How does the Victorian government minimum feed-in-tariff work for solar customers in Victoria?

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Victoria is the only state in Australia with an annually legislated government minimum feed-in-tariff (FiT). For the period 2020-21, this has been set at 10.2¢/kWh for solar exports and will be set at 6.7¢ in 2021/22.

Over the last few years the Victorian government minimum FiT has been higher than the true market value of many customers’ solar generation.

Traditional retailers probably cover this gap by subsidising the government minimum feed-in tariff using the retail markup they charge on all their customers’ usage.

This isn’t an option for Amber, because we pass through true wholesale prices with no retail markup.

We take a different approach to passing through the government minimum feed-in tariff for your exports - one that fits with our wholesale model.

How does this work with Amber’s wholesale pricing model?

(This version of our annual bill guarantee only applies to customers who joined Amber on or after the 15th of April 2021. If you joined Amber before this date please click here to learn how your minimum feed-in tariff top-up will be handled during the 2020-2021 financial year.)

Throughout the year we'll pay you the true wholesale value of your solar exports - so if you’re exporting at expensive times you’ll be earning a lot, but if you’re exporting at times when wholesale prices are low you’ll be earning less.

We’ll apply our annual bill guarantee at EOFY to ensure that you’ve earned the minimum feed-in-tariff for your solar exports as required by government regulation.

What is Amber’s annual bill guarantee?

Like other retailers, we publish regulated Energy Plan Fact Sheets (EPFS) which clearly state our promises around usage prices and Solar Feed-in tariffs.

We base these EPFS on the Government's reference price for power (called the Victorian Default Offer) and the Minimum Feed in Tariff.

For solar customers in VIC who joined after 14 April 2021, we guarantee that your total annual bill with us will never be more than the prices quoted in your applicable EPFS (including the Feed in Tariff component if you have solar). We’ll run this comparison for you at each EOFY and credit your account for the difference if necessary.

We also want to make sure solar customers aren't penalised for having solar - so if your bill excluding your Feed in Tariff would have been higher than just the usage prices in the EPFS, then we'll also top you up so you aren't worse off.

We'll take you through a few examples of how this guarantee works in the next section. You can also check out this page for more detail on the Victorian Default Offer (VDO).

How does this guarantee work?

Let’s go through a couple of examples showing how we’d compare two different hypothetical customer’s annual bills against our guarantee at EOFY. You can use these principles to calculate how you’re stacking up against our guarantee at any point during your time with Amber.

Example 1

Sudeep lives in postcode 3205 (South Melbourne).

Sudeep’s household consumed 4,000 kWh from the grid over the year at an average wholesale price of 15.2¢/kWh and a daily supply charge of 48.40¢/kWh. Sudeep also exported 2,000 kWh over the year at an average wholesale feed-in-tariff of 2.7¢/kWh. Because Sudeep uses more power from the grid than he exports, his household is a good fit for Amber’s wholesale prices.

Sudeep’s annual bill with Amber is calculated as follows:

= ⚡️ Usage charges + 📆  Daily supply charges + 💳  Subscription fees - ☀️ Exports

= (⚡️ 4,000 kWh x 15.2¢/kWh)  + (📆  $0.48/day x 365 days) + (💳  $15/mth x 12 mths) - (☀️ 2,000 kWh x 2.7¢/kWh)

= ⚡️ $608.00 + 📆  $172.30 + 💳  $180.00 - ☀️ $54.00

= 🧾 $910.30

Now let’s compare this with Amber’s guarantee:

At EOFY we compare Sudeep’s annual bill to what it would have been on the prices outlined in his applicable EPFS. The daily supply charge for Sudeep’s energy plan with Amber is 48.40¢ and the maximum average usage charge is 22.84¢/kWh.

