No exaggeration, Australia is one of the most sun-drenched countries in the world – and Australians are adopting solar energy at an incredibly unprecedented pace! In fact, more than 3 million homes now have solar panels installed on their rooftops. However, what becomes of all the surplus energy your system produces? This is where the importance of solar feed-in tariffcomes into play.
Consider this as an effective way to earn money for the power you never really use. Rather than being wasted, your unused energy is sent back to the grid – and your energy retailer pays you for it. Seems like an excellent deal for both sides, right?
In this blog, we will unpack feed-in payments – laid out in simple language – so that you clearly understand what’s involved, how they function, and how to reap the optimum dividends of your rooftop energy system.
A Quick Summary
A solar feed-in tariff (FiT) is the payment that you receive for surplus electricity your solar system exports to the grid. This blog sheds light on how solar credits work, what influences your earnings, and how you can find the best FiT rates in Australia. You’ll also learn how FiTs influence your energy bill, how they differ by state, and how to double up the return on your solar investment.
What Is a Solar Feed-in Tariff?
- Basic Definition (Clarified in Simple Terms)
A solar feed-in tariff (FiT) refers to a payment you receive for the electricity your solar system feeds back into the grid. When your solar modules generate more energy than you use, that surplus power is transferred to the central electricity infrastructure. Your energy retailer then pays you a fixed amount (typically cents per kilowatt-hour) as a credit on your electricity bill. It’s one of the most effective ways homeowners can offset their energy costs and slash power bills.
- Types of Feed-in Tariffs in Australia
There are mainly two types of FiT available out there in Australia. They are –
- Flat-rate FiT: This one is a set rate per kWh of transferred solar energy.
- Time-varying FiT: The pricing varies based on the time of day (such as higher charges, especially during peak demand).
There are some states or energy providers out there that may provide a hybrid model, combining both.
Next, take a look at how these credits really work on your bill.
How Solar Credits Work on Your Electricity Bill
Gaining a thorough understanding of how solar incentives work is key to increasing your energy savings. These returns aren’t just perks – they also actively lower the amount you need to pay on every electricity bill.
- From Rooftop to Rebate
Here’s a quick overview of how solar credits work –
| Step | What Happens |
| Solar panels generate power. | You use a portion of the power instantly for domestic needs. |
| Extra energy is exported. | Excess electricity is sent back to the grid. |
| Credits appear on your bill. | You receive a rebate for each transferred kWh. |
Suppose your retailer offers a solar feed-in tariff of 10 cents/kWh. In case you send 200 kWh back to the grid in a billing period, you receive a $20 credit on your bill.
- Do Feed-in Credits Carry Forward?
Yes, of course! Most of Australia’s energy providers apply rebates to your bill balance. If you generate more than you consume, your credit can be transferred to the forthcoming bill cycle.
What Influences Your Feed-in Tariff?
Your solar feed-in tariff isn’t any one-size-fits-all rate – it’s impacted by a number of key factors. Understanding what drives FiT variations can help you pick the right provider and set yourself up for better returns.
- State Regulations and Energy Providers
Not every FiT is created equal. Feed-in tariffs differ based on your –
- State/Territory regulations
- Retailer’s offers
- Time-of-day consumption patterns
Here’s a quick overview of the best FiT rates (as of 2025) –
| State | Typical FiT Range (c/kWh) |
| VIC | 4.9 – 10.2 |
| NSW | 5.5 – 12.0 |
| QLD | 6.5 – 10.8 |
| SA | 7.0 – 15.0 |
| WA | 2.5 – 10.0 |
| TAS | 6.1 – 8.0 |
Make sure that you regularly check with your provider – FiT rates can fluctuate with the changing market conditions.
- System Size and Usage Habits
The more you generate – and the less you consume – the more power you send back. And this directly impacts your rebate.
- Smaller systems (1.5–3kW): Reduced export volumes
- Larger systems (6.6kW+): Greater likelihood of higher FiT earnings
Additionally, your consumption habits also matter a lot! If you consume power, especially during peak solar generation (for instance - mid-day), you will send less back to the grid and receive fewer credits.
