Are feed-in-tariffs disappearing from the Australian energy market?
Feed-in tariffs in Australia have historically rewarded Australians for exporting excess solar power to the grid, but their value and presence are fading. They are rapidly declining in the Australian energy market, and in some states, are being phased out altogether.
What Are Feed-In Tariffs?
Feed-in tariffs are payments made to consumers for the excess electricity their solar panels generate and export to the grid. They were designed to encourage the uptake of renewables by offering above-market rates, especially in the mid-2000s, leading to a rooftop solar boom across the country.
State and federal programs, such as Victoria’s 60c/kWh premium FiT (2009–2011) and Queensland’s 44c/kWh bonus (pre-2012), made solar appealing for households.
Why Are FiTs Disappearing?
After a Council of Australian Governments decision in 2012, most legacy FiTs offering significant incentives were closed to new solar customers. This move was aimed at aligning tariffs with the actual market value of exported energy, not subsidised rates.
Australian feed-in tariffs are being steadily phased out as the policy landscape shifts away from heavy subsidies and toward true market-based pricing for solar exports. Until June 2025, states like Victoria set a regulated minimum FiT to ensure households with solar received at least a basic payment for every kWh exported.
In practice, this has changed dramatically: from 1 July 2025, no regulated minimum exists in Victoria, and retailers can set their own FiT rates, provided they do not drop below zero cents per kWh. This transformation ends guaranteed earnings for rooftop solar exports for most new customers, signalling a major policy reset.
The shift reflects the view that distributed solar should no longer be cross-subsidised by other energy consumers now that rooftop solar is mainstream.
Many other states now have retailer-determined or time-varying FiTs, which tend to be low and reflect wholesale market prices.
Falling Wholesale Energy Prices for Solar
A key factor in FiT decline is the way increased rooftop solar has driven down daytime wholesale prices. With millions of households and businesses sending their excess energy to the grid, electricity supply surges during midday, pushing wholesale prices downward and eroding the value of those exports.
In recent years, the “solar weighted” wholesale price, the average value of electricity at times when most solar is exported, has continued to fall.
For most of 2023 and 2024, prices during peak solar hours were often close to zero or even negative in some market periods. As a result, FiTs have been forced downward to reflect the true, lower market value of solar energy during those times.
This economic reality is now embedded in both federal and state policy approaches, ensuring FiTs are determined by market forces, not fixed subsidies.
Policy and Regulatory Updates
Regulatory updates across Australia confirm that state governments, regulators, and market operators see minimal or no guaranteed FiT as the new normal. Victoria’s 2025 policy removed the Essential Services Commission’s power to set minimum FiTs, shifting the responsibility to individual electricity retailers.
New South Wales in 2025 also introduced an export charge during peak solar export hours, meaning some customers could pay for grid exports instead of being credited. Queensland slashed its regional FiT by 30%, and South Australia dropped any minimum guarantee, leaving everything to competitive retail market offers.
In Tasmania, the regulator still sets a minimum based on avoided cost, but even here, the provisional rate for 2025–26 is around 8% lower than the prior year. Collectively, these moves reflect a nationwide shift to letting FiTs mirror the economics and demand of the modern energy market.
Why Is This Happening Now?
End of Large Government Incentives
Australia’s major federal support programs for renewable energy, such as the Small-Scale Renewable Energy Scheme (SRES) and the Large-Scale Renewable Energy Target (LRET), are being phased out as the country moves towards a market-driven renewable energy approach before 2030. With these policy supports declining, the FiTs that pay solar system owners for electricity they export to the grid will no longer include government incentives and instead will reflect only the true market value of the solar energy exported.
Network and Technology Shifts
Solar technology is changing, with average residential system sizes now exceeding 10 kW compared to the 3–5 kW average just a decade ago. Battery/storage uptake is increasing, influenced by new schemes such as the eligibility for solar batteries under the SRES from July 2025. These trends will help solar self-consumption for businesses and households, reducing the reliance on and value of FiTs.
Impact on Households and the Energy Market
Here is how this shift might impact households and the energy market:
Less Incentive to Export to the Grid
With FiTs set close to wholesale rates, the financial return from exporting surplus solar is now minimal. Households are prompted to use more of their generated energy themselves, especially with storage solutions.
Growth of Storage and Smart Consumption
The declining FiT environment accelerates the case for home batteries, innovative energy management, and smart devices, enabling storage and timed use over exports. Early data from 2025 shows strong interest in solar battery/storage installations following new rebate eligibility.
Grid Impacts and Market Balance
The disappearing FiT may help curb excessive middle-of-day exports and support a better-balanced, more reliable grid, especially as network tariffs move towards “cost reflective” pricing. However, without clear FiT signals, vulnerable consumers with less flexibility or unable to install batteries might miss out on savings.
Conclusion
Feed-in tariffs for businesses in Australia are clearly disappearing from the Australian energy market, driven by policy reforms, falling wholesale prices, and changing technology. While this marks the end of an era for early solar adopters, it is ushering in a new age of self-consumption, smart storage, and more dynamic, market-driven participation in the energy transition.
Careful policy design will be needed to ensure the benefits of this next phase are shared fairly as the energy market evolves. For expert guidance and comprehensive renewable energy solutions designed to meet your business’s unique energy goals, contact Melbourne Energy Group today!
