Nearly a million NSW households face new charges for solar exports

Nearly a million solar households across NSW will face penalties for exporting power to the grid during the middle of the day after regional electricity distributors Essential Energy and Endeavour Energy joined Ausgrid in announcing two-way tariffs.

The new solar pricing was enabled by a change to the national rules three years ago, but had to wait until 2024 because the regulator only approves new pricing structures every five years. NSW is one of the first cabs off the rank, while South Australia and Queensland could follow in 2025 and Victoria in 2026.

Solar panels on rooftops in western Sydney.Credit: Wolter Peeters

The effect of the changes, which will take effect in two phases across 2024 and 2025, is that all three energy distributors in NSW intend to clip the ticket on the feed-in tariffs paid to consumers for producing electricity to try to shift solar exports to times of peak demand.

Solar households will still enjoy the benefits of reduced bills from using their own energy, and will still be paid feed-in tariffs from retailers based on wholesale electricity prices, but an additional network charge will reduce the payments during the day and increase it at night.

An Endeavour Energy spokesperson said the network needed to change to support exported energy to ensure a safe, reliable supply to everyone, and it developed its pricing structure after extensive consultation.

“It should ensure customers who cannot afford home solar systems and batteries are not unfairly charged for the costs required to support customers exporting to the grid,” the spokesperson said.

The distributor, which covers western Sydney, the Blue Mountains and southern NSW, will allow retailers to opt in to two-way pricing from this July. From July 2025, it will make it the default structure, but individual retailers can still opt out.

A spokesperson for Essential Energy, which covers the far northern, western and southern parts of NSW, said the export charge and reward would start in July 2025 and was designed to cover the cost of upgrading the network.

“Essential Energy is one of Australia’s largest electricity distribution networks with 200,000 kilometres of powerlines supplying over 890,000 customers,” the spokesperson said.

“In contrast, the two NSW city-based networks together operate around 80,000 kilometres of powerlines supplying more than 2 million customers.”

The Australian Energy Market Commission changed the rules three years ago, and the Australian Energy Regulator approved the new pricing structures for NSW distributors at the end of April.

AEMC chairperson Anna Collyer said St Vincent de Paul Society Victoria, the Australian Council of Social Service, the Total Environment Centre, and SA Power Networks had all advocated for the change back in 2021.

“The reforms acknowledge that Australia has the fastest rate of solar take-up in the world and reflect concerns from industry, energy market bodies, consumer and environmental groups and other experts that without action, the grid will be unable to handle the volume of solar forecast to double over the next decade,” Collyer said.

All three NSW distributors will provide a free threshold for daytime solar exports and charge a network fee when households exceed that, as well as pay rewards for shifting the solar exports to times of peak demand. While solar panels don’t work at night, households with home batteries, which cost upwards of $9000, can store the electricity they produce to sell it to the grid later.

All three companies have different thresholds, charges, and rewards. The Endeavour spokesperson said the average exporting customer would be $5 a year better off, while an Ausgrid spokesperson said a typical solar customer would see an increase in their bill of only $6.60 a year.

St Vincent de Paul Society executive manager of policy and research Gavin Dufty said: “From an equity point of view, all these non-solar households: why should they have to pay to build out a network for solar households to export?”

However, solar advocates say it unfairly punishes people who invested in solar panels in good faith and protects the old model of the grid based on large-scale operators.

Former NSW energy minister Matt Kean said: “It’s obvious that the solution here is more storage on the grid. Where everyone shares in the benefits, not just those that can afford a battery at home. The NSW government can solve this problem now by using the powers of the legislated road map to allow networks to build community batteries at pace.”

Sources in the Minns government point out this is already happening. The 2023 NSW budget allocated $1 billion from the Restart NSW fund for the Energy Security Corporation, a state-owned body that will invest in projects including community batteries, pumped hydro and grid stability technology alongside the private sector.

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