NSW networks canvass "solar tax" for households, as well as storage and EVs | RenewEconomy

NSW networks canvass “solar tax” for households, as well as storage and EVs

NSW govt networks canvass “solar tax” on households exporting to grid, suggest it could be extended to households with battery storage and EVs.


The three state-government owned electricity networks in New South Wales are canvassing the possibility of hitting solar households with extra network charges, purportedly to recapture the “cost” of households exporting solar to the grid.

The proposal – included in a document “Electricity Tariff Reform in NSW” – is sure to outrage the solar sector, which already believes that households are being penalised by being paid so little, and in some cases nothing at all, for their exports back into the grid.

rooftop solar6


The distribution networks – Ausgrid, Endeavour and Essential – are inviting comments on if there should be “separate network charges for customers who have the ability to use power from the network, and also have the ability to feed surplus power back into the grid.”

It says this charge, effectively a network tax on export, could be extended to households with battery storage and electric vehicles.

“An export generation tariff for network usage could be technology neutral, and could be charged to residential or small business customers who export electricity to the grid to reflect the costs imposed on the network. This could include householders with photovoltaic solar panels, battery storage, or electric vehicles.”

It follows their extraordinary move in taking the Australian Energy Regulator to court after the AER rejected their submissions to spend billions of dollar more on network upgrades. The NSW government is seeking to sell down its stakes in Ausgrid and Endeavour, and needs high revenues to maximise the asking price.

A similar proposal – for an additional network tax on solar households – was made by South Australia Power Networks.

It wanted to charge solar households an extra $100 a year for the privilege of exporting power back to the grid. The proposal was greeted with howls of protest and rejected by the Australian Energy Regulator. But SAPN is still keen to try and implement the change, and has taken the issue to the Federal Court.

Australian solar households – apart from those with discontinued premium feed-in tariffs – are paid little for their exports to the grid.

In NSW, the payment is voluntary, but the recommended level has been cut to 4.8c/kWh, partly due to the falling price of wholesale electricity, and in part driven by the increase in rooftop solar. The pricing regulator says it is cutting tariffs because it wants to encourage battery storage.

The payments for exports do not include any consideration of benefits to networks (in delaying and in some cases avoiding peak demand events), and to the environment (in the form of reduced emissions).

Utilities can then sell that power exported to the grid to other users for the full retail price, which includes the network charges. Now, it seems, the state-owned networks want to pocket that network fee, and charge the solar households an additional fee.

It is similar to the “solar tax” imposed in Spain that is causing outrage in that country, and part of a general push-back by utilities to defend their business models against the rising threat of household solar, battery storage, and the move to decentralised energy.

The networks justify this by saying that they need to be able to meet the “peak demands of consumers”. But as this report released today highlights, networks have already spent $75 billion on upgrades in the past decade to meet peak demand forecast that never eventuated.

The grid has been built bigger than needed, and the costs have already been passed on to consumers.

Muriel Watt, from the Australian PV Institute, says the grid should be seen as a service provider to facilitate a whole range of transfers, and if networks want to remain relevant in future, they need to provide a platform that suits what customers want to do.

“It would seem that having a grid which facilitates customer generation, storage and load is an essential, if they want to remain in business – otherwise customers will drop off, or new grid equivalents will be built (EVs are a good example of being able to transfer power from one site to the next).

“If provision of grid services is transparent, then customers would be in a much better position to be able to decide whether they want the grid service or not.  However, networks would certainly need to pay customers for the benefits they provide.”

The networks could address this with truly “cost reflective” tariffs, but seem determined to ignore the issue of air-conditioning that is responsible for high grid costs paid by everyone (and a massive cross-subsidisation from people who don’t own A/C).

Indeed, the paper also canvasses “declining block” tariffs – where the cost of electricity actually falls the more the consumer uses. The networks says this is good, because the more the consumer consumes, the easier it is for the networks to meet their revenue caps.