We then accrue the 2020/2021 Victorian government minimum feed-in tariff for Sudeep’s exports:

Government minimum 10.2¢/kWh FiT x 2,000 kWh exported = $204.00

Sudeep’s annual bill guarantee is calculated like this:

= ⚡️ EPFS usage charges + 📆  EPFS daily supply charges + 💳  Subscription fees - ☀️ EPFS FiT

= (⚡️ 4,000 kWh x 22.84¢/kWh)  + (📆  $0.48/day x 365 days) + (💳  $15/mth x 12 mths) - (☀️ 2,000 kWh x 10.2¢/kWh)

= ⚡️ $913.60 + 📆  $172.30 + 💳  $180.00 - ☀️ $204.00

= 🧾 $1,061.90

Sudeep’s actual annual bill at EOFY ($910.30) was lower than it would have been on the prices quoted in his applicable EPFS ($1,061.90). Sudeep has been better off than these prices - so he’ll get to keep all those awesome savings he’s made (and won’t receive any additional credit). And beyond monetary savings, by buying his electricity at cheaper and greener prices when solar and wind are generating, he’s helping shift more of Australia’s energy demand to peak renewable times.

Example 2

Michelle’s energy usage is the same as Sudeep’s (4,000 kWh), except Michelle’s household has exported much more solar over the year (5,000 kWh). Because Michelle exports more power to the grid than she imports her household is not a good fit for Amber’s wholesale prices.

Michelle’s annual bill with Amber’s wholesale pricing is calculated as follows:

= ⚡️ Usage charges + 📆  Daily supply charges + 💳  Subscription fees - ☀️ Exports

= (⚡️ 4,000 kWh x 15.2¢/kWh)  + (📆  $0.48/day x 365 days) + (💳  $15/mth x 12 mths) - (☀️ 5,000 kWh x 2.7¢/kWh)

= ⚡️ $608.00 + 📆  $172.30 + 💳  $180.00 - ☀️ $135.00

= 🧾 $825.30

Let’s compare this with Amber’s annual bill guarantee:

First, we accrue the 2020/2021 Victorian government minimum feed-in tariff for Michelle’s exports:

Government minimum 10.2¢/kWh FiT x 5,000 kWh exported = $510

Michelle’s annual bill guarantee is calculated using the prices in her applicable EPFS:

= ⚡️ EPFS usage charges + 📆  EPFS daily supply charges + 💳  Subscription fees - ☀️ EPFS FiT

= (⚡️ 4,000 kWh x 22.84¢/kWh)  + (📆  $0.48/day x 365 days) + (💳  $15/mth x 12 mths) - (☀️ 5,000 kWh x 10.2¢/kWh)

= ⚡️ $913.60 + 📆  $172.30 + 💳  $180.00 - ☀️ $510.00

= 🧾 $755.90

Michelle will be credited the difference between her actual annual bill at EOFY ($825.30) and what her bill would have been using the prices in her applicable EPFS ($755.90). In line with our guarantee, she’ll be credited the difference of $69.40.

In future, as household battery prices come down, customers like Michelle could benefit with Amber if they combine their solar with a battery (and therefore export more at peak times), or look for other ways to maximise the value of their battery through self-consumption. This also helps drive more renewable electricity.

Why is the market value of solar generation often lower than the minimum FiT at peak solar times (i.e. in the middle of the day)?

Solar adoption is exploding in Australia, with enormous amounts of rooftop solar and solar farm capacity being added to the grid every month.

It’s great progress, but this doesn’t get us to 100% renewables on its own. That’s because supply is increasing way faster than demand during peak solar times.

Unless we fix this imbalance between exploding supply and stagnant demand, the market value of solar generation during the middle of the day will continue tracking towards zero.

One big reason why we created Amber is to help fix this imbalance by rewarding Australians for shifting more of their energy demand to times when solar is generating.

We also need better ways to use more solar generation during late afternoon and evening peak times, including adding more west-facing rooftop solar to the grid, and more home batteries to store solar power for use in the evening when demand is highest.

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