Network “solar tax” canvassed for exports from solar households

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Energy rule-maker canvasses a network “solar tax” to ping households who export back to the grid as grid owners panic about declining revenues.

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The Australian Energy Market Commission, the main rule maker for the industry, is canvassing a potential “solar tax” that could be charged by networks on solar households exporting surplus capacity back into the grid.

The proposal is included in the AEMC’s draft report on the Distribution Market Model, in which it argues that a solar tax may be needed because there is no other way for networks to recoup their costs from solar households.

The proposal is sure to court great controversy in the solar industry. Solar households are already paid little more than the wholesale rate of electricity, partly on the basis that network charges “are unavoidable” for retailers. They suggest that if small generators are charged for network use, then maybe the large generators should be too.

“Any moves to tax the sun in the way that’s being proposed by the AEMC report will be met with very strong community resistance by the 5 million solar voters around the country,” said Shani Tager, from Solar Citizens.
“Over 1.6 million Australian households have stumped up their own money to put solar on their roof and take back control of their power bills and this is another move to make solar owners the fall guy.”

Even though it is recognised that solar has reduced demand peaks, and wholesale prices, and pushed absolute peaks from the late afternoon to early evening, the network benefits are not recognised in any solar tariff. But now the networks are pushing for added charges.

Solar taxes have been considered before. The SA Power Networks proposed a $100 supplementary charge to solar households, but was rejected. Spain and Denmark have both imposed solar taxes, but these appear designed more as general revenue measures.

The AEMC is concerned that rooftop solar is getting a free ride because it does not pay for the use of the grid when solar power is exported, and because solar households tend to use less electricity from the grid because of their rooftop solar panels.

Currently, clause 6.1.4 of the NER prohibits a DNSP from charging a distribution network user (such as an owner of a distributed energy resource) distribution use of system charges for the export of electricity by that user to the distribution network.

There may be cause to revisit this clause if DNSPs incur costs (and benefits) due to the export of energy from distributed energy resources (or passive solar PV systems) that are not appropriately reflected in connection charges and where these costs (and benefits) increase (albeit not necessarily proportionately) with the volume of injections.

The Commission therefore considers that there may be benefits in exploring the deletion of clause 6.1.4 of the NER, and what possible alternatives there are.

Mark Byrne, from the Total Environment Centre and an expert on network regulation, says it appears that the rule is designed to affect households with rooftop solar and battery storage, and larger distributed energy resources.

He says the push for a solar tax is being made by some networks and consumer representatives on the basis that “solar is getting a free ride on the backs of non-solar consumers.”

This argument is based on the idea that the impact of high bidirectional flows, as consumers import and export to and from the grid, and the lower overall consumption of solar households means network revenues have to be recovered through high volumetric or fixed charges.

But Byrne argues that there is little evidence that solar imposes significant engineering costs to networks under at least a 40 per cent penetration, and that these additional costs (where proven) can largely be recovered through connection charges.

“The relatively small cross-subsidy caused by lower total consumption by solar owners can be eliminated by moving to more cost reflective network and retail tariffs (recovering more from peak charges and less from volumetric),” he says.

He also notes that the AEMC push “flies in the face” of recent evidence from Victoria’s Essential Services Commission about the numerous benefits of rooftop solar to networks.
“By making this change the rule-maker would be sending a very load and clear message that rooftop solar is not valued in the grid,” he says, adding that it could lead to perverse consequences.
“More and more solar owners will likely buy batteries to reduce their grid dependence – even when it isn’t economic to do so – or go off-grid entirely.
“Where would this leave legacy non-solar grid-connected consumers? Even more challenged financially as they pick up the tab for guaranteed 5 yearly network revenues.”
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71 Comments
  1. Jo 2 years ago

    It is simple for me. Tax solar and I will be off the grid.

    • George Michaelson 2 years ago

      Your capital investment to have 24/7 at average and peak load will probably exceed any tax mooted. I understand why you said it, and I laud the emotions but the cold hard reality is that you’d have to cut of your nose to spite your face, unless there is a radical shift in costs to be off-grid at the same quality as being on-grid.

      I think it would be better to argue for both a better pay rate to sell electricity AND a network tax impost for everyone, PV or not, to pay.

