Victorian regulator to slash rooftop solar feed-in tariffs

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The Essential Services Commission (ESC) has released its draft decision on the minimum amount energy retailers must pay solar customers in Victoria for electricity they feed into the grid.

The ESC, which is legally required to set a minimum rate that energy retailers must pay their solar customers, proposes cutting the minimum flat feed-in tariff for solar PV to 0.04 cents per kWh from 1 July 2025, down 99% from the current 3.3 cents per kWh in 2024–25.

The draft decision also proposes reducing the minimum price for flexible tariffs, which change depending on the time of day, to between zero and 7.5 cents per kWh, down from last year’s tariffs that ranged between 2.1 cents to 8.4 cents.

ESC Chair Gerard Brody said the lower tariffs reflect the widespread uptake and success of rooftop solar in the last few years, as Victorians have heeded calls to reduce carbon emissions and industry has increased renewable energy generation.

“The amount of rooftop solar in Victoria has increased by 76% since 2019, from approximately 446,000 systems to 787,000,” he said.

“This has both increased supply and reduced demand for electricity during the middle of the day, resulting in decreasing value of daytime solar exports.”

Despite the proposed cuts to feed-in tariffs, Brody said households with solar still had cheaper power bills than those that do not, saving on average up to $895 a year.

“Solar households can maximise their savings by shifting appliance hungry electricity usage to daylight hours during peak solar production times to avoid paying much higher retail costs,” he said.

While the ESC sets the minimum feed-in tariffs, retailers can offer feed-in tariffs above the minimum amounts.

The draft decision is open for consultation until 31 January, with a final decision on minimum feed-in tariffs to be published by 28 February 2025.

Brody said the pricing methodology remains unchanged from previous years and considers wholesale electricity, costs of solar exports, avoided costs faced by retailers, and other social and environmental factors.

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