Following recommendations published in an independent report conducted by Victorian Competition and Efficiency Commission (VCEC), the Victorian Coalition Government has announced that it will introduce a new and fairer feed-in-tariff for rooftop solar. 

According to the VCEC report, over-generous feed-in tariffs to new solar customers would result in all Victorians paying higher bills to subsidize households with rooftop PV systems. As a result, the VCEC recommended establishing a feed-in-tariff which is “sustainable, predictable and free from cross-subsidies”.

Under the new FiT programme — which has been extended beyond solar so that eligibility for the scheme includes other forms of renewable and low emission energy — Victorians installing a renewable energy system, including solar, of less than 100kW will be able to qualify for the new FiT from January 1, 2013, the Energy and Resources Minister, Michael O’Brien revealed.

Moreover, the rate set will be AUD$0.08 per kWh in 2013 for excess power exported to the grid. This is despite VCEC’s recommendation of a rate of between AUD$0.06 and AUD$0.08. The rate will be updated every year in line with the adjusted wholesale electricity rate.

"Solar systems are now more affordable than ever, with the cost having fallen by around two thirds since 2009 and continuing to fall," O'Brien said.

"The coalition government supports the growth of low emissions energy sources, but that support must be fair to all, including vulnerable Victorians who pay the subsidies through higher electricity bills. Over-generous subsidies can no longer be justified.

"The PFIT scheme established by the former Labor Government is collectively costing Victorians an extra AUD$41 million on their electricity bills every year through to 2024.”

Solar customers currently receiving the premium feed-in tariff (PFIT), the transitional feed-in-tariff (TFIT) or the standard feed-in-tariff (SFIT) will not be affected by the new scheme. PFIT and TFIT rates will remain unchanged while those signed up to the one-for-one SFIT arrangements will continue at their existing rate until the end of 2016.

However, the TFIT scheme, which was introduced in January 2012, will be closed to new applicants. Since its introduction, there has been a strong uptake of solar systems in the state. In the first six months of 2012, PV installations in Victoria rose by 33%. This is despite the FiT being reduced from AUD$0.60 per kWh to AUD$0.25 per kWh. O’Brien noted that “This demonstrates that it is the falling cost of solar and the rising price of electricity that is driving uptake, rather than feed-in tariffs”.

The strong uptake is in line with the Australian government’s plans which are pushing for a major shake-up of the renewables industry. According to a study by the Bureau of Resources and Energy Economics (BREE), non-tracking PV will become the cheapest power generation technology in Australia by 2050.