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Rooftop solar avoids ‘sun tax’ but still faces caps

  • August 13 2021
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Rooftop solar avoids ‘sun tax’ but still faces caps

By Cameron Micallef
August 13 2021

Power companies will soon be able to charge Australians with rooftop solar panels a tax for exporting electricity to the grid, albeit the regulators have walked back from the most controversial parts of the new plan.

Rooftop solar avoids ‘sun tax’ but still faces caps

Rooftop solar avoids ‘sun tax’ but still faces caps

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  • August 13 2021
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Power companies will soon be able to charge Australians with rooftop solar panels a tax for exporting electricity to the grid, albeit the regulators have walked back from the most controversial parts of the new plan.

Rooftop solar avoids ‘sun tax’ but still faces caps

A proposal for households with rooftop solar panels to be charged for exporting electricity into the power grid has been softened, with regulators guaranteeing a “free option” for those who have solar panels.

Dubbed a ‘sun tax’, the original proposal highlighted the potential need to see consumers pay for excess solar power to the grid.

The Australian Energy Market Commission (AEMC) stated it is trying to avoid the problems of “traffic jams” on the network which is only likely to get worse as more Australians switch to solar panels.

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The proposal for households with rooftop solar panels to be charged for exporting electricity in the power grid at a certain time has softened, albeit customers could be charged after 2025.

The commission’s chief executive, Benn Barr, said the AEMC had listened to feedback and tightened protections for consumers to ensure people would not have to pay to export solar if they chose not to.

“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,” he stated.

“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 changes come as around 20 per cent of all customers now partly meet their electricity needs through rooftop solar power generation, up from just 0.2 per cent in 2007.

That is predicted to more than double over the next two decades, highlighting the need for a long-term suitable plan to have more customers benefit from solar, while putting downward pressures on prices.

AEMC chair Anna Collyer said the reforms acknowledge that Australia has the fastest rate of solar take-up in the world and reflect concerns from industry, energy market bodies, consumers and environmental groups.

“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,” Ms Collyer said.

“We don’t want to see solar going to waste.

“That costs everyone more because less cheap renewable energy gets into the system.”

Based on the latest retail and solar feed-in tariffs in each jurisdiction, 80 per cent of customers should see their bills drop under this reform because they would no longer pay for solar export services they aren’t using.

AEMC modelling shows that even under a worst-case cost scenario, solar owners choosing paid plans would still earn at least 90 per cent of what they do now – and that’s before taking any action to change their energy behaviours.

Rooftop solar avoids ‘sun tax’ but still faces caps
Rooftop solar avoids ‘sun tax’ but still faces caps
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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