Saving Tips

Why the plan with the highest feed-in-tariff isn't necessarily the best value

When looking to save the most money, naturally solar owners look for the highest feed-in-tariff. We explain why it isn't that simple, and why choosing a lower feed-in-tariff might save you more money.

Now that you have installed a solar PV system on your home you are on your way to cheaper electricity bills. At Huglo, we often get questions from our customers regarding which retailer plan has the highest feed-in-tariff (FiT). This is an important part of every electricity plan, as you will likely only ‘self-consume’ around 30—40% of the electricity generated on your roof, more if you are home during the day. This means you will be exporting up to 70% of the electricity you generate – so it is key to ensure you are getting the best rate for these electrons.

Getting on the best value electricity plan can reduce the payback period of a new solar PV system by between 1.1 – 1.7 years*

However, the solar feed-in-tariff is only one third of the story. The other major components of an electricity bill includes the daily supply charge and general usage charge. These are the costs of being connected to the grid and the electricity you draw from the grid when the sun isn’t shining. You can read more about these here.

Given electricity plan charges are both fixed and variable, both on the cost and credit side. The actual plan that is right for your household is dependent on:

1. The amount of solar electricity you generate on your roof

2. The proportion of solar electricity you ‘self-consume’

3. The amount of grid electricity you draw from the grid

While a retailer may advertise a high solar feed-in-tariff, you need to watch out for also high daily supply and general usage charges.

A real world example:

Solar FiT

(per kWh)

General Usage Charge

(per kWh)

Daily Supply Charge

(per kWh)

Retailer A

11 cents 19.6 cents $1.16

Retailer B

15 cents 24.0 cents $1.10

For a Brisbane household of four with a 6.6kWp solar PV system installed, they would actually be better off going to the Retailer A, even though they have a lower solar feed-in-tariff. This is because the benefits provided by the higher solar feed-in-tariff would be swallowed up by the higher daily supply charge and general usage charge.

We recognise why this can be complicated to understand and in most cases, it’s designed to be that way. If you want a better way of comparing the different solar feed-in-tariffs across retail plans, you could always dust off your Excel skills and go at it yourself, otherwise you could use Huglo’s Comparison Service which takes into consideration the feed-in-tariff, general usage and daily supply charge and shows it to you in a way that makes choosing the best plan for your situation a breeze.

* Assumes a new 6.7kWp Solar PV System installed in Brisbane comparing the median electricity plan to the best value electricity plan using the Huglo Comparison Service as at October 2020.


Huglo's Electricity Comparison service is live!

Huglo is here to help you minimise your electricity costs. Compare over 11,400 electricity retailer plans across Australia – 100% of the market, 100% free and no back-end commissions from electricity retailers.

Start saving

Other Posts