Sun sets over minimum payments for Victorians with rooftop solar

February 15, 2025 journo

Victorians with rooftop solar panels will have payments for sending power to the grid slashed or even terminated under a new move by the state government that permits energy retailers to scrap popular solar feed-in tariffs.

The state’s Essential Services Commission presently has a minimum feed-in tariff of 3.3¢ per kilowatt-hour, paid by electricity retailers to households that generate excess electricity with their solar panels and export it to the electricity grid.

Australia has among the highest per-capita uptake of rooftop solar panels in the world.Credit: Glenn Hunt

But Energy and Climate Change Minister Lily D’Ambrosio will announce on Sunday that the government plans to abolish the requirement for any feed-in tariff.

The move will bring Victoria into line with other states, including NSW, and signals the shift to a new era in which households will not automatically earn payments for sending power into the grid during daylight hours when it’s least needed. The change comes after years of reductions to feed-in tariffs since their introduction in the 2000s, but experts say it paves the way for greater rewards for households with batteries that store solar electricity and dispatch it when it’s most needed.

Explaining her decision, D’Ambrosio cited the surging popularity of rooftop solar panels, driven by generous government incentives, that had caused a glut of daytime solar in the grid.

There are around 700,000 homes with solar power in Victoria – 300,000 of those received a rebate through the state government’s Solar Homes program. Applications for solar panel rebates through the program increased by 15 per cent in the past financial year, while the number of Victorian homes with solar panels doubled under Labor’s popular incentive schemes.

D’Ambrosio said households were saving up to $1000 a year by using the electricity generated on their roofs to power their homes, as well as helping to reduce the price of energy for those without panels.

“The huge uptake of solar in Victoria has helped push daytime wholesale prices to historic lows – meaning lower power bills for everyone.”

Despite the removal of a minimum feed-in tariff, the government stresses that installing rooftop solar still represents good value for households, and that energy retailers such as AGL, Origin and EnergyAustralia could still choose to offer payments for customers who export to the grid.

“Retailers can still offer feed-in tariffs and Victorians can find the most competitive offers on the free and independent Energy Compare website,” D’Ambrosio said.

The Australian Energy Market Operator, which oversees the east coast electricity grid, has been intensifying warnings that the system is flooded with too much solar power during the day.

This glut is forcing authorities to curtail other sources of renewable electricity to prevent dangerous spikes in voltage levels, which could cause blackouts, just to keep the system stable.

Victoria’s decision to remove the feed-in tariff “makes sense”, said Matt Rennie, co-chief executive of energy consultancy Rennie Advisory. “It will encourage innovation and design of new products … which will reward customers for storing their power during the day and feeding it back into the system during peak times,” he said.

However, the Smart Energy Council, which represents solar and battery installers, said Victoria’s abolition of feed-in tariffs was a “disaster”, and accused the government of capitulating to the interests of energy companies.

“There should be a national minimum feed-in tariff policy and there should be, with urgency, a distributed home battery rebates and incentive policy,” Smart Energy Council chief executive John Grimes said.

While tariffs are expected to drop in coming years, household batteries are expected to become cheaper, which would increase the economic benefits of ownership.

This would allow households to store the solar power that is not needed by the grid during the day and reduce their reliance on the grid at night, when prices rise as it is powered largely by coal and expensive gas-fired generation.

Batteries typically retail from $10,000 to $15,000 and with the federal election due by May, both major parties are considering rebates and other incentives to cut the purchase price and boost battery uptake.

Victoria’s Essential Services Commission chair Gerard Brody said the decision to remove the feed-in tariffs reflected the widespread uptake and success of solar panels across the state.

“Victorians have heeded calls to reduce carbon emissions and industry has increased renewable energy generation,” he said.

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