      • June Reichenback 2 years ago

        Well we only get a credit of $49.00 for 3 months for our 26 panels so I think I will consider flicking the switch too.

      • MaxG 2 years ago

        Based on my numbers I disagree; yes, I paid almost 40k$ for my system, but I get my money worth, in particular since — true to Jevons paradox — I increased our consumption to run all sorts of stuff; e.g. irrigation. I am in a position where I do not have to care about energy consumption.
        There is no point in arguing for a better FiT, or for all to pay a tax; the battle was lost when a public good was sold to private profiteers. The latter is simply not interested in any social aspect.

      • Ian 2 years ago

        It’s not so hard now-a-days to find ways to store energy besides batteries- such as hot water storage, and to have standby power sources.

        A well designed solar plus storage system can handle day to day generation and load management, it can island, it can minimise or maximise grid exports, and it can prioritise loads in a prolonged cloudy period. It’s not a big stretch to go off grid and utilise a standby power source. Two come easily to mind: fossil fuelled generators, EV- home grid interactions. Other more inventive ways can be easily achieved. Here are four that could be considered:1. Plug-out fossil fuelled vehicles – utilising the power of the motor vehicle asset to recharge home batteries – this has already been commercialised . 2. Mobile battery storage packs -not EV related – could be transported to a nearby EV charging station, recharged and then returned to the home 3. Grid access sharing with neighbours.4. Community Grid-connected minigrids. These could be suburb- or city building-wide minigrids, possibly with shared standby assets such as central battery storage or generators. They could have flexible network contracts with different network operators bidding for their business.

        These sorts of ideas need to be developed so that network operators are less likely to bully consumers with idiotic suggestions like taxing solar exports

    • Trudi 2 years ago

      Solar plus batteries plus heat pump air conditioner plus pellet heater for those cold winter nights and a generator just in case.

      I too am seriously considering turning my back on electricity companies.

      • solarguy 2 years ago

        Do yourself a favour and get an Evacuated Tube Solar HWS. Only heart ache can come fro H/pumps and off griding.

        • MaxG 2 years ago

          What I have done… got a high-efficiency evac tube system from Germany! 🙂

          • Diego Matter 2 years ago

            In Qld?

          • MaxG 2 years ago

            Yes, in Qld; also double-insulated glass in Qld; also highly-insulated in Qld; also has only 0.6 air changes per hour (ACH) other than the 20 ACH in Qld; also using a max of 2kWh per day on the coldest and hottest days to heat/cool in Qld.

            You are not alone with your reaction; in fact it is pretty standard; why our construction code is nowhere near where it needs to be for energy-efficient housing.

        • nakedChimp 2 years ago

          What’s the problem with heat pumps and off-griding?

    • MaxG 2 years ago

      Same here; I am in credit every quarter; and once I do not break even, I will cut the chord for good. I am already elated every time I use power, which reminds me of my own power generation — I throw my hands in the air, middle fingers out and a big grin on my face — priceless!

  2. Andrew Woodroffe 2 years ago

    Here in WA, people with solar get 7c/kWh for excess electricity from the retailer Synergy, which is then sold to their non solar neighbours for 26c/kWh. The retailer does have to pay the network operater, Western Power, 8.8c/kWh to be able to do this. Further details here, http://www.skyfarming.com.au/CostValueRooftopSolar/index.htm

    Any talk about a solar tax will need to show very clearly that networks are indeed, making losses.

    • Carolyn 2 years ago

      Using “Smart home plan” rates (time of use rates), they sell our power at 44.805c/kWh – an even bigger profit margin than they admit to.

  3. solarguy 2 years ago

    When I installed my hybrid system recently, I designed it to give me the capability to cut the grid umbilical if the need arose. We have heard this bullshit before from the greedy, mega profiteering networks.
    Since the 14th of April, I have drawn only 13kwh from the grid and that was just in the last 24hrs and could go higher yet, as this weak, but very rainy east coast low, could become a pain in the arse until Sunday. I just hope we get enough light to charge the batteries up enough by this arvo and I will switch off the grid again. That should give me 2 days autonomy.
    Soon there will be plenty of households like mine and all we will need is a back up genset and bye, bye grid. However, as I like the idea of selling my excess solar for 14 cents/kwh, I won’t be hasty in making the decision to defect. I’ll just sit here on the fence, as sooner or later they will work out they need our solar to stay in business.
    Now here’s a thought, they pay 16 cents/kwh for our solar and tax 2 cents for network costs. Plus in times of ultra network peak demand they pay us 80% of the wholesale market price.

