Updated on November 26, 2025
You’ve heard about feed-in tariffs, and they sound like the perfect way to help your solar power system pay off. But as you dive deeper, the details seem murky. Are feed-in tariffs still as rewarding as they once were?
At PSC Energy, we’ve seen the fluctuation of feed-in tariffs firsthand. We’ve been installing solar systems long enough to remember the golden age of feed-in tariffs. Of course, things are different now, but you should always consider every last penny of savings when it comes to shortening the payback period of your solar system.
In this article, you’ll learn about the following:
- What Are Feed-in Tariffs?
- The History of Feed-In Tariffs: How Solar Incentives Have Evolved
- Alternatives to Feed-in Tariffs
- FAQ: Feed-in Tariffs
By the end of this article, you’ll know what feed-in tariffs are, how they work, and their advantages and limitations.
What Are Feed-in Tariffs?
Feed-in tariffs (FITs) are a financial incentive offered by your energy retailer for the electricity your solar system produces.
Here’s how it works:
- You install a solar system at your home.
- When your system produces more electricity than you need, the excess is exported to the grid.
- In exchange, your energy retailer compensates you with a dynamic or fixed payment, known as the feed-in tariff rate, for every kilowatt hour you send to the grid.
It’s really that simple. You export energy from your solar system, and you get paid for it.
If you’re interested in learning more about solar systems, you might want to check out our introductory article titled, New to Solar: Start Here.
The History of Feed-In Tariffs: How Solar Incentives Have Evolved
- Role in Solar Growth: Years ago, feed-in tariffs encouraged solar adoption by offering financial payouts for energy exported to the grid.
- Purpose: Designed to make solar systems more attractive for households.
- Evolution: Over time, feed-in tariffs have changed significantly in structure and value. They don’t make much money for you anymore.
The Golden Age of Feed-In Tariffs
- Feed-in tariffs often exceeded $0.30 per kWh, encouraging solar adoption. High tariffs helped offset the high upfront costs of solar system installation.
- Homeowners earned more exporting solar energy (over $0.30 per kWh) than they paid for grid electricity.
- Exporting solar power was more financially rewarding than using it directly.
The “golden age” of feed-in tariffs is over, but affordable solar systems still make solar energy a great investment.
The Shift to Lower Feed-In Tariffs
As solar energy became more widespread and the cost of installing solar systems dropped, the need for high feed-in tariffs disappeared. Today, feed-in tariffs are significantly lower, with most providers offering rates between $0.04 and $0.10 per kWh for exported energy. This shift reflects:
- Market Saturation: More people are using solar energy, so more electricity is being sent to the grid. This reduces the need for high incentives.
- Grid Constraints: With so much energy being exported, the grid is inundated with electricity. This has caused tariffs to go down.
- Self-Consumption Focus: It’s more financially viable for homeowners to use their solar power directly in their homes.
Your focus should be on using your solar energy at home instead of exporting it, which gives the best financial benefits.
The Decline in Tariffs and the Rise of Affordable Solar
- Cost Reduction: Solar systems are much less expensive than they were in the 2010s. This has made solar energy affordable for more households, even without high feed-in tariffs.
- Financial Independence: Lower costs mean solar systems can now pay for themselves. Homeowners benefit from self-consumption.
Electricity from the grid is often much more expensive, usually costing between $0.20 to $0.50 per kWh, depending on time of day, your location, and energy retailer.
Because of this, self-consumed solar power provides much greater financial benefits compared to exporting energy to the grid.
By using more of the solar energy your system generates, you can avoid paying these higher electricity rates, leading to significant savings on your electricity bill.
The limitations of feed-in tariffs highlight why it’s so important to do your homework. Check your energy retailer’s policies, compare rates, and think about your energy usage habits.
By understanding these factors, you can decide whether FITs are worth it or if alternatives like battery storage or self-consumption strategies might suit you better.
If you’re interested in learning a bit more about the VPP portion of the battery rebate, you might want to check out the following article titled, NSW Battery VPP Rebate Explained: What You Need to Know.
Ready to go solar? Click here.
Alternatives to Feed-in Tariffs
If feed-in tariffs don’t provide the benefits you’re looking for, there are alternatives that can help make the most of your solar energy investment:
- Battery Storage Systems: Installing a battery storage system gives you the ability to store excess electricity for later use. This reduces your dependence on the grid because you can use your renewable energy even when production is low (e.g., at night or during cloudy days).
- Self-Consumption Strategies: Focusing on consuming more of the energy you produce can be more financially rewarding than relying on feed-in tariffs. For example, scheduling energy-intensive tasks like running appliances during peak production hours can lower your reliance on grid power.
Each of these alternatives has its pros and cons, so it’s worth exploring what works best for your energy needs and financial goals.
If you’d like to learn a bit more about what solar batteries are on the market, you might want to check out the following article titled, 6 Best Solar Batteries on the Market.
I Shot the Tariff, but I Did Not Shoot the Subsidy
Feed-in tariffs remain a useful incentive for solar energy adoption, but they’re not as lucrative as they used to be. They promise financial returns, shorter payback periods, and contributions to sustainability goals. However, declining rates and policy uncertainty mean they’re no longer a one-size-fits-all solution.
