We have completed our review of the 2023-24 minimum feed-in tariffs.

From 1 July 2023, retailers will be able to offer solar system owners a single rate feed-in tariff, or two time-varying feed-in tariff options, or both.

Minimum feed-in tariffs for 2023-24 

The table below shows the draft minimum feed-in tariffs for 2023-24. Retailers can offer solar customers a flat feed-in tariff and/or time-varying feed-in tariffs for electricity exported to the grid.

The inputs to the minimum feed-in tariff model have been updated since we released the draft decision in December 2022. This reflects the most recent data available to us at the time of our final decision. Compared to our draft decision, solar weighted wholesale electricity price forecasts increased very slightly. 

The proposed single rate minimum feed-in tariff for 2023-24 is lower than for 2022-23 due to lower daytime wholesale electricity prices.

The proposed overnight and early evening tariffs for 2023-24 have increased significantly compared to those for 2022-23. This is due to a forecast of significant increases in night-time wholesale electricity prices. As for the single rate feed-in tariff, the day rate has decreased due to lower wholesale electricity prices during daylight hours.

What's driving changes in the 2023-24 minimum solar feed-in tariffs?

Why the minimum feed-in tariff changes each year

The minimum feed-in tariff changes each year mostly because of changes in wholesale electricity prices. Wholesale electricity makes up around half of the costs covered by the minimum feed-in tariff.

We estimate the wholesale electricity prices using the latest information available at the time of publication of each decision. In recent years, wholesale electricity prices during the middle of the day when most solar is exported have been going down.

The wholesale price is set in a competitive national market, based on the supply of and demand for energy. The wholesale price is not set by government or a regulator.

How can the feed-in tariff decrease when retail prices are going up?

Average wholesale electricity prices have gone up recently and are forecast to go up further. In the evening when electricity demand is highest, wholesale electricity prices have increased significantly due to a combination of high fuel prices, generator outages and weather conditions.

However, growth in installations of rooftop, and utility-scale, solar has decreased demand for and increased supply of electricity during the day. As a result wholesale prices at the times when solar exports happen are lower, leading to a lower feed in tariff.

Why the minimum feed-in tariff is different to the retail electricity tariff

The minimum feed-in tariff is a payment you receive for generating electricity.

When retailers provide electricity to their customers, they must cover costs including:

• transporting electricity (the poles and wires connecting customers to electricity generators)
• operating a retail business (for example, billing and revenue collection systems, information technology systems, call centre costs, human resources, finance, legal services, regulatory compliance costs, licence costs and marketing)
• the ‘spot price’ of energy in the national energy market paid to generators
• hedging costs to provide a guaranteed price to their customers
• complying with environmental programs.

These additional costs mean the minimum feed-in tariff will always be lower than the retail electricity tariff.

Also, the retail price of electricity covers the cost of supplying energy at all times of the day. Because retailers must supply energy 24 hours a day, they must also pay for high cost electricity during the night (when wholesale electricity prices are higher). On the other hand solar exports happen during the day, when wholesale electricity prices are lower. So the wholesale prices in the feed-in tariff are lower than those for retail prices.

How we calculate the minimum feed-in tariffs

Legislation controls how we regulate the minimum feed-in tariff. The costs we must include are set out in the Electricity Industry Act 2000. By no later than 28 February each year, we must set the minimum feed-in tariffs to apply for the next financial year.

We calculate the minimum feed-in tariff by forecasting the wholesale price of electricity for the year ahead. This has the following affect on the minimum feed-in tariffs:

• The forecast includes wholesale electricity market information available up to the time of the decision. This means that for each decision effective from 1 July, the forecast wholesale prices is based on market information up to February of that year.
• Any changes in wholesale electricity market after the publication of the final decision in one year are included in the next decision. This means any changes in the wholesale electricity market after the final decision will be incorporated in the wholesale electricity price forecasts for the feed-in tariffs for 1 July of the next financial year.

The wholesale price varies across different times of the day due to changing supply and demand. As solar panels generally export power between certain hours of the day, we only use the forecast wholesale price for electricity during these ‘solar hours’.

In our calculation, we also include:

1. avoided transmission and distribution losses: the value of energy saved by not transporting the energy long distances from large scale generators.
2. other fees and charges: the value of market fees and ancillary service charges that retailers avoid when energy is produced by solar customers.
3. environmental benefits of renewable energy: the value associated with reducing greenhouse gas emissions when energy is produced by solar customers. It is currently set at 2.5 cents per kilowatt hour (c/kWh). 

