How Does the Solar Feed-in Tariff Work?

If you’re thinking about installing a residential solar system or wondering how to lower your energy invoice, feed-in tariffs are a neat little perk worth researching further.

Solar feed-in tariffs can lessen the sting of those quarterly electricity bills. In this guide, we explore what these tariffs are, why rates vary, how they appear on your bill and how to get more value from your solar system.

What Is a Solar Feed-In Tariff?

A solar feed-in tariff is a credit you receive for excess solar electricity exported from your system to the grid. The credit appears on your electricity bill and helps reduce the total amount you owe.

Your solar system will power your home first. But if there is any excess energy that you aren’t utilising that day, the extra power can be sent off to the grid. The credit your electricity retailer applies will be based on the feed-in rate and the number of kilowatt-hours you exported.

Do Solar Feed-In Tariff Rates Vary by Household?

Yes, they can differ significantly based on several factors. The best solar feed-in tariff is not always the plan with the highest export rate. A high feed-in tariff can look attractive, but it may come with higher usage rates, higher daily supply charges or less favourable terms.

Your state or territory

In NSW, SA and Queensland, tariff rates are largely determined by competitive market forces. Energy retailers set their own feed-in tariffs, generally ranging between 0.05 and 0.12 per kWh.

In Western Australia, solar feed-in tariffs are largely standardised for most households because residential customers in Perth and much of the South West are supplied by Synergy under the state-regulated Distributed Energy Buyback Scheme. Rather than comparing feed-in tariffs between retailers, solar households should focus on maximising self-consumption, as most solar exports occur during the lower daytime tariff period.

In Tasmania and the NT, the rates are single, government-regulated flat or variable structures that apply universally across local providers.

The energy plan

Feed-in tariffs vary by the electricity plan a provider offers. Retailers structure these buyback rates differently based on the plan you choose.

As Perth and much of Western Australia are under the Distributed Energy Buyback Scheme, our feed-in tariffs experience a time-based structure. Solar exports sent to the grid during the evening peak period earn a higher rate, while exports during most daylight hours receive a lower rate. As a result, the value of your feed-in tariff depends largely on when you export electricity rather than which retailer you choose.

Flat rate pays a single, set rate for every kWh exported to the grid regardless of the time of day.

In the eastern states, a tiered or block rate is generally used, which offers a higher rate for a limited amount of daily exports and a much lower rate for any excess.

Your system size

Whilst larger systems produce a lot of excess power, feed-in tariffs generally don’t increase, as the rate will stay level or even decrease due to retailer-imposed caps and grid saturation rules. Many providers follow the tiered rate structure mentioned above, which limits how much solar you can export at a higher rate.

Currently, electricity providers are paying higher rates to those with smaller system limits, as they try to circumvent these high buyback costs.

Your export limit

Your export limit is the maximum amount of excess solar energy your system is allowed to send back to the grid. It doesn’t change the price per kilowatt-hour you are paid, but instead determines how much of your excess power you can actually sell.

In Perth, Synergy decides the cap on the amount of money you can earn from excess solar generation, so while the rate stays the same, you’re no longer earning a tariff once you are past your limit.

Whether you have a battery

Instead of simply exporting all your excess daytime solar, a battery allows you to store energy to avoid buying peak-rate electricity at night or to capture higher variable feed-in rates. With a battery, you can shift your energy use to the evening without incurring high grid prices.

Many battery owners are programming their systems to store solar during low-demand daytime hours (when feed-in tariffs are lowest) and export it to the grid during peak late-afternoon and evening windows, when feed-in tariff rates spike.

How Solar Feed-In Tariffs Appear on Your Electricity Bill

Your electricity bill will usually show:

• Electricity imported from the grid.
• Electricity exported to the grid.
• Your feed-in tariff rate – in Perth, these rates will be higher during peak hours (generally 3-9 pm) and lower during off-peak usage times.
• The total credit applied for exported solar.
• Your remaining balance after credits.

Feed-in tariffs are usually shown in cents per kilowatt-hour, often written as c/kWh. It will usually look like this:

This credit reduces your bill, but it may not fully cover your electricity costs, especially if you use most of your energy at night when your solar panels are not producing power.

How to Get More Value From Your Solar Feed-In Tariff

To get better results from your solar system, focus on using more of your solar power before it leaves your home.

Practical ways to improve your solar savings include:

• Run washing machines, dishwashers and pool pumps during daylight hours
• Use timers on appliances where safe and practical
• Heat or cool your home while solar generation is strong
• Consider a hot water timer
• Consider battery storage if your household uses a lot of evening power

Do Feed-In Tariffs Make Solar Worth It?

Solar feed-in tariffs help improve returns from solar, but they are usually not the primary source of savings. The biggest benefit often comes from reducing the amount of electricity you buy from the grid and relying on self-consumption.

While these credits still help reduce your bill, they are no longer the primary driver of solar savings as their rates continue to drop. Relying solely on exports is a strategy of the past; today, the feed-in tariff can be seen as a small “bonus” rather than a profit-making tool.

To fully maximise your solar’s potential, focus on running appliances during the day and installing a battery to store any excess solar. Speak with our professional team for more insights on making your solar investment worth it.