What is the Premium Feed-in Tariff and why is it ending?
Many of our customers made the sensible choice to install solar PV systems through Victoria’s Premium Feed-in Tariff (PFIT) scheme, available between 2009 and 2011. The PFIT provided eligible solar customers with small-scale systems of 5 kW or less, a credit of at least 60 cents per kWh for electricity exported to the grid, offering significant financial support at a time when solar technology was relatively costly.
As of 1 November 2024, the Victorian Government will end this scheme. From 2 November onwards, PFIT customers will no longer receive the premium rate. The PFIT was funded by electricity distribution businesses, with costs passed on to all Victorian customers. While early adopters benefited from high feed-in rates, this came at a small cost to non-solar customers.
With the increase in solar exports to the grid, the financial and environmental benefits of the PFIT have diminished, making this an appropriate time for the scheme to conclude.
What should PFIT customers consider next?
PFIT customers have supported the growth of the solar industry and are now free to expand their systems, which were previously limited in size to retain PFIT eligibility. Many have systems smaller than 3 kW and can now consider upgrading to match the current national average of approximately 11 kW. However, there are important factors to weigh.
Solar PV technology has advanced significantly since 2011, yet the value of solar exports has declined. Solar exports, particularly during the day, are often priced low or even negative in the National Electricity Market, reflecting significant solar exports and low demand. For example, in Victoria, daytime electricity prices on sunny days often drop below well below zero.
At Indigo Power, we’re adjusting our pricing to encourage electricity use during the day, offering a rebate between 10am and 3pm. This will allow our customers to charge batteries or electric vehicles (EVs) at little to no cost as if they were generating their power from a 10kW solar system.
Should I upgrade my solar system, or consider other options?
If you’ve been a PFIT customer or are looking for a high-value clean energy investment, now might be the time to consider other solutions. Instead of installing an oversized solar system, speak with your installer about other options like hot water heat pumps, home batteries, or even an electric vehicle. The Victorian Government offers incentives for hot water systems and battery installations, and the Australian Government provides support for EV purchases.
By shifting energy use to the day or investing in battery storage, you can make the most of Indigo Power’s clean energy surplus and support a sustainable energy future.
Ben is Indigo Power’s Managing Director. He has a passion for collaborative initiatives that positively impact our communities. Ben leads our skilled and committed projects team, driving the uptake of community-scale clean energy technologies in communities around Australia.