Export charges for solar energy in Australia have elicited some strong negative reactions and misinformation – including referring to these charges as a sun tax.
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Update: July 1, 2024. SolarQuotes has launched a “sun tax” calculator that will show the impact two-way pricing will have on your electricity bills. It will initially apply to the Ausgrid network area, but can help you understand the potential impacts wherever you may be. The calculator will soon be updated to also include Endeavour Energy’s 2-way tariffs.
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Solar energy exports are reaching levels in some parts of the grid during the 10am – 3pm period that they are becoming difficult to manage and could potentially pose a threat to network stability. Export charges applied during this window will act as a signal to system owners to self-consume more of the energy they generate during this time.
Export charges have been on the cards for quite a while. Back in 2021, provisions in the National Electricity Rules (NER) prohibiting Distributed Network Service Providers (DNSPs) from charging for energy exported to the grid were removed.
But DNSPs can’t just charge what they want, how they want and when they want. In May 2022, the Australian Energy Regulator (AER) released final Export Tariff Guidelines that included guidance on customer protections and the need for any two-way pricing proposals to be justified. Any export tariff plans must be approved by the AER a long time in advance and must have a basic export level – an amount of electricity that a customer will be able to export to the grid at no cost – good for at least ten years.
Ausgrid As An Example
New South Wales electricity distributor Ausgrid is introducing two-way pricing/tariffs for energy exports across its network, and it won’t be the only one. Ausgrid’s two-way tariffs involve a carrot and stick approach.
The carrot is rewarding solar owners with a payment or credit of 2.3 cents/kWh for exports during the peak demand period (4pm to 9pm), which would be in addition to any feed-in tariff. The stick is an export charge of 1.2 c/kWh between the hours of 10am and 3pm. But there will also be an amount of electricity a solar household can send into the Ausgrid network between these times that will not attract a charge.
Even though there’s a “free threshold” and higher payments for exports during peak, many have chosen to focus on the export charge. That’s understandable as nobody likes charges. But it’s important they are framed correctly and the reasoning behind them understood.
To provide an idea of the financial impact, in Ausgrid’s case it says a typical solar customer with a 5kW system (granted, small by current standards) – will see a net cost impact of $6.60 a year1.
Unless a system owner is getting a 0c feed-in tariff, which is unlikely, they’ll basically just be getting less feed-in tariff unless there’s sufficient offset from export rewards during late afternoons and evenings. And for years now, the real value of having a solar power system has been through avoiding consuming expensive mains electricity; not feed-in tariffs.
Why Not Just Upgrade Electricity Infrastructure?
Years ago, there was much criticism of networks spending a bunch of bucks on “gold-plating” parts of Australia’s electricity infrastructure. To avoid the need for export charges, much more of this very costly work would need to happen (infrastructure would need to be “platinum-plated”) and those costs would be passed on to all energy consumers.
What About Using Remote Shutdown Capabilities?
The ability for a DNSP to remotely shut down or throttle systems when solar energy exports are dangerously high have already been implemented in a few states. Some are approaching remote shutdowns (aka emergency backstop) better than others. But the idea behind these “big red buttons” is they are only used as a last resort, not part of business as usual. Altering consumer behaviour is preferable, but at least remote shutdown capabilities will still be there in extreme situations.
Better Get A Home Battery?
If a solar battery suits your energy consumption profile, needs, desires and budget, go for it. But for some, a much cheaper solution may be a device such as Catch Control (formerly known as Catch Solar Relay).
So, Why Is Calling This A Sun Tax Wrong?
Words matter. Yelling “sun tax!” only serves to stir up folks unnecessarily, promote confusion and misinformation, and may even discourage some households from installing solar panels – even though the hit will be small compared to the financial benefits of having a system.
In a nutshell, calling export charges a sun tax or accusing electricity companies of charging for sunlight is incorrect. Sunlight is free – where these export charges apply, you will only be charged (likely taken off your feed-in tariff rate/credit) if you choose to send your self-generated electricity over and above the free threshold into the grid at certain times of the day, which is a very different thing.
Footnotes
- SolarQuotes has released an Ausgrid “sun tax” calculator here, which will generate an estimate based on your energy consumption/production profile. ↩
About Michael Bloch
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The problem is that while this is a new tax\charge, there are precedents in other bodies adding new costs. In those cases the costs rose. It follows that the 1.2 c/kWh between the hours of 10am and 3pm isn’t the final cost, merely Ausgrid testing the water. If the backlash is acceptable – the majority don’t go off grid etc, then the charge can be raised to 1.8 c/kWh or 2.4 c/kWh, and\or the taxed export period extended to 9am to 4pm etc.