Comparing the Best FiT Rates in Australia
- What Makes a FiT “Ideal” for You?
The best FiT rates aren’t only about the number – they also depend on –
- Your system size
- Regular electricity usage
- Whether you’re on a fixed-rate or variable-rate plan
- Provider discounts and fees
At times, a lower FiT but cheaper consumption rates can be more effective than a high FiT paired with an inflated retail charge.
- How to Compare Feed-in Tariffs Smartly
While comparing different plans, look at –
- FiT rate (cents/kWh)
- Usage rate (the amount you pay per kWh used)
- Supply charge (recurring connection fee)
- Contract terms and exit fees
Expert take – Rely on energy comparison tools and consult your state’s energy authority for guidance.
Advantages and Drawbacks of Solar Feed-in Tariffs
Benefits
- Lowers your electricity bills
Feed-in tariffs reduce your overall energy costs by providing you with credits for the surplus power your solar system sends back to the grid. These rebates are applied directly to your electricity bill, decreasing the amount you should pay.
- Encourages energy efficiency
By producing and feeding back clean energy, you're more aware of when and the ways in which you consume electricity at home. This results in smarter consumption habits and decreased grid reliance.
- Makes solar more economically viable
FiTs help accelerate your return on investment by converting unused power into savings. In the long run, this can make setting up solar panels a cost-efficient decision.
- Supports renewable energy in your community
Every kilowatt-hour you return to the system reduces the need for fuels. This helps in building a greener power network and aiding Australia in moving towards a more sustainable energy future.
Drawbacks
- High usage in peak daylight = fewer exports
If you're at home in the daytime and running appliances, a smaller amount of energy is returned to the grid. This lowers your potential FiT returns and total credits.
- Excessive dependence on FiTs can lower long-term savings if not paired with smart usage strategies
Counting only on FiTs without optimizing exactly when or how you manage electricity consumption could limit your savings. Combining self-consumption with power backup systems can deliver increased financial advantages.
Maximizing the Value of Your Solar Feed-in Tariff
- Effective Tips for Australian Homeowners
- Use appliances at the daylight hours – boost self-consumption.
- Size your system smartly – steer clear of overspending on system size you won’t send back to the grid.
- Track your usage – start using apps or advanced monitoring devices to track generation.
- Negotiate with your retailer – don’t forget to negotiate as some better rates might be available!
- Consider battery storage –ensure to save excess power for future usage and reduce dependence on FiTs.
- Solar Batteries and FiTs – The Best Match?
While batteries don’t increase your FiT, they do have the ability to –
- Reduce your energy consumption at night.
- Assist in steering clear of peak rates.
- Offer backup support during blackouts.
However, they come with upfront expenses – so weigh the ROI carefully.
Frequently Asked Questions
- Can I continue to get solar feed-in tariffs if I currently have panels?
Yes. Most systems qualify, but consult your energy provider for any particular conditions or requirements.
- Are FiT payments taxable in Australia?
Usually, if you’re using solar for residential or personal use, it’s not taxable. However, if you produce power as a business, it may be.
- What happens if FiT rates decrease?
You’ll receive less for the energy back to the grid. Hence, it’s smart to maximize energy usage during daylight hours and focus on lowering overall consumption.
- How frequently do FiT rates change?
Feed-in tariff rates are typically reviewed and updated every year or based on changes in wholesale electricity pricing. Consider keeping an eye on your energy provider's communication or your energy regulator’s announcements to stay informed.
Final Words – Make Every Ray Count
Grasping how the solar feed-in tariff operates is important for every Australian aiming to reduce energy bills and maximize the value of their solar investment. From learning how solar credits work to drawing comparisons between the best FiT rates, you’re now better equipped to make wiser energy choices.
As the energy market goes through constant shifts and technologies such as batteries become more accessible than ever, your solar strategy must adapt, too. Regularly assess your current FiT, track your energy consumption closely, and explore greater plans for better savings.
