Feed-in tariffs in Australia

Feed-in tariffs in Australia are the feed-in tariffs (FITs) paid under various State schemes to non-commercial producers of electricity generated by solar photovoltaic (PV) systems using solar panels. They are a way of subsidising and encouraging uptake of renewable energy and in Australia have been enacted at the State level, in conjunction with a federal mandatory renewable energy target.

Australian FIT schemes tend to focus on providing support to solar PV particularly in the residential context, and project limits on installed capacity (such as 10 kW in NSW) mean effectively that FITs do not support large scale projects such as wind farms or solar thermal power stations.

Some schemes are based on a gross feed-in tariff model while most are based on a net tariff.

Net feed-in tariff schemes have been criticised for not providing enough incentive for households to install solar panels and thus for not effectively encouraging the uptake of solar PV. They have been described as a "fake feed-in tariff". Critics of net FIT argue that gross tariffs conform to the normal definition of a feed-in tariff, and provide a more certain financial return, paying for all electricity produced, even if it is consumed by the producer, reducing or helping meet peak demand. The issue still remains as to what level the FIT rate should be set — e.g., at the cost of production, at market rates, at the cost at which the retailer sells electricity, or at the rate at which the retailer can acquire electricity in the wholesale market, while others set them at premium or subsidy levels.

The effective difference is that household producers under a gross scheme pay for electricity from the electricity retailer for household consumption at the market rate while all the power produced by them is sold to the retailer at the higher subsided FIT rate. Net FIT schemes effectively use the same rate for the use of electricity by household producers as for sale into the grid (i.e., use of electricity by the household reduces the amount of electricity available to feed into the grid), and accordingly the subsidy to household producers is generally less in overall terms.

The ACT and New South Wales had gross feed-in tariffs, which were subsequently replaced with net feed-in tariffs.

A uniform federal scheme to supersede all State schemes has been proposed by Tasmanian Greens Senator Christine Milne, but not enacted. National feed-in tariff systems have been enacted in numerous countries including Brazil, Canada, China and many EU countries.

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Wikipedia