It is entirely plausible that in the future, exporting power to the grid will cause the solar owner a loss!
Per the linked article below, the expectation is the average solar home will be about $70 worse off according to Australian Energy Market Commission chair Anna Collyer – this SQ article says $6.60 a year.
https://9now.nine.com.au/a-current-affair/sun-tax-set-to-charge-solar-panel-owners-who-send-excess-electricity-back-to-the-grid-at-peak-times/8bb2e8e6-feb8-4620-b1aa-806539e252de
Note that increases are starting to be released. I’m seeing:
– a 20% reduction for the FiT
– a 6% increase for the Usage charge
– a 12% increase for the Solar Meter charge
– a 3% increase for Daily Supply
The increase isn’t as large as I expected, or as much as last year, but the FiT cut is huge!!! It was already hard to break even with a large system, this is just pushing it into impossible without large government\taxpayer subsidies.
And this is without a ‘Sun Tax’ costing a quarter of the FiT. The argument for going off grid continues to get stronger.
next week, we’ll release a calculator where you can see the exact impact of the export charges and credits on your system.
I did see that, but thanks for emphasising it.
At this stage my guess is that 1.2c/kWh would cost me something like $100/year, but I’ve a large(ish) system and export heavily.
I think a fairer system would be elimination of the supply charge I don’t pay a supply charge at the garage to get petrol. and if we export power at whatever the price is the electricity companies supply it back at the same price.
Also why have a company to generate electricity and others to distribute it , just more vultures to feed. All the costs should come from the companies profits. if they can’t make a profit hand it all back to the government.
So will Ausgrid’s two way tariff be ON TOP of the feed in tariff (e.g. if FIT from your provider is normally 5c then during the penalty period of 1.2c/kWh, FIT drops down to 3.8c)? Or does it replace FITs all together?
it drops to 3.8c
Thanks for confirming that, Finn. I’ve been looking around all over the internet to find that information and all I could find were articles or posts saying people will be charged to export during the penalty periods, rather than it’ll just decrease the amount of FIT they’ll be receiving.
That’s assuming folk keep the 5c/kWh though. As noted above, some are dropping to 4c/kWh.
As long as the FIT stays above the penalty rate, then it’s still a credit (however diminished) for having solar. My initial worry was that the penalty rates in the two way tariffs were replacing FIT all together, which would mean losing money rather than a diminished return.
Hi Michael, a very informative article, and thank you for the info. The one point not to forget is that lack of forward grid capacity planning got us into this situation, and my fear – in the original story that got your considered response – is that it will not stop here and the charge, when the principle has been established will go up – in the same way FITs have gone down.
In my instance I have a 30kW system and in summer months easily export 100 kWh, so if the charge goes to 10c a kWh – there is a potential “Suntax” of $10 per day going to hit me. Or I throttle the system via export controls and waste all the renewable energy, at a time we trying to go away from coal fired power generation. That seems a bit stupid.
So hand in hand with the growth of solar – I believe the energy retailers/distributors needed to invest in battery capacity. If all the exported power for which I and many others in the future have to pay, gets sold on to my Neighbour for 35c per kWh per annum – this new Suntax initiative in such an instance would put over 2 billion $ per annum additional income into energy retailers pocket – at the expense of end consumers.
The same energy retailers who jacked up electricity prices by 30 % recently because wholesale prices spiked, and then gave a 1 per cent reduction, a year later when wholesale prices went back to normal. Where did the remaining 29% go? Pure profit gauging.
So you kind of defending the multinational energy profitbarons who are responsible for this “disaster” due their lack of planning and investment. they have been playing energy consumers for mugs for decades. Just remember when you are loyal to your energy retailer – you pay a higher electricity price… and do not let me start with the experience of having solar installed by them. The energy retailers and distributors are NOT the consumers friends, and the Suntax just proves it. So defending them – and swallow their arguments means the consumer only gets half the story.
I totally agree with sun tax comments, the article defends the suppliers. THEY WILL OF COURSE RAISE OUR COSTS WHEN IT ALL STARTS
Well said!
Markus Lambert could you please make a full disclosure.
You’re the guy in the hat on the ACA segment.
And you’re a solar industry figure, not an average punter, something ACA themselves haven’t admitted either.
