The federal government is set to downgrade its plan to mandate three hours of free daytime electricity with the imposition of a reasonable use cap, but there’s a simple way to ensure you rarely if ever hit the limit: getting solar panels.
What Is The Proposed Solar Sharer Offer Limit?
The Albanese government in December announced it would mandate that all electricity retailers offer an opt-in Solar Sharer Offer providing free electricity to households for at least three hours a day.
That pitch has since been downgraded in a recent consultation outcome paper with the addition of a reasonable use cap that limits the amount of electricity available for free.
The cap would initially be set at at 24 kWh per day, which federal authorities say is equivalent to an average five person plus household shifting its total daily electricity use into the free power period.
The cap is one of six recommendations for the offer in the outcome paper, with the others being that it:
- Looks to deliver bill savings for households;
- Considers key market factors and system efficiency;
- Is flexible and aligns to local conditions;
- Considers retailer viability;
- Is adaptable.
The offer will initially be implemented in New South Wales, South Australia and South East Queensland from 1 July 2026, with other areas of the country to follow after that, potentially in 2027.
Solar Households Don’t Need To Worry
The limit is sufficiently high that homes with their own rooftop solar will be so rarely affected that”it’s not worth worrying about”, SolarQuotes resident fact checker Ronald Brakels says.
Ronald qualified that there would need to be a combination of factors at play for a solar home to breach the three free hours cap. One factor is the season, with a cloudy day in winter potentially pushing heavy electricity users past the limit.
“If your electricity consumption is unusually high because you have a big battery or EVs to charge, then you may find yourself hitting the free electricity period cap. This is most likely to happen on cloudy winter days when solar output is low. The smaller your solar system, the more likely it is to happen, so it’s still a good idea to have a large solar system,” he says.
SolarQuotes founder Finn Peacock has previously expressed concern that the government’s original uncapped plan would create a perception that solar isn’t worth getting, despite Australia needing to further boost solar capacity to meet future energy needs as ageing coal plants wind down.
The introduction of a cap further enhances the continued case for getting rooftop solar, even for households that sign up to get three free hours of power a day.
Heavy Energy Users Without Solar Likely To Breach Cap
Households without solar panels that have high electricity consumption through heavy charging of home batteries and EVs face the prospect of regularly exceeding the cap, Ronald says.
“On cloudy winter days, any home with electric heating and a drained battery that needs charging could easily hit the cap. This is a problem for the grid, because we want people to charge their batteries during the day when it’s cold and cloudy, so they’ll draw less grid electricity at night when it’s even harder to provide electricity due to greater heating demand and zero solar generation. Fortunately, this will probably only be a minor issue. Most people will simply pay for extra electricity during the day when they exceed the cap and not worry about it. Also, no matter what homes have to pay when they exceed the cap, it will certainly be less than what they’ll pay in the evening, so they’ll still have an incentive to charge their battery, even if they’re over the cap,” he said.
“Anyway, if you have a battery, you almost certainly have solar. If you have solar then, provided it’s not a puny system, you’re only likely to exeed the cap during rare periods of lousy weather, so it’s not worth worrying about.”
A promotional image for Solar Sharer, which the federal government sees as a means to encourage people to shift high energy demand activities like charging EVs to the middle of the day when solar energy is abundant.
A Cap Is A Sensible Move
There was potential for an unconditional offer for free electricity to present issues during the day however, so the proposal of a cap does limit the potential for problems.
The issues around the federal battery rebate burning through its initial budget too quickly by incentivising overly large batteries serve as an example of how things could have gone wrong.
“It’s a little annoying how the government got people all excited by saying ‘free electricity’ but then they go, ‘well, actually, there’s a cap we didn’t mention…’ If the cap was 40kWh or even just 30kWh we could laugh and say hardly anyone will be affected, but 24kWh is low enough for some to exceed it. But fortunately, it won’t be many. And most of them will only be rarely go over it,” Ronald says.
“That said, the plan had lots of potential to go pear shaped in winter, especially in NSW where it gets colder than SE QLD and there’s less solar generation per person. Some sort of safety mechanism, such as a cap, was pretty much necessary. We saw how the government failed to plan ahead adequately with the Federal Battery Rebate and had to rejigger the subsidy while it was in motion. So there’s plenty of room for their predictions about the Solar Sharer offer’s effects to go off the rails.”
Seasonal Limits Would Have Been Less Annoying
A plan that had different caps for different seasons would have been even better, Ronald suggests.
“If the cap was 24kWh in winter and 48kWh the rest of the time, then that would get the idea across that the grid has it harder in winter and give people an incentive to change their behaviour and use less electricity then. It would have a double benefit of making people feel less annoyed by the cap and it would be more likely to get them to change their behaviour when it matters more. Higher caps on weekends is also an option, as electricity demand is lower. This would be useful for anyone who has trouble charging their EV during the week because it’s parked at work,” he says.
Next Steps
The Australian Energy Regulator will now consider the consultation recommendations as part of its 2026-27 Default Market Offer (DMO) determination process.
For more on the Solar Sharer plan, read Ronald’s analysis on how it will save everyone money – including renters.
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