Exploring payback-year based feed-in tariff mechanisms in Australia

Solar energy applications are crucial to urban sustainable development and energy investment. Among the policies incentivising solar energy utilisation, Feed-in Tariff has been widely applied to stimulate the adoption of solar photovoltaic systems in the residential sector. This paper presents a payback-year-based Feed-in Tariff determination mechanism from the investment perspective, as suggested by recent research survey data. As an important indicator, the time required to recover the investment (i.e., payback year) in a residential PV project is then formulated using the proposed algorithm to determine Feed-in Tariff rates. The proposed mechanism is demonstrated in a case study in Victoria, Australia. Sensitivity analysis is used to identify the optimum Feed-in Tariff ranges for two popular types of rooftop PV systems, i.e., 3 kW and 5 kW, as examples. The results identify the desirable Feed-in Tariff range for individual energy investors as 20.29 A¢/kWh to 28.25 A¢/kWh, and this should be considered as a point of reference in determining the Feed-in Tariff rate in a manner that takes into account end-users’ expectations. The proposed mechanisms and methodology would be useful for policymakers in adjusting Feed-in Tariff incentive policies at a national or regional level.