    • Ian 2 years ago

      Thanks Solarguy for your input from a very personal experience. The 13KWH that you have imported over a period of 2 months is that net of imports and exports or is it zero imports until this last 24hr period? Can you island your set-up so that when the grid goes down or when you get bored with the grid connection you can just disconnect? Do you have some sort of computer-controlled load management or do you have enough solar and storage to not bother? Do you run the house electricity through the battery ( ie solar dc connected to battery dc connected to inverter ac) or solar dc to inverter ac to loads including battery charger/inverter ( Enphase type setup)?

      I enjoy the Queensland legacy FiT, but have not been particularly careful to shift energy consumption to nighttime. I am now thinking of getting a second off grid solar plus storage system to take care of more of the household needs. Half the roof space is wasted with a stupid solar pool heating system that makes the pool hot in Summer and still unusable in winter and consumes 5 or 6KWH of valuable electricity in the day. I am thinking of removing this and plastering the space with solar panels – EV ready you might say. I like the Enphase way of doing off-grid to try and minimise battery storage, and am toying with the idea of using an air conditioner to soak up the surplus solar electricity after other household loads are met.

  4. john 2 years ago

    The production from a solar array going to the local network would be used on the low voltage side of a transformer, I would be very surprised to find a company in charge of allowing a small generator of being of such a size that it is larger than the amount of power used on the low voltage side of the transformer that they are connected to.
    Where the network company looses money is the supply of power to the end transformer that that array is connected to.
    This is similar to a petrol company being able to charge more to a user of petrol more because the car is more efficient or heaven forbid an EV.

    • Diego Matter 2 years ago

      Well said.

  5. lin 2 years ago

    “no other way for networks to recoup their costs from solar households”
    Is the $1.20 per day connection charge plus the $0.20-ish per kWh they sell to our surplus to non-solar neighbours for not enough for the rapacious bastards????

    • david_fta 2 years ago

      To answer your question, no.

  6. Chris Fraser 2 years ago

    If they were considering the small generators’ usage of the grid on an equity basis, they would probably have to apply the following;-
    😎Tax large and small generators on the fraction of their share of grid use, ie measured in kWh per total reticulation grid distance (that could be as close as your neighbour, but i bet it wouldn’t be terribly far).
    😎 Pay small generators $14/kWh FiT on high demand days.

  7. DJR96 2 years ago

    This really highlights the idiocy of the distributors. They should be doing whatever is needed to discourage people from leaving the grid. The network works best with everyone participating in some way. In any way possible. Paying the pittance that is feed-in tariffs nowadays is nothing compared to the wholesale price so far this year. They should be pleased to have access to our excess generation.

    • solarguy 2 years ago

      They will play ball when enough of us have solar & batteries. We will then have market power.

    • MaxG 2 years ago

      As for your last sentence: Not when you’re greedy — it will never be enough.

      • mick 2 years ago

        gday mate like your style agree totally cut the cord 5 years ago and have been laughing my arse off ever since

      • Ian 2 years ago

        Maybe, but self preservation would probably trump greed, if it doesn’t then, never mind, off-grid sounds okay.

  8. Nick Thiwerspoon 2 years ago

    Do they **want** us to go off grid?

    • solarguy 2 years ago

      I’m sure they think they can have their cake and eat it too.The greedy bastards are bunging it on to see if we are suckers. They know the grid must stay intact.

  9. howardpatr 2 years ago

    Tax solar exports while the ACT Government allows the likes of ActewAGL to rort solar energy producers by only paying them 6 cents per kWh.

    The ACT Government remains silent while the Victorian rate is due to move to 11.5 cents and NSW has a similar amount being recommended to it.

  10. david_fta 2 years ago

    In 3 decades’ time, Australia will have no coal-fired power, not even gas.

    Instead, power generation will be distributed, with solar PV on most roofs, storage at most premises, and solar PV farms, wind and wave generators on the grid. The only thermal generation will be solar thermal, and additional bulk storage (if required) will be pumped hydro.