“Under capped revenue regulation, increasing electricity consumption reduces network charges and declining network consumption increases network charges,” the networks argue.

Watt says the networks are operating in isolation, without taking account of the whole picture. “Less use of, or need for the grid is seen by them as a negative, so we have EE and PV, which reduce grid use, as something to be prevented.”

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  1. Jacob 5 years ago

    Nutters. I think flow batteries could be used by apartments to go off grid. With weekly deliveries of electrolyte.

  2. Dbunk 5 years ago

    Amazing how the Telco industry has managed to adapt to change, yet the Utility segment is dragging its feet like a spoiled child. Tax on solar panels is akin to having Telstra ask the ACCC to mandate that people with mobile phones should be taxed with an extra charge because they did not use Landlines anymore !. The Telco industry has contended with 2 major industry shifts, the move to mobile and the move to internet based voice calling, and it has survived and grown. Market disruption is here and Utility companies should take heed and adopt or face an even speedier demise. Protectionism has never worked in the past, nor will it ever work moving forward.

    • Jacob 5 years ago

      Indeed. The incumbents can switch their focus to selling off-grid systems in Africa and Asia.

      Vodafone operates in so many nations including rich nations.

    • Math Geurts 5 years ago

      As some Australians apparently seem to prefer to live in a developing country: “Solar-panels-are-not-cell-phones”.


    • Mike Dill 5 years ago

      The phone ‘land line’ companies did go bankrupt and were bought by their new competitors. My guess is when ‘daily’ storage (one day of storage) gets to AUS$0.10/kWh, and backup (the remaining 5% of the time) gets down to AUS$0.50/kWh we will see the defections. I think it will take about two years…

    • orko138 5 years ago

      The analogy with the Telco’s copper wire, should be more like if the receiver of the call on the copper network paying a fee as well as the caller. Its a ‘user pays’ system on steroids

  3. phred01 5 years ago

    Arizona has introduced a solar tax which was to in the order 50-100$ but the following howl it was backed off to 5$ leaving the way open for hike increases in the FUTURE. If this tax is leveled here then there will be a guarantee defections of massive proportions thus making the grid unviable in rural areas quicker.

    • Jacob 5 years ago

      $100 per what?

      • phred01 5 years ago

        It’s not per What but a means of raising revenue for the network. If the income is increase the govn’t can ask for more money for utility on it’s privitization

        • Jacob 5 years ago

          There is a difference between watt and what.

      • Mike Dill 5 years ago

        The concept is ‘per KW of solar on the roof, per year’. The initial request from the utility was $7.50 per kw per month, which was rejected, and a $5 per month flat fee for solar system was allowed.

  4. Andrew Thaler 5 years ago

    These networks are behaving like privatised Network businesses BEFORE they are even privatised. They are still publicly owned and managed.. not that the government looks out for their customers needs and wants these days #:()
    The network has been one of the most successful social instruments ever seen by man… why do we have to destroy it and reinforce the have/have-not system of old?

  5. Chris Fraser 5 years ago

    The NSW Electricity Supply legislation used to say that small generators could not be treated any differently to other consumers. That text was quietly dropped.My first question would be what part of the massive $50 billion investment of 2007-2012 was used to assist in handling energy supply from small generators ? Oh … nothing ?My second question is how can you prove there is a social or environmental disadvantage from having distributed small generators ?There is no proof of course. This is about improving the saleable value of networks. Keep trying.

  6. Rob 5 years ago

    Big corporations behaving badly. No surprise there.

  7. Math Geurts 5 years ago

    No, it is not solar tax or even “solar tax”. Yes, it will come, in Australia and everywhere. Who does not want to pay his fair share for using the grid, is free to leave the grid and to transport his excess kWh’s with his EV.

    • Chris Fraser 5 years ago

      Does it then follow that grid-defectors should not be charged for not using a grid ? Since as you say their decision to share energy with others is freely made, and depends on the price they must pay for sharing it ?