At PSC Energy, we believe that whether you rely on feed-in tariffs or explore alternatives, adopting solar energy is a step toward a more sustainable future. We’re here to help when you’re ready to get started.
If you’re interested in learning a bit more about solar and battery rebates in NSW, Australia, you might want to check out the following article titled, Ultimate Guide to Australia’s 2025 Solar Rebate and Battery Rebate: Federal and NSW Rebate for Solar.
FAQ: Feed-in Tariffs
What is a solar feed-in tariff and how does it work?
A feed-in tariff is the rate your energy retailer pays you for each kilowatt hour of solar power you export to the grid. When your solar system makes more energy than your home uses, that excess flows into the grid. Your retailer tracks those exports and credits your bill at the agreed feed-in tariff rate. You do not get paid for what you use in the home, only for what you send out.
How did feed-in tariffs help grow solar in the past?
Feed-in tariffs played a big role in early solar growth. Years ago, some feed-in tariffs were 30 cents per kilowatt hour or higher. In many cases that rate was more than what you paid for grid power. Exporting solar was more profitable than using it in your home. That strong incentive helped many people justify the high upfront cost of solar at the time.
Why are feed-in tariffs lower today than they used to be?
Feed-in tariffs are lower today because solar is much more common and cheaper to install. There is more solar energy hitting the grid in the middle of the day, which reduces the need for high export payments. Networks and retailers also face grid constraints when lots of power flows in at once. As a result, most modern feed-in tariffs sit around 4 to 10 cents per kilowatt hour instead of the old 30 cent rates.
Are feed-in tariffs still a good way to make money from solar?
Feed-in tariffs still provide some value, but they are no longer a big money maker for most homes. The credit you receive helps reduce your bill, but it usually forms a smaller part of your total savings. The main benefit now comes from using your solar power directly in the home. Feed-in tariffs work best as a bonus on top of strong self-consumption, not as your main strategy.
Is it better to export solar or use it in my home?
In most cases it is better to use your solar power in the home. Grid electricity often costs 20 to 50 cents per kilowatt hour, depending on your tariff and time of day. A typical feed-in tariff only pays 4 to 10 cents per kilowatt hour. Every unit of solar you use yourself avoids buying expensive grid power. That avoided cost is usually worth far more than the small export credit.
How do low feed-in tariffs affect my solar payback period?
Lower feed-in tariffs reduce the income you earn from exports, so they play a smaller role in your payback. Your payback period now depends more on how much grid power you avoid using. If you shift more of your usage into daylight hours, you can still reach a good payback even with modest export rates. The key is to design your system and habits around self-consumption rather than chasing high feed-in tariffs.
What are the main limitations of feed-in tariffs for solar households?
Feed-in tariffs have a few important limits:
- Rates are much lower than they used to be
- They can change over time as policies and markets shift
- They only reward exports, not smart use inside the home
These limits mean you cannot rely on feed-in tariffs alone to justify a system. You need to look at your retailer’s policies, your usage patterns, and your total savings, not just the export rate.
How has cheaper solar changed the importance of feed-in tariffs?
As solar hardware has become cheaper, you do not need sky-high feed-in tariffs to make solar worthwhile. Panels and inverters cost far less than they did in the 2010s. Many systems can now pay for themselves through self-consumption savings alone. Feed-in tariffs still help, but they are now one piece of a larger picture that includes lower system cost and smart energy use.
What are the main alternatives to relying on feed-in tariffs?
If you do not want to rely on feed-in tariffs, you have two main alternatives:
- Battery storage so you can store excess solar and use it later
- Self-consumption strategies that shift big loads into solar hours
Both options focus on using more of your own energy instead of sending it away for a small credit. They can deliver stronger long-term savings than exports alone.
How can a battery reduce my dependence on feed-in tariffs?
A home battery stores excess solar during the day so you can use that energy at night or during cloudy periods. This reduces how much you export and how much you buy from the grid. Instead of selling cheap and buying dear, you keep more of your own power on site. A well-sized battery can turn low feed-in tariffs into less of a concern because you rely more on stored solar and less on export income.
What self-consumption strategies increase my solar savings without a battery?
You can boost self-consumption without a battery by shifting your energy use into sunny hours. Simple strategies include:
- Running the dishwasher, washing machine, and dryer during the day
- Using timers or smart plugs to line up appliances with peak solar output
- Pre-cooling or pre-heating your home while the sun is strong
These habits raise the share of solar you use on site. That reduces your grid usage and makes low export rates less painful.
Do lower feed-in tariffs mean solar is no longer worth it?
Lower feed-in tariffs do not mean solar has stopped being a good investment. They simply change how the value stacks up. Today the main benefit comes from cutting your grid usage with cheaper solar power from your roof. Exports are a smaller slice of the savings pie. If you size your system well and focus on self-consumption, solar can still offer strong financial and environmental benefits, even with modest feed-in tariffs.
