Australia’s Victoria has announced the final decision on the minimum FIT rates for rooftop solar prosumers for FY 2024-25. The 33% drop from AUD 4.9 cents/kWh in FY 2023-24 will come into force from July 1, 2024. ESC says this reflects the changing value of solar exports amid increased generation in the market. It also anticipates overall wholesale electricity prices to be lower in FY 2024-25.
The Essential Services Commission (ESC) of Victoria in Australia has reduced the minimum electricity feed-in-tariffs (FIT) for solar customers in the state by 33% for the financial year (FY) 2024-25. This adjustment brings the rate down from AUD 4.9 cents/kWh in FY 2023-24 to AUD 3.3 cents/kWh.
The ESC has approved a range of time-varying minimum FITs from AUD 2.1 cents/kWh to AUD 8.4 cents/kWh, effective from July 1, 2024, until June 30, 2025.
This change reflects the evolving value of solar exports due to increased solar generation and low wholesale electricity prices during daylight hours.
With a rise in rooftop solar households contributing solar power to the grid, there has been a decrease in demand and an increase in supply during daylight hours, leading to reduced prices during peak solar export times.
Rooftop solar currently makes up 99.9% of the state's small-scale renewable energy generation.
Consumers are advised to maximize the financial benefits of their solar systems by using the generated power to offset retail electricity costs. Shifting electricity usage to daylight hours, when solar generation is at its peak, is highlighted as the most effective way to optimize returns on a solar system, potentially saving customers around 30 cents per kWh.
Following a consultation initiated in November 2023 proposing the reduced rate, the ESC's final decision was based on the forecast of lower wholesale electricity prices for FY 2024-25, especially during peak solar export periods.
While facing opposition from solar customers against the decision, the ESC emphasized that FIT rates must be determined based on the value of solar exports as required by legislation.
According to reports from local media outlet One Step Off The Grid, FY 2024-25 will mark the third consecutive year of declining FIT rates in Victoria, starting from AUD 10.2 cents/kWh in 2021-22, then dropping to AUD 6.7 cents/kWh in 2022-23 before reaching the current rate of AUD 3.3 cents/kWh.