      • Math Geurts 5 years ago

        A full-time grid-defector (leaver) should not be charged at all

        • Mike Dill 5 years ago

          Whole heartedly agree. DO NOT GIVE YOUR ELECTRONS AWAY. Use them to heat something if you have no other idea what they can do. The NEM will either work or it will fail. I give it three years…

          • Math Geurts 5 years ago

            If you believe it is better or cheaper to go off-grid, then go off-grid. Transport your excess kWh’s with your EV. Stop complaining.

    • Ron 5 years ago

      Fair enough, but then allow solar exporters to on-sell their power (either to the neighbour, school or shopping centre down the road and pay for the network in between). The networks need to figure out how to make money out of these micro-embedded generators.

      • Math Geurts 5 years ago

        Sounds fair, but if a neighbour or a school by (only) a part of their power from “an external source” they have to expect an additional charge (not a tax) for the remaining grid usage.

        • Stevo 5 years ago

          Currently the consumer pays a network charge for each kWh consumed. It doesn’t make any difference where the power comes from, the network tariff is the same. Big generators don’t pay these network charges, so why should small ones?

          The main issue for the networks is the net reduction in kWh metered, therefore less revenue. There are also potentially extra costs in keeping the network safe and reliable when it wasn’t designed for distributed generation.

          • Math Geurts 5 years ago

            Essentially, grid costs are fixed costs, independent of the amount of energy transported. As such, the consumer should pay, for the grid, per kW connection. Even a “net zero consumer”.

          • Dbunk 5 years ago

            Essentially, Telco copper and optic fibre lines are also fixed costs. The consumer is charged for access to those networks if they use them and a variable cost for calls made on that network, They are not charged an incremental amount just because they also own a mobile phone because it MAY reduce the variable cost. Extend this paradigm to water tanks at home. Will the water utilities seek to charge you an “fee” for harvesting rain water for your use because you don’t use more mains supply water. The absurdity in this solar tax argument is the myopic, disillusioned views of utility companies who over capitalised on network upgrades based on unrealistic demand forecasts and never bothering to think alternative technologies would ever disrupt them. Embrace change rather than fight it and perhaps you may actually still have customers to service in the future.

      • Stevo 5 years ago

        But the networks already make money out of these generators. The electrons flow through meters to other customers and the networks clip the ticket on the metered charge. And the networks only have to provide a relatively small amount of network to enable this, therefore the cost is low compared to their tariffs.

    • lin 5 years ago

      >$1/day grid connection charge is more than a fair share for using the grid.
      Paying solar generators $0.05/kWh for inputs they sell to the neighbours at >$0.3/kWh is excessive gouging.
      Charging an additional connection fee for houses with PV panels would be government approved racketeering.

      • Math Geurts 5 years ago

        Grid connection can not be charged per day. It is always or never. The best solution is to charge only for kW of the connection (power), nothing for kWh’s taken (delivered (energy).

        • lin 5 years ago

          Grid connection IS charged per day. Total for my house is >$400 per year, regardless of power used, unless I fail to pay my bill and then get disconnected. New connections to the grid are charged extra for any hardware required, which can include transformers etc, and total many thousands if you are in a rural area. This is on top of the daily connection charge. I am not sure what your point is about “always or never”. I think you are saying that the only charge should be for the connection, and nothing for the power used? This makes no sense. It costs to generate power, firstly to build power stations, and secondly to run them. If you pay only for the connection, your single old age pensioner in a tiny flat who uses almost no power will pay the same as a large house, filled with people, heated pool, home theatre etc, which is not at all fair or reasonable. Essential service costs should be closely related to the cost of providing them.

          • Math Geurts 5 years ago

            No. (Of course) you can not buy a “grid subscription” for a single day, or just for the winter month’s, when your (and all other) solar roofs delivere not enough.

            Indeed service costs should essentially be closely related to the costs of providing them. Of course you also have to pay (to the “generator”) for energy used, but that is not so much in Australia. I guess around 4-5 ct/kWh. To the “grid owner” you should pay a fixed amount per year, related to the size of the connection.

