Homeowners rush to buy batteries to avoid ‘sun tax’
Electricity companies are starting to charge homeowners for excess solar energy. Some owners are taking their power back.
Reducing his dependence on the NSW electricity grid has allowed Penrith solicitor Tony Sutton to take the power back.
Not being at the mercy of an electricity company and getting out in front of a proposed new fee makes him feel more in charge of his outgoing costs.
Many solar panel owners who send extra electricity back to the grid at peak times will be charged a tariff. Bloomberg
He’s spent $30,000 with VoltX Energy to purchase 19 kilowatts of solar panels and two batteries to store the energy generated from the solar panels on his roof. He recently purchased a third battery after switching from gas to electricity for his hot water and heating.
Switching to solar will save him around $2000 a year on his electricity bill. Switching from gas to electricity for hot water and heating will save a further $1300 a year. The investment will pay for itself over the years as the savings roll in.
Batteries in high demand
Sutton is one of the growing number of homeowners rushing to purchase batteries to store the energy generated from his solar panels, so that he can avoid the so-called “sun tax”.
Under the new fee, solar panel owners who send extra electricity back to the grid at peak times will actually be charged for the privilege.
Three electricity distributors in NSW including Ausgrid have introduced the charge to reduce congestion in the electricity network struggling to handle the influx of power being sent to the grid at times of high demand.
Sutton admits he’s locked into not selling his house for several years to be able to realise his investment, but that doesn’t faze him. “I’ve finally got it set up how I want it set up anyway,” he says.
An app on his phone enables him to monitor his electricity usage. “I’ve got a system that will deal with anything now. It’s an expensive journey, but it’s a very profitable journey in the long run,” he says.
Changes to the electricity market were signed off by the Australian Energy Market Commission in 2021, paving the way for retailers to introduce two-way electricity tariffs. A handful of companies, mostly in NSW, have been testing the market since then.
Ausgrid will introduce the 1.2c/kWh export charge to its network in the middle of the day, initially as an opt-in exercise to customers who request to be involved via their retailer before it becomes mandatory from July 2025.
But for homeowners who have followed the government recommendation of installing solar panels, the new fee feels like a kick in the guts. The average cost of a 10kWh battery is $12,400, including all required components and installation, according to comparison website Solar Choice’s battery price index.
Solar batteries can help homeowners store their excess power. Peter Rae
Essential Energy confirmed it was one of the providers to implement the two-way tariff from 1 July this year. It is designed to recover the costs associated with the augmentation of the network to facilitate the high levels of exports experienced in the network.
But solar companies fear that forcing consumers onto tariffs they don’t understand will undermine the confidence in the electricity system.
Solar Choice chief executive Jeff Sykes says homeowners are generally confused and outraged at being charged anything for the additional power they are contributing to the energy network.
“Exported solar has increased strain on the network and therefore costs for network operators, but solar and batteries have also provided enormous benefits for network operators through avoided transmission upgrades. None of these benefits have been factored in or passed through to consumers, so I don’t believe applying a sun tax is fair,” Sykes says.
Storing power
Nearly 14,000 homeowners across the nation have installed batteries to store energy generated by solar panels to beat the introduction of the sun tax, estimates from Solaris Finance show. Battery storage allows households to store excess solar power, reducing reliance on the grid and lower their carbon footprint.
Solar Run director Anthony Kurta says the sun tax is “extremely unfair”.
VoltX Energy reports an 80 per cent increase in enquiries and a 40 per cent increase in new battery sales in the past three months as homeowners try to avoid having to pay more for their electricity, chief operating officer David Sedighi says.
“The so-called ‘sun tax’, where energy providers charge customers a tariff for rooftop solar exported to its network is already driving new demand for batteries. We’re seeing households realise the potential of not just having solar, but being able to store their own solar power energy for off-peak times,” Sedighi says.
Energy company Solar Run director Anthony Kurta agrees the sun tax is “extremely unfair”. At least half of its customers want a battery to avoid the sun tax, he says.
“I do understand that the value of excess solar reduces in daytime hours during summer and spring. What is not considered in the government proposal is the value of the excess solar during winter and autumn, which still has considerable value to the grid,” Kurta says.
Jonathan and David Green of solar panel and battery retailer Green.
A better approach would be tailoring the value of excess solar to suit the month of year, which would be fairer to both parties.
“This should also be the case for export during later hours in the day, when electricity demand is higher. And both these values should be matched to what the wholesale price of electricity is worth for each month,” Kurta says.
Households see batteries as giving them as a sense of control, solar panel and battery retailer David Green, of retailer Green, says.
“Sometimes people over-rationalise the financial return, but unfortunately with the sun tax, this might be an indicator of where the market is going.
“People don’t know if rates will keep rising, they don’t know what their mortgage will look like and they don’t know what their bills will look like in the future, but a battery gives you complete control and predictability in a cost of living crisis,” Green says.