    Given that, this suggestion from AEMC sounds like a stunt to protect a dying industry: straight out of Tony Abbott’s policy handbook.

    • solarguy 2 years ago

      I agree, but there will be gas, biogas! And there has to be!

      • david_fta 2 years ago

        Biogas perhaps, but not mineral gas – although I’d be expecting biogas to be used for industrial processing rather than wasting it on power production.

        BTW, on what basis is And there has to be! added; I see no reason why power generation from gas will be essential.

        • Ian 2 years ago

          Can I hesitate to answer this question, at least in part? Land-fill gas has to go somewhere, why not burn it to generate electricity, same with bagasse and other organic wastes, which might not be so useful in the uncombusted form. You’d think industrial low grade heat, like hot water, could be obtained by direct rooftop solar heating or preheating. How many vineyards, or dairies for instance, use solar thermal hot water for process heating?

          Air conditioning uses up so much of the grid electricity and is the biggest culprit when it comes to the summer peak demand yet there is no adequate direct solar air conditioning – a holy grail of renewables. There should be a Nobel Prize for a truely solar thermal air conditioner. A unit you can pop on your roof and with the minimum of electrical input produces refrigeration or air conditioning.

          • david_fta 2 years ago

            I agree it is better that landfill gas be burnt for power than not captured at all, but it would be best of all if landfill gas is captured for higher value-adding purposes – powering mobile machinery eg the front-end loader at the landfill; but better still would be using it for process heat in the adjacent glass recycling facility.

            I also agree with bagasse powering sugar milling – but instead of simply burning the excess bagasse at the end of the crushing season, wouldn’t it be better to pulp at least some of that bagasse and mix it with recycled paper pulp for paper-making? Many people seem to not understand that much of the paper we recycle in Australia gets loaded onto ships and taken to China (burning vast quantities of Bunker ‘C’ fuel oil in the process) where there are Chinese jobs in pulping and paper-making … and then the recycled paper is shipped to Australia – burning yet more vast quantities of Bunker ‘C’ fuel oil in the process.

            The vast quantities of Bunker ‘C’ fuel oil that are burnt in the process of enabling “globalisation” is its Dirtiest Little Secret – yet the unthinking ProgLeft seem as committed to globalisation as they say they are to emissions reduction.

          • david_fta 2 years ago

            Better than combusting biogas in air would be feeding it to Hazer Group’s process to make Hydrogen gas – which can be chemically burnt in a flame (inefficient) or electrochemically oxidised in a fuel cell (efficient) – and the carbon content of the biogas is converted to graphite for batteries etc.

            Better than burning bagasse would be to use it to make paper (Australia is presently a net importer of paper from China, with all the CO2 emissions that shipping paper from Shanghai to Brisbane entails).

            Australia is also a net exporter of water paper, which is shipped to China (with all the CO2 emissions that shipping waste paper from Brisbane to Shanghai entails) to get recycled and re-imported to Australia (with all the CO2 emissions that shipping paper from Shanghai to Brisbane entails). Would therefore be much better to recycle that paper in Australia, adding fresh plant fibre (bagasse) to achieve high quality paper.

  11. coreidae 2 years ago

    That will go down with the market really well

  12. June Reichenback 2 years ago

    I expected a better credit from our 26 panels, is $49.00 for 3 months an average amount does anyone know?, I live in the Snowy Mountains.

    • Giles 2 years ago

      kind of depends. which three months we talking about. is this just the credit for exports? or the total credit on bill. The bill should provide info on how much exported and at what price. 26 panels? when were they installed?

      • June Reichenback 2 years ago

        This is the solar credit for the last 3 months at 6 cents kw for the 26, we had 6 installed about 6 years ago at 65 cents and the next 20 2 years ago at 6 cents, we were getting about $380.00 per quarter before is this average do you know as a friend of mine had 8 installed a few years ago at the 65 cents and said she has never had to pay electricity, in fact got a rebate of about $500.00 each quarter so I just wondered if maybe mine were not installed or working properly.

