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Premium Feed-in-Tariffs Explained
A feed-in tariff (FiT) is often a premium rate paid for electricity fed back into the electricity grid from a designated renewable electricity generation source. At present, feed-in regulations for renewable energy exist in over 40 countries, states or provinces internationally, all involving the payment of a premium for the electricity fed into the grid from a variety of renewable energy sources.
FiTs can be applied in two forms:
- a gross FiT - whereby all electricity generated from a renewable source is purchased from the generator at a generous price, with the generator buying-back any electricity they need to use from the grid, or
- a net FiT - whereby only unused or surplus electricity is purchased from the generator.
Either of these FiTs can be applied as a static subsidy, or can gradually decrease over time to promote innovation. (Source: Parliament of Australia. Parliamentary Library, 2010)
In Australia, FiTs have been introduced or are under consideration in all States and Territories. A summary of each scheme is provided below. In addition the Clean Energy Council's summary of Feed-in-Tariffs by State and by Electricity Retailer is available here.
The FiT schemes differ from State to State and the premium FiT schemes all have the capacity to greatly offset the cost of electricity usage during the evening when peak tariffs apply. The more electricity a household feeds back into the grid the quicker they may recoup the cost of their system. This provides incentive for additional energy efficiency measures in the household. The FiT schemes in general provide greater incentive for larger systems.
Transitioning your household to a FiT scheme will in many cases require the installation of a new bi-directional meter that can measure the inward and outward flows of electricity, it will also most likely result in a change to the tariff structures offered by your Distributors/Retailers and we recommend that you spend the time to assess the tariff options available to you.
In November 2010 the NSW Government announced changes to the gross feed-in tariff or Solar Bonus Scheme after the milestone of 50 megawatts (MW) installed capacity was successfully reached.
New customers installing solar power systems up to 10 kilowatts in size, with a maximum 160 megawatt-hours electricity consumed per annum will now receive a gross tariff rate of $0.20/kWh compared to the original $0.60/kWh. The Scheme will also be capped at 300 megawatts (MW). Customers who have connected systems by 27 October 2010 will not be affected by the tariff change.
The NSW Government states, "Under the transitional measures, customers who purchased or leased systems (or entered into a legally binding agreement to do so) by 27 October 2010 can still be eligible to receive the previous 60 cent gross tariff if their application for connection is received by the distributor by 18 November 2010. For all eligible systems purchased or leased after 27 October 2010, a new gross tariff rate of 20 cents per kilowatt hour now applies."
NSW customers also have the option to apply for a net feed-in tariff. If they choose do so, a net electricity meter needs to be installed instead of a gross electricity meter.
Both the net and gross tariffs are offered until the end of the Scheme on 31 December 2016.
For more information please visit the link below or navigate directly through the Industry & Investment NSW website.
http://www.industry.nsw.gov.au/energy/sustainable/renewable/solar/solar-scheme (Source: NSW Government. Industry and Investment)
At the March 2008 Council of Australian Governments' meeting it was agreed that Australia would have a harmonised approach to FiTs. However, little progress on a national level has been made since. Australian Greens Senator Christine Milne tabled a petition on 24 June 2009 with over 17 000 signatures supporting a national gross FiT scheme. On the same day, Independent MP Rob Oakeshott introduced Senator Milne's Private Member Bill on FiTs into the House. The previous Prime Minister Kevin Rudd has indicated that discussions on a national FiT will take place in the context of how it could potentially dovetail with the renewable energy target.
(Source: Parliament of Australia. Parliamentary Library, 2010. Last viewed on July 28, 2010)