Solar Tax Coming For Australia?

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Ironically, it was John Howard, a long serving Australian Liberal (Conservative) Prime Minister, who brought in subsidies for household rooftop solar in Australia (circa 2007). As well as subsidies for the upfront purchase, there were generous feed-in tariffs (FIT). The solar system on my roof was installed in 2009 and I have a feed-in tariff of 56¢ a kWh. It is only a 2.6 kW system. Most quarters, I get a small credit.

Nowadays, the subsidy for installation is still there and most systems are over 6 kW (one of my neighbors has 12 kW), but the FIT is down to 8¢ a kWh. This forward thinking policy has led to Australia having the highest solar penetration per capita in the world, with approximately 3 GW expected to be installed this year alone.

Every year, concerned citizens worry that this will be the year when our solar bonanza will end — the subsidies will be over, the FIT will go. But solar citizens vote, so the federal government is reluctant to act. However, the Australian Energy Market Commission (AEMC) has given the go-ahead for networks to charge domestic solar producers to export to the grid — essentially, a solar tax. It’s not over yet — in Australia’s overly complicated energy market and political system, this rule must be legislated by the state energy ministers. Ah, passing the political buck — it will be the states’ fault, not the federal government’s. Hopefully the states will also realise what a vote loser this will be.

The AEMC is taking the user pays their fair share approach. If you want to be connected to the grid, you have to pay for the poles and wires. (Hang on a minute, don’t we pay a connection fee of $30 a month for that — even if we don’t use any electricity at all?) Apparently, there will be some options — you can export a small amount for free or pay to export more. However, the network may have the right to deny any exports at all. Thank goodness these rules will be phased in over 4 years.

As Gabrielle Kuiper of IEEFA states, “The rule maker has endorsed an unhelpful solution to a future technical issue that has already been solved by network engineers.”

I won’t be surprised to hear that more and more people will be heading off grid. The price of batteries is coming down and many state governments are subsidizing those as well in the hope of setting up virtual power plants. With all this technology change happening, the incumbent power companies just can’t keep up.

Personally, we pretty much use all the power we generate to power the house and charge the car, so it probably won’t affect us. My neighbor, on the other hand, might find it makes a big impact. Be aware, if you are making an income off the roof of your house (as he is), you get taxed on that at 30% as well — in this country, we love our tax. That’s why we are taxing EVs as well!

For most of us, it will be smart to use our own power as much as possible. Buy an EV, charge when the sun is shining.

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David Waterworth

David Waterworth is a retired teacher who divides his time between looking after his grandchildren and trying to make sure they have a planet to live on. He is long on Tesla [NASDAQ:TSLA].

David Waterworth has 748 posts and counting. See all posts by David Waterworth