Solar Rebate Vs. Feed-In Tariff: Explainer

Difference between solar rebate and feed in tariff

Confusing Australia’s national solar rebate with feed-in tariffs is still pretty common – this explainer clarifies the differences between the two incentives and what they are worth.

This sort of statement can seen or heard about the place:

“Solar isn’t worth it any more as the rebate is too low!”

But this is incorrect – it’s still very generous.

What Is The Solar Rebate?

While this subsidy has been unofficially called a “rebate” pretty much since it began, it’s not something you receive after you’ve installed a solar power system. The good news is you’re able to access the value of the subsidy as an up-front discount when you buy a system.

The subsidy is based on Small-scale Technology Certificates (STCs). These have a value that varies with market conditions. The number of certificates an eligible solar power system can receive is based on its solar panel capacity (not inverter capacity), where in Australia it is installed, and the year it was installed.

While the certificates are generated after installation, solar buyers sign the rights to them over to the installation company that (or through another registered agent) deals with the paperwork required to claim STCs and then sells them. While sometimes referred to as the “Australian government solar rebate”, it’s not the government buying these certificates but liable entities (generally electricity retailers) compelled by the government to do so.

For a deeper dive into this topic, check out our comprehensive solar panel rebate guide.

It’s a good system that significantly reduces the up-front cost of installing solar panels. But by how much these days?

How Much Is The Solar Rebate Worth?

You may see ads around putting a dollar figure on the subsidy – I wrote about an example of this here. But the value varies depending on the factors above.

As an example, an eligible 8kW system installed in Brisbane this year is entitled to 110 STCs. Based on current STC values (~$39 each) and taking $2 – $3 off each for administration costs and fees, that works out to a total subsidy of $3,960 – $4,070.

It’s a significant chunk of change. Prices you see advertised for systems will include the rebate.

But – the number of STCs a system is eligible for is reducing at the beginning of each year. For an installation on or after January 1, 2022, the same system will be entitled to 99 STCs – so around $3,564 -$3,663  value and approximately $400 less “rebate” than an installation in 2021. This is assuming STC value remain the same. The maximum value of a certificate is $40 and the minimum is $0. While $0 has never been seen, back in 2017 it went as low as $26.

If you’re close to pulling the trigger on a system purchase after having carried out your research, right now could be a very good time to do so as some installers will soon be closing their books for installations this year. And some may have already done so.

If you aren’t quite ready, don’t panic – solar power will remain a very good investment in 2022.

You can estimate how much the subsidy is worth under different system size, location, installation year and STC value conditions with this simple STC calculator.

What Is A Feed-In Tariff?

A feed-in tariff (FiT) is a payment a solar household receives for the surplus electricity generated by their system that is exported to the mains grid.

When your system is installed, you’ll go on to a solar plan with your electricity retailer. It is the retailer that pays this incentive to you, not the government.

When feed-in tariffs were originally introduced, they were very generous in order to promote uptake of solar panels – and this mission was accomplished. The rebate combined with feed-in tariffs along with high mains electricity prices provided plenty of motivation for Australian households and businesses to have solar panels installed.

How Much Are Feed-In Tariffs Worth Now?

Feed-in tariffs have reduced in recent years, but so has the cost of solar since the days of high FiTs. This is in part due to the success of solar power, which is pushing down the cost of wholesale electricity – and feed-in tariff rates are partly based on wholesale electricity prices.

The rate of payment varies from state to state and from electricity retailer to retailer. But the best electricity plan for solar owners isn’t necessarily the one that offers the highest feed-in tariff as other factors come into play such as supply charge for mains electricity consumed, daily service charge and at times, other gotchas.

Trying to identify what might be the best deal can be incredibly time-consuming (and confusing) if you go about it by visiting each retailer’s web site. But on SolarQuotes, there’s a tool for comparing electricity plans that makes initial research super-quick and easy.

Reduced feed in tariffs don’t mean solar isn’t worth it any more, bearing in mind the still generous rebate and lower cost of going solar. Lower FiTs just mean it’s becoming increasingly beneficial to self-consume as much solar energy as you can by load shifting; i.e., using appliances where you can during the “solar window” rather than at night. This shift can be made easier by taking advantage of timers built into some appliances, or using timer switches – which aren’t costly.

Every kilowatt-hour of solar electricity a household self-consumes is generally 20c – 25c less (in the case of Brisbane) it is paying to an electricity retailer – and that adds up very quickly. As more Australians solar households buy electric cars, boosting self-consumption will become even easier.

