Electricity retailers with their own version of federal Labor’s Solar Sharer scheme consistently offer bigger power bill savings than the government-regulated three hours of free power, new research has found – and in some cases, the difference in savings is “extraordinary.”
In a briefing note published on Wednesday, IEEFA Australia says that tariffs that provide free electricity in the middle of the day can save consumers hundreds or thousands of dollars a year, given the right technologies, regulations and behavioural changes.
But the researchers also found that electricity retailers are already voluntarily offering plans with periods of free electricity that are often more competitive than the federal government’s opt-in Solar Sharer.
The Solar Sharer Offer (SSO), which became available through the Default Market Offer (DMO) at the start of July, offers three hours of free power between 11am and pm in Queensland and New South Wales and 12-3pm in South Australia. A Victorian version will launch in October.
The federal Labor ordained SSO includes shoulder periods either side of the free power window where tariffs are set relatively high – a feature the Australian Energy Regulator has said allows retailers to recover costs.
Solar Sharer also puts a cap on the total amount of free grid electricity a participating household can use each day, currently set at 24 kWh. Households that exceed this cap will usually be charged at peak or shoulder rates for any further usage.
These features of Solar Sharer have drawn criticism from critics who say the built-in allowances for retailer viability have compromised the scheme’s goal of sharing solar savings with households that can’t install it – and in some instances could wind up inflating consumer bills, rather than cutting them.
IEEFA says using more than the daily cap – or spilling to either side of the three-hour window – could easily be triggered by large households, or those with two electric vehicles, that are not careful with their usage.
But this is “less of a concern” under market solar sharer tariffs, IEEFA says, which tend to include longer free power periods, significantly higher caps (eg 50 kWh for GloBird Energy) or no cap at all, subject to fair use policies (eg OVO Energy).
“Switching to the regulated solar sharer tariff yielded mixed results for homes with solar and batteries – with no savings in Brisbane, some savings in Sydney/Adelaide, and considerable savings in Melbourne,” the briefing says.
“However, there is an extraordinary difference between the regulated and best market solar sharer tariffs.”
The study finds that at least two retailers offer solar sharer tariffs with a window of four free hours of electricity, while others offer different variations – for example, a more constrained free window of two hours alongside lower peak rates.
Some retailers have combined free solar sharer windows with premium evening export tariffs, IEFFA says, presenting a “compelling plan” for households with a battery and no solar.
“IEEFA consistently found solar sharer plans were available on the market that offered greater savings than the regulated offer,” said IEEFA analyst Jay Gordon on Wednesday.
“Some even offer a high feed-in tariff in the evening, rewarding households that export energy from a battery, which we know has significant benefits for the wider energy system.”
The report says that while it is reasonable to expect the retail electricity market to deliver more competitive products than the default offer, regulators should analyse these market offerings to see whether improvements can be made to default offers to enhance their success.
“This could include, for example, expanding the window of free electricity for at least part of the year, introducing a regulated minimum evening feed-in tariff, or considering alternatives to the 24kWh daily cap,” IEEFA says.
Benefits and barriers
For the households that do sign up to the SSO or more competitive retail offers, IEEFA says some of the biggest cost-saving opportunities come from being able to use the free power to heat up an electric hot water tank or charge a home battery – or battery on wheels as part of an electric vehicle – and shifting that free power or hot water into peak times.
Households able to afford the full price of a 20 kilowatt-hour (kWh) battery – the Cheaper Home Batteries rebate requires the battery to be paired with solar – could unlock annual savings of $A1,377 to $2,202, for example, by storing the free power and shifting it into the evening peak.
And for a typical apartment without solar, the modelling shows that installing a 5kWh energy storage system could save an additional $A366–644 a year in combination with switching to a solar sharer tariff.
Households with electric hot water systems were found to be able to unlock annual savings of $577–$1,028 by shifting the system’s power load from the middle of the night to the middle of the day via a timer. For the other half of homes with gas systems, switching to an electric system with timer controls can save $323–$623 a year using solar sharer tariffs.
IEEFA finds that a household with one electric vehicle (EVC) can save $731–$893 a year by charging their car in the middle of the day; this rises to $1,341–$2,257 for homes with two EVs.
But key barriers remain in the way of the scheme’s ability to level the consumer energy playing field, including the ongoing use of gas appliances in around half of all Australian homes – and particularly in rentals – and regulations blocking access to plug-in portable home batteries.
“Critically, [Solar Sharer] savings require a household to have electric appliances for major energy end uses, and households that rely on gas will have more limited benefits from battery systems generally,” the report says.
On plug-in batteries, which when combined with free midday power could be a game-changer for apartment dwellers and renters, IEEFA recommends a federal government review into enabling plug-in solar and battery systems, including the technical standards that would need to be updated to allow these products to be safely and legally installed in homes.
“Households that can’t flex their demand are unlikely to benefit from solar sharer tariffs,” Gordon says.
“To ensure more households benefit from solar sharer tariffs, governments should prioritise policies that support greater uptake of flexible electric appliances, flexible EV charging as well as solar and storage solutions for apartments and renters.”
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