          • lin 5 years ago

            To the “grid owner”, we pay >$1 per day already, the generator gets $0.05, and between them, the distributor and government get to screw us for more than half the bill for doing nothing. Surprise! And now they want to protect and increase their margin by adding additional charges to small solar generators. More greed than good management.

          • Math Geurts 5 years ago

            Don’t blame the “grid owner” for supposed misbehavior of the distributor or the government.

          • lin 5 years ago

            No statement I made attributes blame to the grid owner. However, I will point out that the grid in my state was built with taxpayer money, and sold against the wishes and interests of taxpayers, and is now being used against taxpayers interests to maintain tax dodging multinational corporate profits at the expense of good grid management, environmental policy and fair pricing.

  8. lin 5 years ago

    Corporatocracy – Rule by an oligarchy of corporate elites through the manipulation of a formal democracy.
    It’s here, and these arseholes write the laws so they can unfairly take our money with the blessing and assistance of our elected “representatives”. Essential services once provided by government are now a money making scam for the enrichment of the few at the expense of a fair go for all. This will continue and worsen until the apathetic majority grow a spine and say Enough!

    • MaxG 5 years ago

      Spot on; in fact, democracy is an illusion… people just did not catch on to it yet 🙂

  9. Math Geurts 5 years ago

    “Watt says the networks are operating in isolation, without taking account of the whole picture. “Less use of, or need for the grid is seen by them as a negative, so we have EE and PV, which reduce grid use, as something to be prevented.”

    No. Grid cost are basically fixed costs. Less use of an existing grid generally does not lead to less costs. Taking account of the whole picture means that non-solar households have to pay more if solar households pay less.

    • Chris Fraser 5 years ago

      I propose a different model. At present it’s the Consumers that are charged for use of the grid. Let’s change that to Generators. Large and even small generators, based on a function of how much energy transported, over the grid distance required to consume it. On each contract for supply the Generators add the grid-use fee to their tariff. Do you think the centralised generators in Latrobe Valley will compete in NSW ?If we think it over, this model uses the best parts of the merit order effect, and rationalises the use of the grid, so the most needy parts of the grid will get the most attention. As if they need any more capacity work done at all …

      • Math Geurts 5 years ago

        Grid costs are not related to the quantity of transported energy.

        • Chris Fraser 5 years ago

          Maybe so, but it shouldn’t be. We shouldn’t be paying grid usage for the sake of the gold-platers’ cost recovery, which is the model we’ve stumbled into. It should be based on actual usage. That’s why they’re called utilities – they serve the public.

          • Math Geurts 5 years ago

            You can not change the facts: grid costs are not related to the quantity of transported energy. Indeed: utilities have to serve the public and the public has to share and pay the costs. Most of the public does not own solar panels.

  10. john 5 years ago

    This is exactly the type of thinking I thought would be put in place.
    The thought bubble goes like this the householder is not mobile as in the house is fixed so charge the house.
    The Telco situation is different in as much as the communication device can be mobile.
    I can see a very good business in supply of off grid solutions only being enhanced by this charge on households.
    Retrofit of households and new build what a business opportunity.
    Because of the good solar irradiance in Australia the economics of off grid solutions is very good.

  11. Rob G 5 years ago

    So to be clear, I export my excess energy to the grid and receive nothing. Then that power is sold on to someone nearby for a premium. And then that network, which stole my power, wants to charge me for their theft? Sound fair? It’s just amazing how desperate they are becoming, last gasp of a dying beast…

    • MsAdventure 5 years ago

      That’s how it’s done in Qld now. At best most customers get 8c per kw and have to pay for the meter to be read.

  12. Julius Alexander 5 years ago

    So you companies are saying outright that you don’t like paying but you are quite happy to suck money from people like parasites suck blood. It’s time you leeches were cast aside. Deal with it or cry all the way into the depth of the ocean when the Titanic that you are on eventually sinks into it’s depths.

