The Sun Tax isn’t that bad… Here’s Why.

Introduction

The introduction of export charges for solar energy in Australia, often referred to as a “sun tax”, has elicited strong negative reactions and misinformation. However, a closer look reveals that these charges are not nearly as dire as some would have you believe.

The rationale behind the export charges is quite reasonable. As solar energy generation continues to grow, there are times of the day (typically 10am to 3pm) where so much solar energy is being exported to the grid that it becomes difficult for network operators to manage.

This surplus solar generation can potentially threaten the stability of the electricity grid. The export charges are designed to act as a signal to solar system owners to consume more of the energy they generate during these peak export periods, rather than sending it all back to the grid.

Understanding the Sun Tax

It’s important to understand that these export charges are not just arbitrary fees imposed by greedy energy companies. They are subject to strict guidelines and oversight by the Australian Energy Regulator (AER). Any proposals for export tariffs must be approved by the AER and must include a “basic export level” – an amount of electricity that customers can export for free. This basic export level is guaranteed for at least 10 years, providing stability and predictability for solar owners.

NSW Sun Tax Example

Let’s look at a specific example – Ausgrid, the electricity distributor in New South Wales. Ausgrid’s two-way tariff system involves both a “give” and “take”. The give is a payment or credit of 2.3 cents per kilowatt-hour (c/kWh) for exports during the peak demand period of 4pm to 9pm. The “take” is an export charge of 1.2 c/kWh between 10am and 3pm. However, Ausgrid has also included a free export threshold, so customers won’t be charged for the first portion of their exports during those midday hours.

Let’s Talk Sun Tax Numbers

Crunching the numbers, Ausgrid estimates that a typical solar customer with a 5kW system will see a net cost impact of only $6.60 per year. That’s hardly a “sun tax” that’s going to break the bank. And it’s important to remember that the real value of solar these days comes from avoiding expensive grid electricity, not feed-in tariffs.

Less Import Is Better Than More Export

Rather than framing this as a “sun tax”, it’s more accurate to view it as a way to encourage solar owners to better align their energy usage and generation. By incentivising self-consumption during peak solar export periods, these export charges can help minimise the need for costly grid upgrades that would ultimately be passed on to all energy consumers.

Tips And Tricks

Here are some tips for optimising household consumption during typical solar generation times:

1. Schedule Major Appliance Use: Run major appliances like washing machines, dryers, dishwashers, etc. during peak solar generation hours, typically from mid-morning to late afternoon. This allows you to take advantage of the free solar electricity and minimise reliance on the grid for importing as well as less solar available for exporting.
2. Adjust Thermostat Settings: Set the thermostat a few degrees higher in the summer and lower in the winter during solar generation hours. This reduces the electricity needed for heating and cooling when solar power is abundant.
3. Charge Batteries/Electric Vehicles: Charge any home batteries or electric vehicles during the day when solar power is generating. This stores the renewable energy for use later.
4. Minimise Lighting & Electronics: Turn off unnecessary lights, TVs, computers, and other electronics when not in use at night. During the day try to optimise additional usage to coincide with your homes solar peak generation.
5. Cook with Small Appliances: Use small kitchen appliances like instant pots, air fryers, or microwaves instead of the oven/stove during peak solar hours. They use less energy.
6. Optimise Solar System Production: Ensure your solar panels are clean and unshaded to maximise energy output. If adjustable, consider adjusting tilt or orientation seasonally where possible for optimal generation. Though this does not apply for most residential homes.
7. Monitor Consumption: Use a home energy monitor or smart device to track real-time electricity use and identify opportunities to shift consumption to solar generation hours.

The key is being mindful of your household’s energy use patterns and strategically scheduling higher-consumption activities to align with solar production for maximum efficiency and cost savings. Let me know if you have any other questions!

If you wanted to see what people are getting worked up over, read this article.

Conclusion

So while the introduction of export charges may seem like a step backward for solar, a closer look reveals a thoughtful and reasonable approach to managing the challenges of an increasingly solar-powered grid. By understanding the rationale and the consumer protections in place, we can see that the “sun tax” isn’t nearly as onerous as the name might suggest.

If you’d like more information check out out recent Sun Tax article, or read our guide on How to Beat the Sun Tax!

If you would like any info or help on how you can take the first step into designing your home to be as energy efficient as possible, please reach out to the team at Urban Future.