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How does a Feed-In Tariff Work and what is it anyway?

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A residential homeowner, small business or even community group can have a renewable energy system such as PV (photovoltaic) solar panels installed and sign up to export or ‘feed in’ any excess electricity back into the main grid. For this electricity you can typically receive credits against your electricity account — thereby reducing your bills or gaining a credit.

What is a Feed-In Tariff?

A Feed-in Tariff is an agreed amount paid to you for any unused electricity generated by your solar energy system that is fed back to the main electricity grid. Many electricity retailers across the country have introduced a feed-in tariff (FiT) to pay you for the excess electricity your solar PV system generates but you don’t use yourself.

What Is A Net Feed-In Tariff

“Net metering: The customer consumes the electricity that is generated on the premises. If the customer needs more electricity, it is drawn from the grid, incurring normal electricity fees. If the customer is consuming less electricity than their system is generating, then the surplus is exported to the grid and earns the FiT rate for each exported KWh.” — Parliament of Australia

How to access a feed in tariff (FiT):

Following the installation of your Solar Energy System, SEM Group will submit an application on your behalf to with a relevant network provider to gain approval to connect to the grid. This is so that your meter can be connected and upgraded moving forward. It is advised that you shop around to find the best FiT possible (unless you’re in the Northern Territory, this is set by Jacana Energy), SEM Group is happy to assist in advising of the best retailers and options available to review for your specific needs.

What’s the point of FiTs?

Feed-in tariffs were created to meet a number of goals — environmental, economic and industrial. The primary aim is to encourage the population’s adoption of renewable energy while making the installation of renewable electricity systems more affordable. FiTs reduce the length of time it takes to recover the initial cost of the system (payback time) through the saving in electricity bills. Increasing demand for solar systems, in turn, drive the industry to develop more efficient systems and technology. The FiTs also encourage consumers to be more energy-efficient and aware of their energy consumption.

Get localised advice

Since 2008 all Australian states and territories (excluding Tasmania) have operated a form of mandatory feed-in tariff scheme recognising that small-scale solar generators have the right to export electricity to the grid in exchange for payment (ranging typically between 6–26 cents per kilowatt hour). Due to the fact that no national scheme exists, FiT schemes vary from state to state — each pays different tariffs and cover different types and capacities of generators. This is why it is best to get localised advice and see how feed-in tariffs work where you live.