Shared solar: Labor’s “free power” plan to have daily cap to stop abuse by EV and home battery owners

Any thoughts that Labor’s proposed Solar share offer would deliver unlimited free power to fill their EVs and home batteries have been dashed, with the federal government proposing a 24 kilowatt hour cap.

The Solar Sharer offer has grabbed the attention of the market, both for its political success in underlining the clear benefits of Australia’s middle-of-the-day solar surplus, but also concerns about potential regulatory and policy over-reach into the retail electricity market.

Federal energy minister Chris Bowen wants retailers to be required to offer three hours of free power to customers, enabling households who do not have access to their own rooftop solar to share in the benefits of the solar surplus that regularly pushes wholesale electricity prices below zero.

Some retailers already include such offers, but Bowen wants it to be a regulatory requirement to make sure that all customers – often confused by the complexity and myriad retail offers, and facing higher bills – can seek some relief if they can make it work.

The government on Friday released a consultation paper that takes feedback from more than 70 submissions, most of which it says were supportive of the proposal.

It admits, however, that not all households would benefit. For a start, a household would need a smart meter, and would be better placed if there was someone at home during the day, or had the “smarts” to switch load to the hours of free electricity. It notes that those already with solar power would not see any significant benefits.

Still, it says that while a single occupant residence, with someone working at least partly from home, could cut their annual bills by around $150, a family of four could potentially shift between $800 and $1,100 of electricity consumption to the free power period in the right circumstances.

However, there are caveats. Among the six proposed “guidelines” for the Australian Energy Regulator to consider as it weighs up the design of the scheme, the government proposes a “reasonable use” criteria that would cap the daily consumption of free power to 24 kWh.

That equates to the average daily use of a household of four, but also means that any households with one or two EVs (many with faster charging rates), during that period.

Retailers had raised concerns that customers with large home batteries and EVs could disproportionately benefit from the Shared Solar offer by maximising charging during the free-power period and later using or exporting that stored energy.

Submissions also highlighted that, in the absence of specific safeguards, very high levels of consumption during the free-power period could create localised network impacts that may lead to increases in network costs.

The other guidelines announced on Friday focus on what tariffs might be imposed at other times of the day. The fear is that retailers – as they currently do – could jack up evening tariffs to offset the cost of providing the free electricity in the middle of the day.

The design principles also say it should be an “opt-in” offer rather than a default offer, must take into account market efficiency, including network costs, and should also consider the viability of energy retailers. It should also be subject to two-year reviews and there may be differences in some network areas due to local conditions.

The federal government wants the AER to finalise the regulations ahead of the offer being made from July, 2027 in NSW, South Australia and south-east Queensland, and a year later in other jurisdictions. Victoria, which has a different regulator, is also working on its own proposal.

“Australia has more rooftop solar capacity than the entire fleet of remaining coal fired power stations across the country,” Bowen said in a statement on Friday.

“The Solar Sharer Offer is about making sure we make the most of our huge solar generation, including by ensuring the benefits of cheap solar can be shared with consumers who don’t have solar systems themselves through the offer of free daytime power. 

“It will provide direct bill savings for households who sign up and can move their energy use into the zero-cost power period, while also taking pressure off evening peak demand, lowering network and system security costs.” 

The consultation report says most submissions supported the proposal in principle, and many argued that it should allow for regional and network-specific flexibility, and be underpinned by robust consumer protections and disclosure requirements.

However, some retailers, academics and “jurisdiction-specific stakeholders” opposed the proposal in its current form, citing the potential for cross-subsidies, potential market distortion, consumer harm, and possible disincentives for future solar investment.

One of the biggest concerns was around network tariffs, none of which currently contain a free-power period that would mirror the structure of the SSO’s free-power period. This would mean that retailers who offer the SSO would continue to incur costs during the free-power period.