Solar tariffs for Australian solar panel owners

On 19 August 2021, the Australian Energy Market Commission released the National Electricity Rules, Version 170 with Clause 1.6.4 [Deleted].  In Version 169, Clause 1.6.4 read:

Prohibition of DUOS charges for the export of energy

(a)  A Distribution Network Service Provider must not charge a Distribution Network User distribution use of system charges for the export of electricity generated by the user into the distribution network.

(b)  This does not, however, preclude charges for the provision of connection services.

Together with some other changes instituted by the AEMC, removal of this clause gave distribution network companies in the eastern states the right to impose export tariffs on the owners of small generators and batteries from July 2025.

To which, Lily D’Ambrosio, the Minister for Energy and Resources for Victoria, said “Nope, not in my State”.

Conversely, the state and territory governments in the ACT, Queensland, New South Wales, South Australia, and Tasmania said “ok, all good”.

This means that from July 2025, all owners (residential and business ) of small generators and batteries will have to pay distribution networks for the energy they inject into the grid.

So, why is this discriminatory?

Large generators connected to the transmission grid, be they coal-fired, gas-fueled, wind and solar generated, or large batteries for that matter, do not pay for transporting their energy to consumers over transmission and distribution networks.

The consumers pay to the networks their fees for the transport of the energy provided by large generators and batteries.

There are also mid-sized generators (and batteries) that are connected to the distribution grid.  Like the large generators, they don’t pay for transporting their energy on the distribution grid either – the consumers do.  And in a case of supreme irony, these mdi-sized asset owners get a payment for injecting their energy under a scheme  called “Avoided Transmission Use of System payment”, in which case consumers have to pay twice, once to the transmission companies for their regulated revenue, and again to the medium-sized generators for their rebates.

It is always the consumer that pays.

So, now as a result of the changes instituted by the AEMC, large and mid-sized generators and batteries are further protected from competition from small generators – generators that are located closer to the consumers and use less transport infrastructure.

Clear, unambiguous, legislated, protection racket favouring large generator and battery owners from the upstart small generator and battery owners like you.

Who loses? All of us! Consumers with or without small generators or batteries.

Removing the small generators’ ability to compete means that the large generators can charge more.

You may have heard some people talk about the “sun tax” a while back.  The media went for the glib headline but totally missed the systematic discrimination propagated against all consumers.

How did this come to be?

The AEMC is a statutory body authorised to create rules about electricity.  They see themselves as the guardians of a stable electricity supply industry where electricity is the purview of large energy companies.

The AEMC had been agitating for forcing small solar PV owners to pay for the right to have their energy transported on the grid as far back as in 2017, but such ideas were viewed as a power grab by the network monopolies.

Instead of retreating, the AEMC devised a new and clever strategy.

In 2020, the Australian Council of Social Service (ACOSS) and the Total Environment Centre (TEC) made a proposal to delete Clause 1.6.4.  One represented poor people and the other represented the environment.

ACOSS stated that only rich people can afford to own solar panels and batteries and that’s unfair on poor people.  TEC said that if we let distributors levy charges on small generators, then these distributors will reduce their charges elsewhere.

Amazingly, these proponents used class warfare and assumed benevolence on the part of monopolies to argue for this rule change!

And at the 11th hour, the Energy Consumer Association (ECA), a taxpayer funded agency claiming to represent the interest of consumers, published a consumer survey showing that the owners of small solar panels supported having to pay for their energy to be injected into the grid.

The usual suspects shouted “sun tax” and some experts argued against the economic modelling used by the AEMC in supporting their decision to change.

And to ensure minimal immediate resistance, introduction of these charges was delayed well into the future, and the responsibility of accepting or rejecting these export tariffs was given to the Australian Energy Regulator, who would be the villain when we finally start to see these charges come through.

Everyone missed the sublime use of innocents the AEMC used to get this change across the line.  As for the ECA’s role – we don’t know what backroom deal was done.

Henry Kissinger would have been proud.

It is interesting that we are in the middle of a once in a lifetime energy transition where we as consumers and owners of small generators are already part of the energy supply system.

Instead of supporting us, policy makers are ensuring that more taxpayer funds are channelled to support big energy directly, via schemes like “long term energy service agreements”, or for building of new transmission lines.

So, what to do?

Be wary of people claiming to speak for you.

You have to speak directly to power – individual voices can be very powerful and effective.

Constitutionally, electricity is a state responsibility.

Write or talk to your state energy minister – you don’t have to be an energy expert to speak about your rights being abused.

Here is a list of your state energy ministers.

Shane Rattenbury, Minister for Climate Change and Sustainability, ACT Government

Penny Sharpe, Minister for Energy, NSW Government

Michael de Brenni, Minister for Energy, Renewables and Hydrogen, Queensland Government

Tom Koutsantonis, Minister for Energy and Mining, Government of South Australia

Guy Barnett, Minister for Energy and Renewables, Tasmanian Government

AEMC website

Here’s some information on the AEMC website about these changes if you want to know more.

This is the first part of a two part series. You can find the second part here: A Survey of Distribution Networks Intending to Impose Export Tariffs

Talk to us about how Localvolts can help you to take control of your energy!

Localvolts gives you control and flexibility to buy energy from the providers that you want to support, and to offer the energy you generate to whom you
want, at the price you want.

Got questions? Get in touch!