Sun tax to be “optional” under new solar export plan, but limits may still apply

Owners of rooftop solar homes may be able to export their excess power without facing new charges, but can expect to pay their electricity retailers to avoid curtailment and to access the best feed-in-tariffs under new rules signed off by the Australian Energy Market Commission (AEMC).

On Thursday, the AEMC delivered its long-awaited final determination on a controversial plan to charge households and businesses for the ability to sell their excess solar power into the grid.

Advocates have argued that the export charges are necessary to help fund much-needed upgrades to electricity networks. Electricity companies had complained that they had been unable to keep up with the surging uptake of rooftop solar – resulting in many households having their output curtailed.

Opponents have argued that it is an effective “solar tax” on households who had invested in clean energy, and have questioned whether the cost of upgrades is anything more than a small fraction of total network spending.

The AEMC says that in response to its draft proposals to charge households and businesses for the ability to sell their power to the grid, it had introduced new requirements on network companies to actively accommodate rooftop solar in future network planning.

“We’ve listened to the feedback we have received and have tightened protections for consumers to increase certainty,” AEMC chief executive Benn Barr said.

“This means networks will have to offer a free basic service alongside any paid solar export plans, so people won’t have to pay if they don’t want to. If they choose a paid plan where they earn more at some times and less at others, there will be more ways to earn and save.”

The AEMC says that under the final rules, network companies would be required to invest in making the grid “solar and battery friendly”, ensuring that households and businesses wanting to install their own energy systems will not be prevented from connecting and exporting to the grid.

It says electricity retailers will have to offer a “basic export service” – that allows solar owners to export excess solar up to a particular threshold without having to pay additional charges. While the changes generally intend to prevent customers being blocked from exporting excess solar altogether, customers could still face restrictions if network operators deem if they are necessary for the efficient operation of the grid.

Electricity companies are set to offer two different payment plans for solar exports.

Households will still be able to export power through a fee-free option that electricity retailers will be required to offer to customers, which will set a ‘basic export level’ below which households will be able to send power into the grid without facing a charge.

This level will vary throughout the grid and will reflect the capacity of the local network to receive exported power, and tariffs will likely vary from state-to-state.

But under the rules, electricity retailers will also be able to offer paid plans, where households pay an additional charge to export their excess power into the grid, but in return could benefit from higher feed-in-tariffs and other incentives to export power at times beneficial to the wider grid.

“Those choosing paid plans could earn more for solar export at some times and less at others but they’ll have more opportunities to earn and save,” the AEMC said in a statement.

The exact structure of the fees won’t be known for several years while different networks put the packages together and seek approval from regulators. The Australian Energy Regulator has been tasked with preparing a set of guidelines on how the fees should be structured.

The decision was quickly slammed by solar advocacy group Solar Citizens. “This decision to penalise households for sharing their clean solar energy is deeply disappointing,” Solar Citizens’ national director Ellen Roberts said.

“We will see less renewable energy in the grid if people are discouraged from exporting or investing in solar panels in the first place. Households now have to pay to export their power while big coal and gas generators get off scot free. This does not make our energy system fairer.”

The AEMC says that the changes to the National Electricity Rules would ensure that the export of excess solar power would become a core part of the energy services that energy companies offer to their customers.

The new rules will take effect on 1 July 2022, but electricity retailers will be prohibited from forcing existing solar customers onto the new plans before 1 July 2025.

The Australian Energy Regulator will also be tasked with preparing a set of ‘Export tariff guidelines’ before the new tariffs commence next year.

“For the household rooftop solar investors out there, and network companies, we want you to know that we will work with you to develop a set of guidelines that encourage network investment that supports the national grid, the environment, and is good news for retail energy bills,” AER chair Clare Savage said.

AEMC chair Anna Collyer said the reforms were part of a broader effort to respond to how the generation and consumption of electricity was evolving due to the new emergence of new technologies.

“They represent a profound change to the way poles and wires businesses must think about how they manage their network and turn the current one-way street delivering power to people’s homes into two-way super-highway where energy flows in both directions,” Collyer said.

“Power network companies will need to deliver services to support solar – and they’ll be judged on their performance on how much solar exports they allow into the grid.”

“By carving a path for smart solar, batteries and electric vehicles, more solar can be used, we will keep costs down for all consumers and protect the value of household solar investments already made,” Collyer added. “We don’t want to see solar going to waste. That costs everyone more because less cheap renewable energy gets into the system.”

The AEMC said that they anticipated that electricity costs for most electricity customers would fall, as “they would no longer pay for solar export services they aren’t using”, while households with rooftop solar would still receive at least 90 per cent of the existing financial benefits.

Chair of the Energy Security Board Kerry Schott, who recently delivered the ESB’s proposed shake-up of energy market rules to energy ministers, said the new reforms would help reduce the barriers to the installation of more solar and storage.

“This determination removes blockages for renewable energy entering the system. It’s important for customers and is a major step towards the new clean and affordable energy system,” Dr Schott said.

The rule changes had been jointly proposed by utility SA Power Networks and consumer advocates the St Vincent de Paul Society Victoria, the Australian Council of Social Service and the Total Environment Centre.