What is a solar feed-in tariff?
In the solar industry, households receive payments for any excess energy produced from their own solar systems. Feed in tariffs are an integral factor in making installing a solar system more affordable, and they’re available from most electricity retailers.
Different solar feed in tariffs exist across the country, depending on who pays them and how much is paid to you. To find out which feed in tariff is right for you, compare the options that are currently available in your area.
Contrary to other solar incentives, the feed in tariff does not pay you when your solar exports power into the grid. Instead, this incentive is applied as a credit on your electricity bill, helping reduce overall energy expenses.
In a typical household, you will receive the solar tax credit when your energy bill is generated by your electricity provider (us). The amount of FIT that you receive depends on how many kilowatt hours (kWh) of extra energy that is not consumed in your home.
The FIT (Feed-through tariff) is generally paid to you at a higher rate than you would have had to pay if using electricity directly from the grid. This is because retailers must cover their own expenses in providing you with power, so they need to charge an appropriate price to cover these.
Some FITs are credited at a fixed rate per kWh, while others have variable tiers that change depending on when you export to the grid. In Victoria, for instance, the FIT is highest during peak demand periods from 3pm-9pm weekdays and lowest during shoulder or off-peak periods.
It is essential to make this distinction, as many people get confused when they see their power bills and find they have been paid for more energy than they actually used. If you are uncertain how your FIT payment works, take a look at your recent bill and use an online comparison site like ours that can give an accurate representation of the rates being charged by your current supplier.
Depending on the state you reside in, you may be eligible for additional bonus feed-in tariffs from your government. This can be a great incentive to install solar panels and make the investment worthwhile.
How does it work?
Solar production is measured in real-time as it occurs. For instance, if you have a sunny day and your solar panels generate lots of electricity, any excess will be sold back to the grid immediately.
Your retailer will then sell this unused energy back to the grid and give you credit on your electricity bill for it. This reduces your overall bill, with any credits remaining to be claimed when another bill comes around.