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How do Feed-In Tariffs Work?

How do Feed-In Tariffs Work?

Feed-in tariffs levels are now largely determined by energy companies

Most energy companies offer low payments or nothing at all. Each state has a different position, with energy companies paying around 6 - 10c per Kwh for new installations.

How feed-in tariffs work:

When you generate your own power with solar photovoltaic panels, with no storage, around 65% of a household's power comes free from the sun. Come night time however and the disappearance of the sun or on particularly cloudy days, you can't generate electricity with current technologies so at these times, you need to revert to using the electricity company's energy unless you have a battery storage system.

Depending upon the strength of daylight and the number of photovoltaic panels you have, you will probably generate more power than you need to use during the day and it is this excess power that you can sell or give back to the electricity grid.

If your electricity company pays for this excess power, it is called a Feed-in Tariff and you a paid per Kwh for the electricity you feed in. Potentially you are not only saving money on the power you don't buy, but you are making money on the excess.



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Science Notes

Their really isn't a lot of science to Feed in Tariffs beyond commercial reality.  Energy companies set their own payment levels and at the moment there is little or no pressure on them to pay more than they have to. Most states have pricing coming up before their local Competition Authorities and various lobby and political groups are emerging to fight for better tariffs, so watch this space. 

Make sure you read the lock in clauses in any contract you sign with an energy provider.

Related Tip

Here is a quick overview of the measures of power and energy. Power is measured in watts (W) - just like when you buy a 100W bulb. Energy measures the electrical power used and it is measured in watt hours (Wh). However, most of the time power and energy usage is measured in kW and kWh. (1kW - 1,000W). So, a 100W light left on for 5 hours uses 100W x 5hours = 500Wh or .5kWh per day.