Perhaps outline how you ended up on the TV, more specifically the rationale behind making content that the renewable industry has rounded on as unhelpful clickbait.
I’ll paraphrase but I’m fielding a few complaints asking “Who is this Markus prick and what is he doing?”
It’d be good to get it in your own words please.
Cheers
I have plenty of PV and an electric resistive element storage HWS, which the Distributer with TOU is now able to switch on during the day, as well as the original 1am onwards period. I had not requested an additional heat up during the day, but surely SAPN could ONLY supply during the daytime and NOT do the typical night main heating, thus offsetting my 8kwh of electricity during the “solar glut” every single day,…perhaps they could supply at even cheaper rates than the present daytime controlled load to help the situation (well my finances at least),….instead of running the HWS at night (at the higher Night Controlled Load rate of course).
….or I could get a Catch Control to utilise surplus PV and just leave the HWS on normal tariff with my Hot water only costing my 8c FIT export! The ROI is attractive!
Maybe the Energy Distributers are just looking for other ways to cash in on the fear?
Tim Chirgwin
Export tariffs are not mandatory in SA but are proposed for July 2025.
You appear to be on a non-interval meter. This may be replaced over the next 6 years depending on national metering arrangements (AEMC/AER approvals).
You could do the options you mention (catch relay), or you could ask for a meter replacement (interval, leading to TOU tariffs) which could work by combining all supplies onto the one circuit (house, HWS, PV) or you could do nothing.
It depends on what ‘plenty of PV’ means. The modelling that SAPN did showed that any export charge for a 5 kW PV system was likely to be negligible (or zero).
Don’t get too worried just yet.
James B
So after putting a decent solar system up and struggling to get any decent FiT, the information missing is what pieces of kit I can get (that I control myself) that can be configured to recognise all these variables and help coordinate energy usage in the home across these periods.
Is there a smart circuit board approved in Australia yet? Like Span or similar? It would be great to have something that’s aware of solar production status, battery levels, FiT rates, grid charge rates, required loads, optional loads, etc.
Hi gth
I don’t have a single go to answer, however adding something like a Tesla Powerwall can be the simplest. Have a look at what’s compatible with the retailer Amber and that will guide you as to what’s available off the shelf.
Fronius have excellent open control via Modbus RTU whereas Enphase run a closed shop and won’t let anyone play with their APIs.
As for automating other things, if you’re savvy then Home Assistant seems to be the best option. There are many people doing many things with a plethora of sensors, smart relays & measuring gear.
Hi Anthony, I have been in the industry since 2006 – very true and never stopped shy to mention this. I do not have editorial control over ACA. The suntax is not a problem now but will be in the future should it be allowed to be raised.
The reality is the EV charging in the middle of the day is now already starting to absorb part of the solar overproduction and will do this even more in years to come.
The energy retailers have been lazy on forward planning, and creating a fit for purpose grid, lazy on rewarding loyal customers with higher rates than new comers and lazy in their tariff structure including educating customers when the tariff structure changes. There is room for new incentives – – for example why is EV charging and electric HW heating not shifted to the middle of the day via cost incentives – to take advantage of the solar production.
It’s a mess and deserves to be called out. A smart solar company will use this new reality to sell a solar & battery system potentially on finance. Only lazy Bruce’s will have a whinge. I actually got more positive industry comments than negative and ACA says – best rating show in 12 months. Cheers
Thanks for the clarification Markus,
What are you up to these days?
I agree we need EVs to soak up the duck curve, but SAPN have been both planning this and publicising the fact for years. They know full well they have to double the throughput of energy as gas declines and transport is electrified.
The retailers effectively have nothing to do with network planning. Blaming them is like holding a used car salesman responsible for engineering decisions made in car development.
It’s the DNSPs that manage grid reliability, and they have to produce 5 years plans for review and funding approval by the Australian Energy Regulator.
SAPN say it can be done with the existing infrastructure, provided we get the transition correct, as the infrastructure built to withstand RCAC is only running at 40% capacity on average.
Basically we have to get the public to play nicely and share in a timely fashion.
This is detail we need to explain to the punters.
Kathleen did a great job with very little time afforded to her.
Whereas claiming that 1.2c/kWh is “being whacked hard” for export is certainly ACA hyperbole but were they scripting you?
Demand tariffs are causing much more confusion and are, to the uninitiated, much more unfair than a small reduction in FIT.
Electricity is a mess, but assigning blame only to “the retailers” will foment distrust and misdirect public pressure to where it’s not going to have any effect. The shareholders don’t care.
