Recognising the need to reduce our environmental impact, governments in Australia (and other countries) provide incentives to encourage citizens and business to install Solar generation systems.

The incentives come in two forms :

• Capital Incentives – These seek to reduce the initial up-front investment required. The former Solar Homes & Communities Program rebate, and the current Renewable Energy Certificates (RECs/STCs) are examples of capital based schemes; and
• Production Incentives – These seek to reward actual generation with a higher than normal price paid for the green generation, in recognition that is is from a cleaner and therefore more valuable source.

Solar PV Feed in Tariffs (or FiTs) are a form of production incentive.  In basic terms, it is simply the money paid for electricity generated from the Solar PV system at the relevant customer’s premises. The thinking is that a production incentive only rewards actual generation, and therefore motivates consumers to take greater care in selecting providers and components, whilst at the same time ensuring funds are only paid out for actual generation and not hypothetical generation.

For example, if the feed in tariff rate is 26c and a sample 1kW capacity system generated 4kWh in a day, then the value of that electricity would be 4 x 0.26 = 1.04 for that day.

For Solar PV in Sydney, small system owners are eligible for Federally legislated Small Technology Certificates (STCs) on the capital side, and historically the state legislated NSW Solar Bonus Scheme Feedin Tariff on the production side. Now, the feedin tariff is provided by the retailer on a company specific basis rather than being legislated for. The current arrangements support a net tariff, which means your solar power goes first to power your appliances, with any surplus exported to the grid at between 6c and 10c depending on the retailer.