Understanding Feed-in Tariffs: How They Work and Why NSW Rates Keep Falling

A feed-in tariff (FiT) is the rate your electricity retailer pays you for excess solar you export to the grid. In NSW it's not government-set — retailers set their own rates, and for 2026–27 many are offering flat rates around 3–4c/kWh, down from more than double that a few years ago. This isn't your retailer being unfair; it's a structural shift in how the market values solar exports, and it's reshaping the economics of home solar and batteries.

<div class="tldr" style="border:1px solid #cbd5e1;background:#f8fafc;padding:16px 20px;border-radius:8px;margin:24px 0;"> <strong>Quick answer</strong> <ul> <li>A FiT is the c/kWh credit for solar exported to the grid, set by retailers (not the government) in NSW.</li> <li>From 1 July 2026, many NSW flat FiTs sit around 3–4c/kWh; import rates are around 30–35c/kWh.</li> <li>Falling FiTs are driven by midday rooftop-solar saturation and time-varying wholesale pricing.</li> <li>The value of solar has shifted from exporting to self-consumption — and storage.</li> </ul> <em>Updated August 2026 for NSW residents. Rates vary by retailer — confirm your own plan.</em> </div>

What is a feed-in tariff?

A feed-in tariff is the rate your retailer pays you for excess solar electricity your system exports — the power you generate but don't use yourself at that moment. It's expressed in cents per kilowatt-hour (c/kWh) and appears as a credit on your bill, offsetting the cost of the electricity you import.

Crucially, in NSW the FiT is not government-set. Unlike the old Solar Bonus Scheme days, there's no fixed statutory rate. The Independent Pricing and Regulatory Tribunal (IPART) publishes a recommended benchmark range each financial year, but individual retailers set their own actual rates within (or sometimes below) that range, and they can differ significantly between providers.

Why have NSW feed-in tariffs been falling?

The decline isn't random — it reflects genuine structural changes:

Rooftop solar saturation at midday — NSW now has well over three million rooftop systems. On a sunny day, the volume of solar exports flooding the grid between roughly 10am and 3pm depresses the wholesale value of electricity during those hours — sometimes to zero or negative. Retailers pay you based on what that power is worth on the wholesale market when it's exported, and midday solar is now often the least valuable electricity of the day.
Time-varying wholesale pricing — the National Electricity Market increasingly prices by time of day. Evening electricity, when solar has stopped and demand peaks, is worth far more than midday electricity, and retailers pass this through via time-varying FiTs.
IPART benchmark reductions — each year IPART recalculates its benchmark based on projected wholesale prices, and for 2026–27 the benchmark trended down again.
Reduced subsidy pressure — early FiT schemes were deliberately generous to kickstart the industry. That job is largely done, so rates have settled toward the electricity's genuine wholesale value.

What do falling FiTs mean for solar economics?

This is the part worth sitting with, because it changes the maths meaningfully.

The old model is breaking down. The traditional pitch — "export your excess and get paid a decent rate" — no longer stacks up. When export rates sit around 3–4c/kWh but retail import rates sit around 30–35c/kWh, exporting a kilowatt-hour and buying it back later is an extremely poor trade.

<div style="overflow-x:auto;"> <table style="border-collapse:collapse;width:100%;min-width:480px;"> <thead><tr style="background:#eef2f7;"> <th style="border:1px solid #cbd5e1;padding:8px;text-align:left;">Direction</th> <th style="border:1px solid #cbd5e1;padding:8px;text-align:left;">Typical NSW rate (2026)</th> <th style="border:1px solid #cbd5e1;padding:8px;text-align:left;">Implication</th> </tr></thead> <tbody> <tr><td style="border:1px solid #cbd5e1;padding:8px;">Export (feed-in)</td><td style="border:1px solid #cbd5e1;padding:8px;">~3–4c/kWh (flat plans)</td><td style="border:1px solid #cbd5e1;padding:8px;">Exporting surplus is worth little</td></tr> <tr><td style="border:1px solid #cbd5e1;padding:8px;">Import (retail)</td><td style="border:1px solid #cbd5e1;padding:8px;">~30–35c/kWh</td><td style="border:1px solid #cbd5e1;padding:8px;">Buying back later is expensive</td></tr> </tbody> </table> </div>

Self-consumption is now the priority. A well-designed system today should be sized and used to maximise how much of its output you consume directly — running major loads (pool pumps, dishwashers, EV charging, hot water) during solar hours rather than exporting for a few cents and buying back at full retail later.

This is exactly where batteries change the equation. A battery lets you "self-consume" your solar after the sun sets, by storing midday surplus that would otherwise be exported for next to nothing, and releasing it during the evening peak. As FiTs fall, storing your own excess becomes progressively stronger — a battery converts near-worthless 3–4c/kWh export value into 30c+/kWh of avoided evening import.

Time-of-use plans reward smarter behaviour. Some retailers offer time-varying FiTs that pay considerably more for exports during the evening peak (roughly 4pm–9pm) than during the midday trough. Paired with a battery that holds solar back until that window, this can meaningfully improve economics — but it requires either a battery or genuinely flexible household habits. (See Time-of-Use Tariffs.)

What should you check on your own plan?

Whether your retailer offers a flat or time-varying FiT, and how the peak/off-peak windows are defined.
Your effective FiT after any daily supply charge — a headline rate means little if fixed charges eat the benefit.
Whether your export limit (set by your network, commonly 5kW or 10kW per phase in most of the Sydney area) is actually being reached, or whether there's room to add more panels productively.
Whether a battery retrofit would convert more low-value exports into high-value self-consumed or peak-exported energy, given current NSW rebate settings.

The bottom line

Feed-in tariffs falling isn't a sign solar has become a bad investment — it's a sign the market has matured to the point where the smartest money has moved from "exporting for credit" to "using and storing your own power." Systems designed with that principle in mind, sized correctly and paired with the right battery, are still delivering strong payback periods even as headline export rates shrink.

Frequently asked questions

What is the NSW feed-in tariff in 2026?

There's no single set rate — retailers set their own. Many flat plans sit around 3–4c/kWh from 1 July 2026, though time-varying plans can pay more during the evening peak. Check IPART's benchmark and your retailer's offer.

Is solar still worth it with low feed-in tariffs?

Yes, but the value has shifted from exporting to self-consumption. Sizing for self-use and adding storage generally delivers better returns than relying on export credits.

Want to know exactly how a battery would change your export economics on your current tariff? Run the numbers with Blue Energy Solar for a Sydney-specific assessment, or call 0421 458 217.