        • Giles 2 years ago

          it suggests you are exporting about 8kWh a day, which sounds about right, but depends on actual capacity of your installation, assuming you have around 5kW or a bit more, but depends on how many people in your house and usage patterns/

          • June Reichenback 2 years ago

            I would have to check my account to see those details Giles but we are 3 adults in this house and my bill was $1780.00 for the last quarter I know that is a lot but we don’t have gas and 2 of my son’s jobs mean the are up most of the night so it is like running 2 households.

          • Giles 2 years ago

            Whoah. That’s a big bill! the solar is saving you something, presuming that it is functioning properly and it reducing your grid use by around 10kWh a day. But sounds like you using more than 40kW from the grid each day. You might want to think about the usage, amount of lights on at any time, appliances and electronic equipment left on, length of showers (if electric hot water), maybe looking to use more efficient appliances, particularly air-con.

          • June Reichenback 2 years ago

            Just installed a new oven and induction cooktop so I hope that helps, careful with the lights but we had trouble with our hot water and that ate up a lot of power, main meal is at night can’t do anything about that but do the washing during the day. Don’t have air conditioner but have fans in the summer and underfloor heating some of the winter months in dining area, wood heater with fan in lounge and hall, Computer runs 24/7 but I checked the cost of that it is not much.

          • Diego Matter 2 years ago

            Hi June. There must be something wrong with your solar installation or your home appliances.

            You have two options:
            – call an energy efficiency auditor to find any energy guzzlers and ways to make your house more energy efficient. Later install a whole house energy monitor.
            – or install a whole house energy monitor first. Whole house because It tells you electricity usage of appliances AND all hard wired users, the actual usage and and depending of model usage over time and solar production. With your huge bill it will be worth investing in a good model because it will save you the most long term. It will give you control over your energy use. Call a company that sells a wide range because they vary vastly in functionality. You will need some advice. Some energy monitors will also measure solar production, this gives you a hint if the solar system is working correctly.
            This is one company that sells energy monitors https://reductionrevolution.com.au/collections/wireless-energy-monitors

            Get advice before you buy!

          • June Reichenback 2 years ago

            Thanks Diego for that advice, one of my sons is an electrician so I will get him to look at your advice too and investigate for me.

          • Diego Matter 2 years ago

            Your welcome.

            Since you use underfloor heating it will also be worth looking at insulation levels and draught proofing. Well, it’s always worth checking these two factors since heating and cooling are the biggest users.

            If your son is an electritian the energy monitor will be cheap for you to install. Great 😁

          • Peter G 2 years ago

            Hi June, another thing to look for is hot water leaks (perhaps underground or in out of the way places) or dripping hot water taps. Both the normal hot water service as well as under-floor heating might be suspect if you have unexplained high electricity consumption.

          • Cooma Doug 2 years ago

            Check your heaters and fridge use.
            Fridge in the sun or next to heater or stove. Type of heater.
            Your bill is 8 times mine and I have no solar yet.
            If I had a large air con on high output all day with the doors all open, I would not get close to your bill.

          • June Reichenback 2 years ago

            My new energy supplier is giving me 10 cents for the solar so I will see how that pans out.

          • Giles 2 years ago

            that will make some difference. but you better off trying to use as much of that solar as you can – and finding ways of using less at night! you might get 10c back for exports but if you consume that electrici

        • Jo 2 years ago

          change you retailer. Diamond Energy pays now 12 cent/kWh for solar

          • June Reichenback 2 years ago

            I have Jo to Energy Local, they have frozen the electricity price for the next 12 months, from last month before the new increase, and give me 10 cents/kw for the Solar so I will see how that works out.

          • June Reichenback 2 years ago

            Also depends where you live Jo not all energy companies are available in every state.

          • Jo 2 years ago

            there are a number of retailers in NSW giving you more than 10 cent/kWh. But it need to be worked out what is best. Either create your own worksheet for comparison or use this website : https://wattever.com.au (but make sure to double check the retailer information)

          • David Cameron 2 years ago

            Enova is currently paying 16 cent/kWh for solar. Worth a look.

          • Jo 2 years ago

            Unfortunately Enova is not in the Sydney area (yet?).

    • Joe 2 years ago

      The now lousy FiT of what.. 6cents for your exports and then you pay Daily Supply Charge of what…$1.00 per day. Doesn’t really add up to lead to big credits anymore when you maximise your self consumption.

