05/03/11

Feed-in Tariff (FiT):

The Queensland government has announced they will be implementing a "Solar Bonus Scheme" or Feed-in Tariff (FiT) of 44c/kWh around mid-2008.  A FiT is where electricity retailers pay more than the retail price for renewable electricity generated from PV solar systems. 

This financial incentive encourages more PV Solar to be installed which helps the climate, helps the electricity grid and also helps to reduce the financial payback time of a PV solar system.

Local Power welcomes the introduction of the FiT to reward people who install PV systems by helping accelerate the payback as well as the other benefits mentioned above.  Most people who have installed PV systems until now have been motivated by environmental concerns rather than financial ones, although it is welcome that a PV system can pay for itself over it's life.

The Queensland scheme is an "import-export metering FiT" - You are paid 44c for every KWh your PV system generates over and above what your house consumes at any point in time
 

The Queensland FiT could be improved

We believe the FiT can be improved.  Germany has become the world leader in PV Solar adoption due to their superior FiT scheme, while in Australia where we have a much better solar resource, we are well placed to benefit from their scheme. 

Germany and many other countries have implemented a "gross generation metering FiT" - You are paid 44c for every KWh your PV system generates.

Here are 12 reasons why Local Power believes the FiT should be improved and changed from import-export metering to gross generation metering.  Here is some spreadsheet modeling comparing the different FiT metering schemes and what they mean financially to people who buy PV Solar systems.

Local Power has sent a letter along with this information to our local member and relevant ministers.  We recommend that you familiarize yourself with these details so that you understand exactly what is being offered. We strongly encourage you to also write a letter to your local member and relevant ministers as we believe the Government should change to a better model. The contact details (postal, fax, email etc.) of local members and ministers can be found here.  Here is a draft form letter you might like to base your letter on.  Please feel free to use the material we have put together above and drop us an email if you do write a letter.

A gross national approach would be better

As you can see below, almost each state and territory has implemented their own variant of a FiT scheme.  So far only the ACT and NSW governments have implemented the superior gross scheme. 

It turns out that the financial return of a 60c gross scheme for 7 years, & then regular retail rates for the remainder of 20 years, is similar to a 44c nett scheme with 70% export for 20 years, depending of course on the retail electricity price assumptions. 

However the gross scheme is superior because the FiT payment is "bankable" i.e. people know how much payment they will get each year (not matter how much electricity they use), and therefore can get finance to pay for the upfront investment.  The other reason gross over 7 years is better than nett over 20, is that it brings forward most of the payments into the first 7 years instead of spreading them out over 20 years. This better matches how long people stay in their homes on average before moving.