The climate wars have been fought on fear and half truths. After 10+ years of obfuscation & delay, even the business lobby is calling for direction and certainty.
Rolling out an extension cord to Minister Bowen’s office is just a lazy stunt. It’s a cheap shot that will not help create the necessary political changes.
If you have a national audience then it’s your responsibility to make accurate comments which help educate the unwashed.
If that was the best rating show in 12 months then you’ve just squibbed it.
Your heading “Debunking the screams of Sun Tax ” sounds like the issue is being viewed from the Retailers point of view.
Headlining the retailers offer of a “carrot” is misleading.
Firstly, it is only on offer for a very small time during which the sun is shining, making it useless to the vast majority of consumers because we don’t have batteries !
Secondly , the grid owners and managers have known for years, or should have, that this was coming. Good managers in any industry will be held responsible for making sure their equipment/resources are ready when needed and up to date for the use the market requires of them. It is their responsibility to ensure they have the capital necessary to run their business not the customers responsibility to make up for the POOR MANAGEMENT of the organisation.
Thirdly, The retailers cannot expect their customers to make up their shortfall.
If their supplier is increasing their costs it’s not our problem.
I’m not happy to pay an additional charge because they aren’t capable Managers.
The REAL ISSUE is that the retailers are starting to fiddle with their arrangement with us, the customers.
We should all be aware this is just the thin edge of the wedge and our feedin tariffs are in grave risk. We can expect them to continue to be eroded !
Just another example of the typical behaviour of retailers with virtual monopolies. Thankyou to the Government who sold it all off for a one off hit of funds.
Also, I’d like to know whose decision and by what logic was that decision made ,to remove the rule which stopped them charging for electricity exported to the grid. This is the ultimate issue !
The whole industry is a joke and disgraceful mess.
Solarquotes, I would like an explanation of your position on this issue. Why aren’t you aware of the threat to feeding tariffs ?
After weeks of argie bargie with Engie about their new time based tariffs, I am still faced with a steadfast refusal to provide a Bill to Bill comparison on my existing peak rate flat tariff.
Engie must have the data necessary to decide their tariffs. That also assumes they have the staff smart enough to interpret the data.
Why not let a customer have the heads up about which is better?
Why the secrecy? Why the obstruction? Why the lack of consideration for a customer request?
The deal is I have to give up a 32% bill discount for a lower set of tariffs, lower Fit, high meter charges and a discount of only 9%.
What is so unreasonable about asking for a bill to Bill comparison?
It beggars belief that the people who have been investing in the transition to renewables have had the playing field changed again. The implication is that solar is putting stress on the grid when we actually need a whole lot more solar, just smarter ways of storing and using it.
Surely the most obvious thing to do would be more controlled load availability during the day to allow millions of people with legacy off peak hot water to soak up excess green energy without spending a cent? There are too many levels of bureaucracy here with conflicting interests and all looking for ways to profit from the hapless consumer
Re ‘Sun- tax’. I’m not as gifted as many of the respondents to this topic appear to be. However, doesn’t it strike as strange, the retailers, or distributors, or whomever, is quite happy to receive ‘exported to the grid’ power at any time, provided the household pays for it. Logically this suggests these good folk do have the capacity to absorb the ‘excess’ power generated, but want to acquire this excess at a price very favourable to them. Is the argument really about capacity to store, or is it really about more dollars for those collecting the revenue?
Peter Cummins
the amount paid by everyone for export tariffs is meant to cover the annual revenue requirement (return on capex spent to reinforce export capacity) plus depreciation/return of capital plus opex on the extra export capacity.
The price will be low if not much needs to be done eg if some of the network need transformers upgraded.
If extra money doesn’t need to be spent (eg if there aren’t any export constraints), there isn’t any extra revenue allowance. This is reviewed by the regulator every five years.
James B
Does the average home solar system have the ability to stop exporting when the grid is charging for exports and resume exporting outside of these hours?
What is the best way to manage this scenario?
Hi Vlad,
It’s a simple way to avoid the export charges that many seem to have missed, just set your system for zero export.
The actual programmablity of this will depend on your particular brand and model of hardware.
Or choose a Selectronic SpPro and it won’t export at all, but you can have all the solar your heart desires without needing permission from the network.
If you are unhappy about this tax consider installing a solar diverter so Ausgrid will not be able to charge you and they will not get the benefit of your next to free electricity and charging your neibour who has no solar top dollar.