But even with a self-consumption ratio of just 17% and a total energy usage of 12kWh a day (solar energy + grid), the electricity plan comparison tool indicates more than a dozen plans available in Brisbane providing anything from a zero bill to one several hundred dollars in credit over 12 months.

Between the benefits of the national subsidy (rebate), lower cost of solar systems, feed-in tariffs and self-consumption; buying solar is still most definitely worth it in 2021 and this will continue to be the case in 2022.

In addition to the tools mentioned above, give SQ’s solar calculator a whirl to see how rapid simple payback on a system installation could be in your circumstances.

About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.

Comments

  1. Peter Ovens says

    CHEAPER TO GIVE EXCESS SOLAR BACK TO GRID FOR FREE.

    Yes it’s true – in certain circumstances. I am in Victoria near Geelong and Powercor is the wholesaler supplier, Tango is my retailer (but maybe not for much longer!). I currently have floor heating and 2 HWS on controlled load, plus single rate continuous use for the rest of my power. I have 2 smart meters (Landis+gyr E350 installed 2013), one for the floor heat and the other for HWS and continuous use. I can see on the display that this meter is already counting Kwh to grid (already exported around 600Kwh since turning on mid Sept).

    In Sept I installed a 6.6 kw system with 5 kw Fronius inverter and am in the throws of my retailer waiting for my approval to to tell Powercor to reconfigure the meter to solar for which they want $100. Not sure why i need another meter to measure export to grid (when i have one that does that already?) but anyway I was happy to give them their $100 till I found out they also want to put me on ToU rates which for my usage will equate to more than 45% increase in all power I buy from the grid! No one told me that before I decided to go solar! In fact prior to going solar, in June I checked with Tango to see if I could retain my current tariffs if I did go solar (a major factor in my decision making). Tango told me both by phone and in writing (email) that I most certainly could.

    After much arguing over why they would not keep their word, now they say they will do me a favour and let me keep my controlled load tariff, but still put me on ToU for the rest of my power. Gee thanks, not! I’d prefer to see them keep their word.

    Now here’s the rub, in my area Powercor is allowing only 5kwh export per day, and Tango are offering 6.7c FiT, so the most i can earn from exporting all my excess power (which is way more than 5 Kwh by the way) is 33.5c or a max.of $122 per year. Tango also want another 11c more for daily service charge with ToU, so that in effect brings down my export earnings to 22.5c per day / $82 year. Add on the $100 meter reconfig and I don’t think I’ll be getting rich from my export earnings any time soon!

    So my rough calculations tell me whatever I save in generating my own power will be more than cancelled out by a 45% increase in power I buy from the grid. If I went with that scenario it would mean I completely wasted $6000 on a solar system plus my bills would be higher than ever!

    The solution?
    I think the best solution in my situation is to not have the meter reconfigured (they can not force you) and then I can not only save the $100 for the (unnecessary?) meter reconfig. but keep my old much cheaper tariffs too. The only bummer with that will be I will not be paid 22.5c for the nominated 5Kwh of power I feed back to grid each day, but the savings outweigh that. I also now run my 2 HWS via timers direct from the solar to soak up as much generated power as possible (which is about 10Kwh / day, which was costing 17c Kwh on C/L, so there’s $1.70 / day not spent). I run the 2 HWS between 10am and 4pm on separate timers at different times running 2.4 kw elements (scrapped the top element) so they draw less than my inverter produces (but not quite on rainy days). Plenty of hot water as the thermostats are set at 70 degrees.

    All I need to do now is work out how to soak up more self generated power as I find on average I am still exporting 10 – 20 Kwh per day back to grid – for free.

    I’d be happy to hear if anyone has any ideas?

    • Ronald Brakels says

      Hi Peter

      As far as I am aware, Powercor will generally allow households with single phase power to export up to 5 kilowatts of solar power. This comes to more than 5 kilowatt-hours. A 6.6 kilowatt solar system in the Powercor area will typically export around 17 kilowatt-hours per day, depending on how much electrical energy the home consumes during the day and the orientation of the solar panels.

  2. Peter Ovens says

    Yes you’re right Ron. I only found out yesterday that my export limit of 5 kw actually means I can export all my excess energy. I was under the misapprehension that it meant a maximum of 5 kwh per day.
    Good news for me! Now I am rethinking things a little on what retail plan is best, but it still seems two rate C/L (for my floor heat) + Peak is the way to go.

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