    • MaxG 5 years ago

      How poetic 🙂

  13. Kat Headford 5 years ago

    A setback beyond believe for solar in oz if this come true. Why is it so hard to see that we need renewable energy, before we run out of coal and gas?

    • Carl Sciberras 5 years ago

      i can see soo many illegal or uncertified systems going in if this takes place.

      and what a sham, they promote solar with their rebates etc in the past and now this? where is the green government now? ?

      whole system here is a joke

  14. John Molloy 5 years ago

    Bring it on! as soon as they do this, solar becomes an income source and all your expenses are tax deductible! Didn’t think of that, did they?

  15. Wildvine X 5 years ago

    Oh wow every business every day is dealing with changes in society. Video shops will be irrelevant someday soon. Stop being spoilt little brats and change to get with the times. Solar power has benefits for our environment. They’re just taking advantage of the fact it’s a necessity to have power and trying to do anything they can to over capatilise. Stop being greedy!

  16. Charles 5 years ago

    What a joke. I can understand why electricity network companies are annoyed as solar, as households with solar still use the same amount of electricity at peak times (evening) and this is the largest cost in building/maintaining the network.
    But battery storage? They should be promoting that like crazy. Someone with battery storage is able to shift their load around to cut usage at peak times (using solar generation in the evening, or loading up at off-peak overnight to use in the morning), meaning the network companies can get more out of their networks and delay the need for upgrades.
    Again with EVs, they mostly charge overnight, in off-peak time. And why would an electricity company of any type want to discourage take up of EVs?

    • Math Geurts 5 years ago

      Unfortunately, maintaining the network is not related to the amount of energy transported. (Only) if and when there is a need to expand a grid, a network company could delay investments and save expenditures. Before that time costs remain the same, and have to be payed for by all users. If (solar + battery) users pay less, others have to pay more.

      • Charles 5 years ago

        A few examples:

        Battery storage allows customers to “bank” their solar generated power to be used at peak times. if grid usage at peak times decreases, they can postpone future planned upgrades, as a result extending the life of the existing assets.

        Another view: if extending the distribution network to reach a remote customer will be costly, the network company could instead opt to place a (company owned) solar panel + battery system on the customers site – then charge the customer a monthly lease fee.

        Battery systems can even be used with a non-solar grid-connected system, to “top up” at off-peak times – smoothing out the usage. Network companies would love this kind of demand predictability.

  17. Terry 5 years ago

    Like we didnt see this coming! (taxing solar panels)

  18. Ian Cleland 5 years ago

    Get with the game utilities. You are totally out of step.

  19. Nigel Colhoun 5 years ago

    Bring back the carbon tax + interest

  20. Dbunk 5 years ago

    In regards to the constant argument that Electricity networks are all fixed costs and that justifies the “solar-tax”. Fixed network costs are nothing new across any utility based service, be it Telco, Water or Transportation. Do either of these utilities charge you a “tax” for daring to have an alternative to their main network. You pay your Telco for access to their network IF you chose to use it, and then pay a variable cost for usage on that network, You are not charged an incremental amount just because you own Internet or a Mobile Phone. Extend this paradigm to water tanks at home. Will the water utilities seek to charge you an “fee” for harvesting rain water for your use because you don’t use more mains supply water ? Will the transport companies charge you for having a car because you don’t use your the train or bus ? Why do electricity companies seek to have this “woe-me” attitude that they are somehow being victimised. The absurdity in this solar tax argument is the myopic, disillusioned views of utility companies who over capitalised on network upgrades based on unrealistic demand forecasts and never bothering to think alternative technologies would ever disrupt them. Embrace change rather than fight it and perhaps you may actually still have customers to service in the future.

  21. MaxG 5 years ago

    It is simple: do not vote for any party which wants to privatise the grid, or abuses it as it is currently the case.

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