Why are some Australian households about to be charged for generating too much solar power?

<span>About 250,000 of Australia’s 4m households with solar panels have batteries but storage is growing faster than take-up and consumers get almost nothing for their exports.</span><span>Photograph: Tim Wimborne/Reuters</span>
About 250,000 of Australia’s 4m households with solar panels have batteries but storage is growing faster than take-up and consumers get almost nothing for their exports.Photograph: Tim Wimborne/Reuters

Many households with solar panels in New South Wales face the prospect of being charged for some of the surplus power they generate from the start of July.

Here’s what you need to know.

What’s the proposed change?

Since 2021, the Australian Energy Regulator (AER) has been assessing the states or territories where electricity prices should take into account the cost of having lots of solar panel owners exporting power to the grid.

The move was originally prompted by groups such as the Australian Council of Social Service and St Vincent de Paul. They argued it was unfair that households unable to afford solar panels (or batteries) had to pick up additional costs caused by modifying the grid to absorb “two-way” electricity flows. The public interest advocacy centre also supports the move.

Related: Consumer groups criticise energy companies charging solar panel owners for exporting power

The AER’s five-year rolling regulatory pricing updates meant three NSW-based energy firms – Ausgrid, Endeavour and Essential – were told in April they could impose a fee on households exporting surplus power during the period of the day that is sunniest when the spot power prices are often negative.

Other regions, such as Victoria, have no plans to impose such costs when their 2026 renewal time starts. The ACT’s Evoenergy withdrew its two-way pricing submission and will not charge for exports until at least July 2029.

South Australia and Queensland’s networks tariffs will be updated in 2025, the AER said.

The Australian Energy Regulator said the electricity network “was not designed for large amounts of energy flowing back into the network”.

“This two-way flow of energy, with peaks in supply during the middle of the day, is overloading the network in many areas,” it said.

How much will be the charge be?

In Ausgrid’s case, the charge will be 1.2 cents/kWh for exports between 10am-3pm. There will be no charge for about the first 6.8kWh, depending on the time of year.

Those able to supply power to the grid between 4pm-9pm – presumably from batteries for the later part of that period – would be paid 2.3 cents/kWh.

Related: Consumer groups criticise energy companies charging solar panel owners for exporting power

Ausgrid says it has 280,000 customers with solar panels – ranging from eastern parts of Sydney and coastal regions to the north and south – and expects 180,000 more to have them by 2030.

They estimate the annual cost will be $6.60 for a typical customer, or 13 cents a week. “It’s a very tiny signal we’re sending,” a spokesperson said. Even then, some customers may get a rebate and it will be up to retailers to pass on the charge – not all will.

By contrast, the Albanese government this week announced all households would get a $300 energy rebate.

“This pricing has been designed to encourage customers to use their own solar power first and keep energy bills lower for everyone across the network in the long term,” Ausgrid said.

What can customers do to minimise the charge?

Increasingly, electricity appliances come with timers so households can shift their power use to the middle of the day.

Electric hot water systems – including heat pumps and pool pumps – are examples of appliances that don’t need anyone at home to operate. Dishwashing, clothes washing and drying, and electric cars can also soak up extra power rather than export it to avoid any feed-in charge.

“We do need to encourage people to self-consume,” Warwick Johnston, founder of SunWiz, a consultancy said. “It already makes sense to do so.”

Of Australia’s 4m households with solar panels, about 250,000 already had batteries, he said. Storage was growing faster than panel take-up as battery prices fall and consumers get next to nothing for their exports – and may even cop a cost.

However, Heidi Lee Douglas, the chief executive of Solar Citizens, a lobby group, said many households with solar had already shifted their demand. Not everybody washes clothes every day, nor needs to charge up their electric vehicles, she said.

“We know solar is a success story,” she said. “Are we going to lead with a stick or are we going to lead with a carrot?”

Is the charge reasonable?

NSW’s energy minister, Penny Sharpe, told ABC Radio on Friday that “we need to make sure that the grid is stable into the future”. Almost 1m households in NSW with solar were saving about $600 a year on average on power bills, she said.

“Solar and batteries are absolutely the future in terms of individual households and working in communities in being able to share the benefits of solar,” Sharpe said.

Dylan McConnell, an energy expert at the University of NSW, said charging for exports during the sunniest part in the day was “a long time coming” and had been encouraged by the regulator.

Related: Turn on or drop out: new rules could give energy consumers more power on the home front

He said it was “contestable” whether there is too much solar energy in the middle of the day. However, the equity issue – of households with solar enjoying a cross-subsidy from those without – would get worse over time.

Cross-subsidies weren’t limited to solar panels, McConnell said. About 15 years ago, many people started getting air-conditioners that added to demand, requiring networks to invest heavily – spreading the cost on to people without those devices.

“We need to think about this in the context of everyone getting [electric vehicles]” lifting demand on the grid, he said. “If we want to encourage the right time [to plug in], then we should be putting these things in now rather than after the fact.”