VIC Solar Incentives and Feed-In Tariffs 2020
Australia has some of the highest electricity prices globally, and the state of Victoria is no exception. Many electricity consumers are charged over 25 cents/kWh, and some tariffs exceed 30 cents/kWh. However, solar panels achieve greater savings when electricity is expensive since every kilowatt-hour produced is worth more.
Victoria offers incentive programs for three solar technologies: solar panels, battery systems and solar water heaters. These incentives can be combined with the nationwide incentive from the Small-scale Renewable Energy Scheme (SRES), making solar power systems very affordable. In the case of solar panels, Victoria also offers interest-free loans to complement the incentives.
Victoria Solar Incentives 2020
Victoria is the Australian state with the most solar incentive programs as of 2020. Thanks to this, homeowners can expect low upfront costs when going solar, or even zero initial cost:
- As mentioned above, the SRES is a nationwide program that offers incentives for solar installations up to 100 kW.
- The Solar Homes Program from the VIC government offers three incentive types that cover solar panels, batteries, and solar water heaters.
- The program also offers interest-free loans for solar power systems, which can be combined with national and state incentives.
The SRES does not offer a direct incentives for solar panels, strictly speaking. Instead, the program awards Small-scale Technology Certificates (STC) based on their estimated production. The electricity production depends on system capacity and local sunshine, and the estimation period is from the installation year to 2030. For solar power systems installed in 2020, STCs are based on 11 years of operation.
- One STC is awarded for every 1,000 kWh of estimated production.
- The Clean Energy Regulator requires electricity retailers to purchase STCs, as a way to incentive renewable energy. Each STC sells for around $35 – $40.
- Solar power systems in Victoria earn between 13 and 15 STCs per kilowatt of capacity, depending on their location. More STCs are earned in the northern areas of Victoria because they are sunnier.
- Based on these numbers, the incentive can range from $450 to $600 per kilowatt of solar capacity. Assuming an installed price of $1600 per kilowatt, the STC incentive reduces costs by around 28-37 percent.
If you need further information about the Small-scale Renewable Energy Scheme, please visit the Australian Government Clean Energy Regulator website.
Solar Interest-Free Loans
Local incentives from Victoria Solar Homes cover solar panels, battery systems and solar water heaters. The solar panel incentive can also be combined with an interest-free loan, equivalent to the incentives amount. These incentives are available for households with an income below $180,000 per year, and a property value below $3 million.
- The solar panel incentive covers 50% of installation costs or $1888, whichever is less.
- For example, a solar power system with a price of $3200 gets a 50% incentive of $1600.
- On the other hand, a solar power system worth $5000 gets an incentive of $1888. In this case, 50% is equivalent to $2500, which exceeds the incentives limit.
Homeowners who get the solar panel incentive can also apply for an interest-free loan equivalent to the incentive amount. This means solar panels can get a total incentive of up to $3776, where $1888 is an incentive and $1888 is a loan that must be repaid in four years. Adding the STC incentive, the local solar incentive and the no-interest loan, going solar at zero upfront cost is possible in Victoria.
Since 1 July 2019, rented properties are also eligible for the solar panel incentive and interest-free loan, as long as the landlord and tenant sign an agreement. Applicants who have received a solar incentive for their own home can apply for another one if they own a rental property.
If you need further information about this solar incentive in Victoria, please visit the Solar Panel Incentive website from the VIC government.
Solar Battery Incentives
The solar battery incentives available in Victoria are even higher than the solar panel incentives, with a maximum value of $4,838. For example, a battery system with a price of $14,000 would cost $9,612 after the incentive. This incentive has the same basic requirements as the solar panel incentive – a family income below $180,000 per year, and a property value below $3 million. However, additional requirements apply:
- The property must have a solar power system with at least 5 kW of capacity. This ensures that batteries are charged with a clean source of electricity.
- The property zipcode must be listed on the program website.
- The solar battery connection must be pre-approved by the Distributed Network Service Provider (DNSP).
This program focuses exclusively on incentives for homeowners, which means there are no interest-free loans and incentives for rental properties.
Solar Hot Water Incentives
Solar hot water systems reduce the workload on electric and combustion-based water heaters, saving on power and gas bills. In addition, greenhouse gas emissions are reduced in both cases: less fuel is burned onsite when solar heating replaces combustion heating, and less fuel is burned at power plants when replacing electric heating. Victoria Solar Homes also covers solar hot water systems, offering incentives of up to $1,000. According to the program website, a household can save up to $400 per year with a solar water heater.
The incentive is available for homeowners who have not received an incentives for solar panels or batteries from Victoria Solar Homes. However, homeowners who already installed these systems without using incentives can claim one for solar hot water. The incentive is for existing homes, which means it cannot be used in new construction.
If you need further information about this solar battery incentive in Victoria, please visit the Solar Hot Water Incentive website from the VIC government.
Victoria Solar Power Feed-in Tariffs
The feed-in tariff (FIT) is the rate you are paid for exporting surplus solar generation to the local power grid. When high FITs are available, there is an incentive for homes and businesses to install larger solar arrays, and produce more surplus electricity. The opposite applies when FITs are low or unavailable – electricity consumers install smaller solar arrays to avoid surplus generation.
The Victoria government has a minimum feed-in tariff for electricity providers. The rate varies depending on the type of contract, single-rate or time-varying:
- As of February 2020, the minimum FIT for single-rate clients is 12 cents/kWh.
- On 1 July 2020, this tariff will be reduced to 10.2 cents/kWh.
- The minimum FIT for varying-rate clients is 9.9 cents/kWh off-peak, 11.6 cents/kWh shoulder, and 14.6 cents/kWh peak.
- On 1 July 2020, the varying-rate tariffs will be reduced to 9.1 cents/kWh, 9.8 cents/kWh and 12.5 cents/kWh.
These are the minimum FITs required by the state government, but electricity retailers can offer higher tariffs if they choose. In Victoria, it is possible to find FITs over 20 cents/kWh.
The FIT is important when estimating the annual savings of a solar power system unless you consume all the electricity generated. The following is a simplified example, but it explains the concept:
- Assume you have a solar power system generating 10,000 kWh per year. However, you only consume 7,500 kWh and the other 2,500 kWh are exported to the grid.
- If your electricity provider charges 25 cents/kWh, you save $1,875 per year thanks to the 7,500 kWh.
- The value of the remaining 2,500 kWh will depend on the feed-in tariff. With the minimum FIT of 12 cents/kWh they are worth $300, increasing your annual savings by 16%. However, with a higher FIT of 20 cents/kWh, the surplus energy is worth $500 and your savings are increased by 26%.
For an actual solar installation, your site conditions and electricity tariff must be analysed carefully before calculating costs and savings. However, a qualified provider like Instyle Solar can provide an accurate estimate of your savings and return on investment.
The most up to date VIC Solar Feed-In Tariff rates can be found by clicking here