“Taxing Solar Exports Just Nonsense”, say Experts

Solar Tax
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Is the Export Solar Threat a Political Game Play?

Many home owners and small businesses were originally encouraged by the Australian Government to source energy from the sun through solar power.

But they will now be potentially hit with a new charge for producing clean energy. Many industry experts say the proposal is fear mongering and is never likely to proceed.

Even if it will proceed in some form, the annual “tax” for a standard solar system would be less than $100, therefore, not much to worry about, as a standard 6.6kw solar system can generate savings up to $2000 per annum, in places like Adelaide, South Australia.

Solar System Install in Adelaide

The Proposed Plan to Charge Rooftop Solar Users

The Australian government has proposed a plan to charge rooftop solar users for outsourcing excess electricity to the grid, and consumers have been calling it a “sun-tax” and the idea has been faced with large amounts of backlash.

The Australian Energy Market Commission (AEMC) who sets the rules around the energy market, has proposed that electricity networks will be allowed to charge solar panel owners for sending excess energy back to the network, to address growing network problems.

These network problems are not due to issues of energy efficiency, but due to so much solar being generated and exported to the grid in the middle of the day.

The proposed rule is also based on the argument that charging households solar would insure network companies had the funds needed to invest in the power network to accommodate a two-way energy flow while not penalising non-solar residences and encouraging the development of more rooftop solar on the grid.

So in the middle of the “largest threat to mankind “as Climate Change has been described by some politicians and high profile personalities such as Prince Charles the Australian Energy Market Commission (AEMC) is now proposing to penalise solar homeowners.

“Owners of PV systems are currently able to earn additional income for exported solar energy via the feed in tariff (FIT) , a fee paid by energy retailers for renewable electricity exported to the grid and sold to other households and businesses” explained Don Quattrocchi, the director of DQ Solar and Electrical in Gepps Cross, SA.

Don Quattrocchi, the director of DQ Solar and Electrical in Gepps Cross, SA

“These homeowners and businesses, who try to make their contribution for a more sustainable planet by creating more renewable energy, have run head-on into the complex policies of the Federal Government’s Energy direction”, he added. 

The fear is that in the future such solar owners might see themself taxed for any solar exports as foreshadowed by the AEMC. 

But how real is the prospect of such a tax and how much political spin has been added to this story and how real and likely is it that this solar feed in tariff tax will ever be implemented?

The Solar Industry Expert’s Opinion

Markus Lambert, a solar industry veteran of 15 years said: “It makes absolutely no sense to stop the creation of solar energy in the middle of the day.

“With the uptake of EV charging by electric cars in the not-too-distant future, we will need more localised energy generation, if we do not want to see a massive need to invest in grid infrastructure.”

“I believe the whole solar tax debate is a big hoax, to throttle the record solar system demand, invented by persons with an anti-solar political agenda” Lambert added. 

“I want to see the politician who will tell the close to 9 million Australians that live in a home with solar on the roof, that they will now be taxed for trying to save money and save the planet. The proposal simply defies any common sense.”

If I would back a horse in the political energy race, it would be called Survival and Self Interest. Any politician who will suggest a tax on the industry that saves the planet and gives tax credits and grants to the fossil fuel industry that damages the planet, needs to have their thinking challenged, Lambert concluded. 

Industry insiders explained that the “Sun-Tax proposal” was only in its early planning stage and will not likely come into an  implementation phase for at least 5 years, by which time the pressure on reducing emissions will be so large, that the proposal will have little chance of success. 

While current feed in tariff rates have steadily reduced since 2010, when record FITs of 60c per kWh were offered and now range from 12 to 6 cents per kWh, for many solar system owners they still can add up to a few hundred dollars per year of additional solar income.


Electricity Meter

The energy retailers responsible for the poles and wires have had now more than a decade to adjust the grid to the new renewable paradigm, with more and more installed solar coming online, but they have been caught napping on the job, by not pursuing a long term investment strategy, to support solar, batteries and electric vehicles and consequently supporting emission reduction. 

How much would it cost?

Multiple studies have now been carried out since the proposal was released. One of the most accurate studies by Victoria University’s Professor Bruce Mountain which was able to show that the tax would be “roughly 2c/kWh for exports in the middle of the day which can lead to an estimated $100 per year in sun-tax”. (Vorrath, S.2021. Rooftop solar tax could bite twice as hard as was modelled.)

The Consequences

The suggested rule change, dubbed a “Sun-tax,” has sparked widespread resistance, with 95 percent of 1,300 people polled in the Solar Citizens survey opposing the tax.

Furthermore, the survey showed that if the rule change were to be implemented, 63 percent of those polled stated that they would consider going off the grid, by adding more panels and a significant battery bank to their solar system. 

When a rising number of solar PV owners leave the grid, a ‘death spiral’ occurs, leading to higher network charges for remaining customers. The price increase may then trigger more households to abandon the network, causing the spiral to keep going. 

“So given the long timeline for implementation, the relative low cost and the other “death spiral” related consequences, this solar tax as part of the Federal Government Energy Policy is dead and buried, before it even has seen the light of day,” Markus Lambert said.

To find out how solar and batteries can benefit you – contact DQ Solar on (08) 7160 0127

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