Australia: NSW Solar Bonus Scheme commences 1 January 2010

Last Updated: 8 February 2010


  • The Electricity Supply Amendment (Solar Bonus Scheme) Act 2009 (NSW) (Act) and its Regulation will commence on 1 January 2010.
  • The Act creates a gross feed-in tariff scheme which enables NSW small retail customers to obtain a payment or credit from their retailer if they install a complying generator which puts all of the electricity generated back into the grid.

Who is eligible?

NSW small retail customers (retail customers with an annual electricity consumption of less than 160 megawatt hours) will be eligible to apply for the Solar Bonus Scheme (Scheme).

What is a complying generator?

A complying generator is a solar photovoltaic generator, micro-wind turbine, or other renewable energy generator prescribed in the regulations, which:

  • has a generating capacity of not more than 10 kilowatts
  • is connected so that all electricity generated is supplied to the distribution network (network) and measured by the Distribution Network Service Provider (DNSP)
  • complies with relevant safety, technical and metering requirements.

What is meant by a "gross" feed-in approach?

Under the "gross" feed-in approach:

  • the generator's connection must be configured so that all electricity generated goes to the grid (and none is consumed on site)
  • the customer is paid a premium rate for each kilowatt hour of electricity generated ($0.60 in this case)
  • the electricity consumed at the premises is considered separately (with the feed-in tariff payment usually netted-off against these costs, when invoiced).

The $0.60 premium rate is significantly higher than the rate that the customer is likely to pay to the retailer for electricity consumed. Therefore, a gross approach which pays the customer at the premium rate for all electricity generated is likely to encourage greater take up.

This compares with a "net" feed-in approach under which connection may be configured so that the customer can consume some or all of the electricity generated on the premises. The customer is only paid at the premium rate for electricity supplied to the network (and not what it uses itself).

How does the Scheme work?

Once the complying generator and metering equipment is installed, either the customer, or another person on its behalf (such as a company in the business of installing renewable energy generators) will apply to the local DNSP for connection to the network. The DNSP will measure the electricity generated and supplied to the network, record the credit (based on the premium rate) due to the customer, and provide these details to the customer's retailer. The retailer will pay this amount to the customer either as a credit against its electricity account or as a direct payment.

The Regulations introduce three further requirements in order for a customer to obtain a credit:

  1. a credit may only be recorded in relation to electricity produced by one generator
  2. only inverters of up to 10 kilowatts in capacity may be used for connection to the distribution network
  3. new solar photovoltaic generator installations must be carried out by persons accredited in accordance with the Regulation.

The premium rate of $0.60 per kilowatt hour is fixed for the duration of the Scheme, being seven years from 1 January 2010. The Minister for Energy will also review the scheme after 1 July 2012 - or when total generating capacity of all complying generators reaches 50 megawatts, if this occurs earlier.

DNSPs will report bi-annually to the Minister of Energy and the Director-General of the Department of Industry and Investment about feed-in tariff take up, capacity, and generation within their distribution districts.

Transitional provisions

Many industry players had expected New South Wales to adopt a net feed-in tariff model. Perhaps in light of this, Country Energy, EnergyAustralia and Integral Energy already have net feed-in schemes for customers with solar generators.

The Act addresses this by providing that a generator which is connected as a net-feed-in generator before the Act commences (and which would otherwise be complying), is deemed to be a complying generator. Those retailers affected will be required to pay the premium rate on a net basis for electricity supplied to the network from the date of commencement until 1 July 2010 (or another date set by regulations). Country Energy and EnergyAustralia are also exempt from providing connection services unless a generator's configuration allows net measurements to be taken.

How does the NSW Scheme compare with the position in other States?

South Australia and Queensland have had net feed-in tariff schemes in place since July 2008, and Victoria also adopted a net feed-in tariff scheme on 1 November 2009. A Western Australia scheme is currently under consideration and expected to come into effect in July 2010.

The only other jurisdiction to adopt a gross feed-in tariff approach is the ACT, whose scheme commenced on 1 March 2009. The ACT scheme differs in that it does not expressly require the customer's generator to be connected so that all electricity is supplied to the network. It is also the only scheme that allows customers to install generators up to 30kW in capacity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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