (03) 6166 4422.

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