Solar panel owners slugged by Ausgrid for generating too much power

The biggest electricity distributor on the east coast plans to charge households with solar panels to export their electricity to the grid during the middle of the day.

The new policy by Ausgrid, which owns the poles and wires for 2 million residential and small business customers across Sydney, the Central Coast, Newcastle and the Hunter Valley, penalises solar panel owners who do not own a home battery to store the energy they produce.

SunWiz figures suggest 952,000 NSW households had rooftop solar at the end of 2023, while 70,299 also owned a battery. In some Sydney suburbs, up to 70 per cent of homes have panels.

Ausgrid is penalising solar panel owners who export energy to the grid during daylight hours.Credit: Oscar Colman

Solar panels generate electricity only while the sun is shining, while batteries allow households to store their excess energy for their own consumption at night, or to export it to the grid when the price is higher – but they cost upwards of $9000.

An Ausgrid spokesperson said the amount of rooftop solar meant there was simultaneously lower demand for electricity as households used the power they generated, and also more energy in the grid as households exported their excess supply.

Ausgrid will impose a penalty of 1.2¢ a kilowatt-hour for any electricity exported to the grid between 10am and 3pm above a free threshold that varies by month. During peak demand times, between 4pm and 9pm, Ausgrid would pay 2.3¢ an hour as a reward to customers exporting solar to the grid.

The spokesperson said the new two-way tariff would encourage households to use energy in the middle of the day and export it to the grid at night, and help Ausgrid avoid costly network upgrades.

“Other energy distribution businesses are adopting this pricing framework for similar reasons, as the number of home solar systems is forecast to increase across Australia,” the spokesperson said.

The tariff will be charged by Ausgrid and the retailer will decide how to package it. It is opt-in from July this year, and mandatory from July next year.

Amber Electric co-chief executive Chris Thompson said a typical power bill showed a network component and wholesale usage. The retailers pay feed-in tariffs based on the wholesale electricity price, and the network was traditionally not involved.

Thompson said some electricity retailers pay a flat feed-in tariff of about 5¢ a kilowatt-hour, while others such as his company pay lower prices during the day and higher prices in the evening, reflecting the actual wholesale cost. The Ausgrid tariff would offset this.

Thompson said the grid could not contain more energy than could be consumed at any one time, but there was no reason why policymakers should favour big operators over household generators if they were generating the same product.

“Often policymakers treat rooftop solar quite differently than they treat the big end of town,” Thompson said. “There are lots of policies and support for large generators to be able to operate and not nearly as much support for households.”

Grattan Institute energy program director Tony Wood said Ausgrid’s move was not unfair, but it was “very clumsy” and would put consumers offside.

“We’ve got lots of people with solar on the roof, and they were given very strong incentives to do so, and one of them was that they get paid for all the electricity they can export to the grid,” Wood said.

Moving off gas and electrifying the home is one way for households to reduce emissions and save on ongoing energy bills, but there were no new measures in this week’s federal budget for household electrification, including batteries. Wood said the $300 electricity bill rebate in the budget “might have been better spent on helping people to find better ways to use energy”.

Rewiring Australia founder Saul Griffith said the policy would discourage people from getting solar panels, unless they could also afford a home battery.

“The problem right now is the batteries are still expensive,” Griffith said. “They’re not easily purchased by renters, and they’re not easily purchased by middle-income people who have to take out a loan because interest rates are high. [This policy] advantages wealthy people with batteries at the expense of everyone else.”

Griffith said Ausgrid was defending the 20th-century model of the electricity grid based on centralised providers, rather than creating a future where the biggest battery in Australia was citizens’ electric cars and home batteries.

Solar Citizens chief executive Heidi-Lee Douglas said households with existing rooftop solar were “doing the energy grid a favour by exporting cheap, clean solar that their neighbours can use” and there should be more incentives rather than penalties.

“If these tariffs are designed to encourage battery uptake, then this is a blunt, heavy-handed approach,” Douglas said.

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