“Sun Tax” Threatens Electricity Network Death Spiral – Or Does It?

Solar tax - Australia

The results of a recent survey run by Solar Citizens regarding a controversial draft determination from the AEMC will have solar battery manufacturers salivating.

In March, the Australian Energy Market Commission (AEMC) released its draft determination on how to integrate more small-scale solar power systems into Australia’s grid.

Among the proposals – the one that has created the most controversy – is allowing networks to levy a charge on solar owners pumping their surplus self-generated electricity into the grid at times when it is saturated with solar energy exports.

The charges could potentially be a couple of cents per kilowatt hour. So, for example, if a system owner is receiving a feed-in tariff of 10c per kilowatt hour, it would be reduced to 8c during such times. What hasn’t been given as much attention is that solar owners would be paid more when their systems export at times when the grid needs the energy.

Various modelling by the AEMC indicates the overall impact of the charges should be minimal.

Community group Solar Citizens surveyed more than 1,300 rooftop solar owners across the country to get their views on the prospect of the charge, which has been portrayed as a “sun tax” or “solar tax” – and it’s not.

According to Solar Citizens, the survey results indicated:

  • 63% said they’d consider going off grid if this rule change is implemented.
  • 95% were not in favour of the “sun tax”.
  • 65% said the way their state governments responded to this would influence their vote.

That 95% were not in favour isn’t a surprise – no-one likes the prospect of perhaps getting less of something they like.

As for the 63% stating they’d consider going off grid – they key word here is “consider”. We often consider things we’ll never action – and going off grid is a very expensive move at this point in time.

But let’s say this was implemented and a bunch of solar owners suddenly dropped off the grid. Solar Citizens says this could result in a network ‘death spiral’, where ditching the grid results in higher network charges for customers remaining connected to it, which then encourages more to leave the network.

Governments and regulators are unlikely to stand by and let this happen as electricity is an essential service. It’s quite possible that as is the case with mains water supply in South Australia (and perhaps elsewhere); if supply runs past your property you pay charges whether you are using it – or even connected to it – or not.

Perfect Vs. The Good

One of the biggest enemies of solar power in Australia has been delays to implementing what needs to be done to support uptake. While much of that can be blamed on opposition from the fossil fuel sector and electricity companies, we seem to have reached a point where a major threat could be existing solar owners being unable to accept the sorts of changes that need to occur soon.

Delays to necessary changes being made will prevent more Australians from having equitable access to the emissions and bill-busting benefits of  solar panels through situations such as zero export limits becoming more common for new solar owners – and more draconian measures for existing solar owners. That’s not good for anyone.

As SolarQuotes founder Finn mentioned when he and Ronald were discussing a recent ABC report on home solar that seemed to rail against this solution to a problem the ABC was highlighting:

“If all these renewable energy activists carry on jumping up and down and having petitions and pressuring the government – nothing is going to happen for a lot longer than 4 years and we’re all going to be in a terrible situation.”

Both acknowledge the AEMC’s proposal is not a perfect solution, but as Ronald mentioned:

“Perfect should not be the enemy of the good.”

Before arriving at a solid position on the issue, solar owners may want to have a thorough read of what the AEMC is actually proposing, rather than just relying on second-hand information – whether it’s from here or anywhere else. What is being proposed has evolved since original and very flawed “sun tax” ideas were floated.

About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.

Speak Your Mind

Please keep the SolarQuotes blog constructive and useful with these 4 rules:

1) Real names are preferred - you should be happy to put your name to your comments.
2) Put down your weapons.
3) Assume positive intention.
4) If you are in the solar industry - try to get to the truth, not the sale.