  13. John Saint-Smith 2 years ago

    When solar owners withdraw from the grid, they will take their ‘excess’ electricity with them, leaving the distributors to make up for the energy they are currently receiving virtually free of charge. The energy market has evolved somewhat since we began our rooftop solar experiment a decade ago. I suspect that there would be even more peak short-falls and price gouging of those forced to remain on the grid.

    Surely we can achieve a degree of rational cooperation before we destroy our economy trying to ‘go it alone’?

    • solarguy 2 years ago

      Correct!

    • Ian 2 years ago

      It’s not the going it alone per se, but rather the ability and threat of going it alone that can provide a real competitor to the grid. After all, the connections in the short term will still be there, so a person could defect and then rehabilitate when conditions improve. If 10 % of solar households can successfully defect, then the other 90% could also potentially defect. – This would be a very powerful message. Take the example recently when the billionaires tweeted grid storage. The threat was real, ” give me 100 days and I will install 100MW(H) of storage or it’s free” No one took up the offer, but it galvanised a tender process for exactly that amount, and even made the prime minister make some crazy counter-promises – something about snowy 2.0 !

  14. Patrick Comerford 2 years ago

    How about we roof top solar owners teach these money grabbing regulators and networks a real lesson in supply and demand. On the peak of next summer when the grid is stretched to the limit we flick the breaker on our solar and watch the lights go out all along the east coast. Cost to the networks massive, cost to the solar owner nothing. Let them tell me they want to tax my export.

    • Bill Mastrippolito 2 years ago

      I’d love to see this implemented and done often at random times of the year. Might be the only way to get any real action for solar owners who are continually getting ripped off. Solar should be valued, not demonised.

    • Ian 2 years ago

      This could happen, something like an Earth Hour, but a “Zero Export Hour” a “mass transient grid defection” in honour of the grid export tax – catchy!

      • jayro 2 years ago

        this idea has legs as a way of protest rather than the traditional march with placards. I like it.

    • Steve Fuller 2 years ago

      Be careful with this idea.

      The commercial generators with permission to export to the grid are regulated and can be penalised for non-compliance with the expectations of them. This is so that we can have a reliable grid.

      If small scale generators (roof top solar owners) want to be able to export to the grid and the regulator assessed that there was a material risk that solar pv exporters could deliberately disrupt the grid to make a political statement then it would be reasonable to expect the regulator to take action to mitigate this risk. EG they could ban any exports from rooftop pv as has been done in parts of Qld.

      What we need is a civil discussion about how the whole electricity system is managed including the transition away from centralised generation and carbon emission constraints.

      The profit motive seems to be a bad fit for this system and it is holding back the sensible evolution of a transitioning system.

      Perhaps a fact based Royal Commission or an electricity/emissions.transition summit a la the Prices and Income Accord summit is in order. Let’s get the facts, identify the vested interests, identify the corrupting regulations and powers and craft a logical fair transition plan. But don’t invite Tony.

  15. Sally Noel Triggell 2 years ago

    Implement this policy, and people that can leave the grid, will. That will force grid prices to sky rocket, and of course that will affect the poor and renters, but of course nobody seems to care.

    • Ian 2 years ago

      Sally, Sally, if things go on as they are, the subsidised and foreign owned corporations will be the only ones that could afford a grid connection.

  16. Ray Miller 2 years ago

    The AEMC should be thrown under the bus. They have been nothing but a very expensive protection racket and done everything they can to protect the profits of a select group of companies.

  17. Malcolm Scott 2 years ago

    electricity NDSP, and retailers, and generators need to get off their asses. At a time when gas is costly in homes and business (highly polluting generally and poor for peoples health), they can’t find a way to increase their share of the customers wallet? The have to be blind. Free markets are simply not working in Australia.

    There is another tool available to them as well. 17.4+ million cars and light trucks in Australia. Get them all to electric by 2030-35 that’s another 40,000 GWh of revenue. Be a partner in that outcome with a shared interest. Until then my heart pumps custard for them.

  18. neroden 2 years ago

    They really want people to go off the grid, don’t they?

  19. Joe 2 years ago

    Just what was needed an extra incentive to install home battery storage. The battery makers and installers will be rubbing their hands.

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