As more households invest in solar, a new government solar tax in 2024 could be on the horizon. The sun tax is a solar power tax under which households with solar panels may be charged an export fee for feeding energy from their panels back to the grid, particularly when solar exports to the grid peak in the middle of the day.
Why is the government considering solar export charges?
Energy retailers are considering solar export charges due to the congestion on the grid during peak times; a mechanism made possible by rules created by the Australian Energy Market Commission (AEMC). As more Australians take advantage of the sunshine and adopt solar power, supply of energy on the grid is becoming increasingly difficult to manage, particularly at peak solar export times, between 10:00 am and 3:00 pm.
With the grid not originally designed as a two-way system, the oversupply of energy can cause outages and destabilise the grid. The so-called ‘sun tax’ is intended to encourage people to use their own solar rather than export it by scheduling their power use or investing in battery storage systems. This new two-way tariff system combines solar feed-in tariffs and solar export charges to help the grid manage the peaks and troughs in energy supply.
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How will the sun tax impact my power bill?
Households with a solar battery included as part of their solar package, should be less impacted by the sun tax. Instead of exporting all their excess solar energy back to the grid, they’ll store some of this energy in their battery to use later in the day when energy supply on the grid decreases. Those who do not have a solar battery can simply choose to run their high-energy appliances, such as their air conditioning, at peak times so that less of their surplus energy is diverted back to the grid.
While the solar sun tax has been increasingly in the headlines, its initial impact will be low. It’s currently an optional charge, which has only been implemented in NSW. It will not become a mandatory charge in NSW until July 2025.
When and where is the sun tax being implemented in Australia?
While the sun tax was signed off by the Australian Energy Market Commission (AEMC), each state or territory has its own approach to solar, so the adoption of any sun tax will vary by region.
Which states are currently implementing the sun tax?
New South Wales is the only state currently implementing a sun tax. From July 2024, households with rooftop solar panels in NSW were given the option to opt-in to the two-way tariff. Although the tariff was introduced by Ausgrid, all three energy distributors in NSW have said they will introduce the tariff. From July 2025, Ausgrid’s sun tax will be automatically rolled onto the new tariff.
Each state or territory government has the final say in whether or not they allow their energy companies to implement the charge. The Victoria and Queensland governments have already said they will not be making their citizens pay it.
Only regions that are part of the National Electricity Market are subject to the new charge, which means a sun tax in Western Australia or the Northern Territory is unlikely in the near future.
How much could the sun tax cost your household?
The impact the sun tax could have will vary, depending on the household, but Ausgrid anticipates that a typical 5 kW solar customer would see a bill increase of $13.30 per year, $6.70 of which would be offset by the rebate they would earn from the portion of their energy that they are allowed to export.
What factors determine how much sun tax I might pay?
How much electricity you export will be the determining factor in how much you pay. Another thing that will have an impact is the time of day you’re attempting to export your solar to the grid. For example, if it’s between 10:00 am and 3:00 pm, and you exceed the free threshold, you will face a charge while sending energy into the network in the evening, from 3:00 pm to 9:00 pm will generate a reward.
Location will also play a huge part; if you are living in a state that’s either not eligible for the sun tax or has chosen to opt-out, you will pay considerably less than those living in a state like NSW, which is leading the charge for a solar tax.
How can solar + battery systems help you avoid the sun tax?
Solar + battery systems can help you avoid the sun tax by storing your solar energy for you to use later when the sun goes down. You can also amend the settings on your system so that you delay charging your battery until the export charge applies. In addition to offsetting any costs you might pay for having generated more energy than you can use, a solar battery system can reduce your reliance on the grid, reduce the likelihood of blackouts and maximise the value of your system.
How will the sun tax affect future solar and battery installations?
It’s difficult to quantify how the sun tax will affect future solar and battery installations, as there are still a number of unknown variables, particularly in the states that do not have a timeline to roll out any solar taxes. We may see an increase in solar + battery package installations, as adding a battery to your solar system gives you the power to control where your own energy goes, allowing you to avoid the charge.
Why is now the best time to consider a solar battery system?
Investing in a solar + battery system has always made sense. However, with potential charges for exporting solar energy still a possibility across the country, depending on location, a solar system with a battery offers you a measure of protection you don’t get from the panels alone. Having a battery also increases your energy independence and reduces your reliance on a potentially over-stretched grid, increasing the value of your property at the same time.
What financial incentives are available for solar battery systems?
Each state will have its own financial incentives in addition to the national small-scale renewable energy scheme (SRES). This government program offers small-scale technology certificates (STCs) as a subsidy for eligible households installing solar panels. Usually, your solar panel installer will apply for the STCs and discount the value of them against your system.
From November 2024, New South Wales will offer a rebate for households that install batteries alongside their solar systems under the Residential Batteries Incentives Program, which encourages those with solar systems to add a battery with discounts of between $1,600 and $2,400.
Victoria offers a solar panel rebate of up to $1,400 for eligible Victorians, as well as interest free loans of up to $8,800 for battery installation.
In addition to SRES, WA has a Distributed Energy Buyback Scheme (DEBS), which offers customers who qualify payments for electricity that they export back to the grid.
More recently, there are lower cost financing options available for solar + battery systems through the Clean Energy Finance Corporation.
Ready to future-proof your solar investment? Here's how Plico can help
We’re confident that our range of solar + battery systems can fit every household. With no big upfront installation costs, ongoing support, and a transparent tracking app, Plico can help you start saving on your power bills, use your power when you want and make blackouts a thing of the past, all without steep start-up costs. Reach out to the switched-on people of Plico to find out more.
What steps do I take to get started with Plico?
The first step is to schedule an obligation-free, no-pressure chat with our friendly team. Once we have all the relevant information to make a solar system recommendation, the next step is a no-obligation site visit from one of our team.
We’ll delve into the details and perform some rooftop analysis if required. Then, if you’re happy to proceed, we take care of all the necessary paperwork and approvals, and installation can begin.
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