For more information about our methodology and review process for the minimum feed-in tariff 2023-24, see our final decision paper.

Tips to make the most of your solar

The enduring value for solar customers is avoiding paying retail prices for their energy use.

1. Where possible, run your power-hungry appliances - washing machines, dishwasher - during the middle of the day to avoid higher evening peak prices charged by retailers. Any leftover energy is then exported to the grid and you get paid via the feed-in tariff.
2. Consider any advantages to 'time of use' feed-in tariffs when working out which energy retailer meets your needs.
3. Plan your daily energy usage to be met during daylight hours when your solar is hard at work.

On 27 March 2023, we made a final decision directing distribution businesses to report on new Greenfields Negotiated Electricity Connection Customer Service Standards when working with developers and contractors to connect new housing developments to electricity.

Under clause 24.2.2 of the Electricity Distribution Code of Practice, distribution businesses must report to the commission on their performance against the standards every six months for the regulatory period 1 April 2023 to 31 March 2026.

The customer service standards include:

• an overarching customer outcomes statement setting out what a distribution business expects to deliver over the next three years in relation to negotiated connections
• a requirement to form a consultative committee that meets regularly to discuss improvements in negotiated connection processes
• a performance reporting framework that distribution businesses are to report against every six months.

We first directed distributors to develop these standards in 2021 to address delays in connecting new property developments on greenfield sites. In December 2022, we released a consultation paper which sought feedback from stakeholders and industry on the proposed revised standards and performance metrics. We also hosted a roundtable with distribution businesses and industry participants.

Prior to the expiration of the revised standards, we will assess the effectiveness of the revised standards and decide if further standards are required.

Next steps

The Land Access Code of Practice will take effect from Friday 1 March 2024, meaning the rules and obligations will apply from this date. We will support electricity transmission licence holders with their compliance readiness activities, by offering an information session in early 2024.

Once in effect, we will monitor the effectiveness of the Land Access Code of Practice in achieving its objectives. We may review and amend the code of practice as needed in accordance with our stakeholder engagement framework.

If you have any questions about the Land Access Code of Practice, please contact energyreform@esc.vic.gov.au.

Making a Land Access Code of Practice Draft Decision

On 15 June 2023, we released our Making a Land Access Code of Practice Draft Decision and Draft Land Access Code of Practice. Stakeholders were invited to provide feedback on the draft Land Access Code of Practice via a survey through Engage Victoria or by making general comments over email, mail or phone. Our consultation process closed Thursday 27 July 2023. Our draft decision, the draft Land Access Code of Practice and stakeholder submissions can be found in the Resources tab (at the top of this page).

As part of our consultation process, we held an online public forum on 17 July 2023 where we presented the proposed scope and content of the draft Land Access Code of Practice. Stakeholders provided feedback and shared their experiences regarding land access.

A recording of the forum is provided below:

Background

In late 2021, we became aware of community concerns about how electricity transmission companies accessing land for the development of transmission projects under section 93 of the Electricity Industry Act 2000 (the Act). Recognising the urgent need to help minimise these land access issues faced by landowners and electricity transmission companies, we developed a statement of expectations in May 2022 as an interim measure while we developed an enforceable code of practice.

In December 2022, we held a public forum where stakeholders gave their initial views on what a code of practice should address.

A recording of the forum is available below:

In February 2023, we released a consultation paper to seek initial stakeholder feedback on an enforceable code of practice. Stakeholders were able to provide their feedback in the form of written submissions or through responding to survey questions via Engage Victoria.

• 15 stakeholders responded to our consultation
• all non-confidential submissions and survey results are available on our website

Our consultation paper and stakeholder submissions can be found in the Resources tab (at the top of this page).

The feedback received on the consultation paper, draft decision and draft Land Access Code of Practice informed our final decision and the final version of the Land Access Code of Practice.

On 22 June 2022, Mondo Power Pty Ltd (ACN 097 962 395) applied for a licence to generate electricity for supply or sale, and to sell electricity under section 18 of the Electricity Industry Act 2000 (Vic).

Consultation of the licence application closed on 8 December 2022. We did not receive any submissions.

We granted the licence on 14 December 2022.