Negative solar feed in tariff credits

Ausgrid announced they will start charging energy providers if homes export too much solar energy to the grid. The energy providers will certainly pass on those fees to those homeowners. Yikes!

Exporting solar energy to the grid will now cost some homeowners.

Last week, Ausgrid announced that homeowners will have to pay to sell their excess solar energy to the grid at certain times. Is this the canary in the coal mine for solar or a greedy energy distributor running wild?

Ausgrid will charge 1.2¢ for solar energy exported to the grid

Some quick context...

Ausgrid is a distributor in NSW for around four million customers, including a large chunk of Sydney. As a distributor, Ausgrid is responsible for the power lines outside running to the home and ensuring the local energy grid runs smoothly.

Also, for better or worse, Ausgrid is responsible for designing electricity tariffs for their serviced area, which heavily influences the final price the energy provider will charge the homeowner as they pass on these fees.

For extra context, a few years back, it was decided that distributors could charge homeowners for exporting solar. All in an effort to help pay for the rising costs of upgrading powerlines and future-proofing the energy grid. Because in the future, we need a far more robust grid that can charge millions of electric cars simultaneously.

These solar fees will raise the money needed to upgrade the grid by making a home pay if they are trying to sell too much solar energy at specific times of the day. You wouldn't be mistaken if that sounds like a setback to renewable energy.

So last week Ausgrid announced that from July 2025 customers will have to pay 1.2¢ per kilowatt they export into the grid between the hours of 10am to 3pm. The Ausgrid proposal was released in a pdf.

One small caveat is that each month, the homeowner gets to export the first 200 kWh of energy to the grid for free. Depending on the home and their solar system this could be a workable amount or a drop in the bucket.

An attempt to encourage self consumption rather than exporting

Last week, I discussed how demand charges incentivise homeowners to lower their energy consumption. In reality, it was more of a stick than a carrot, meant to punish those who didn't get their energy consumption under control.

Charging homeowners to export their solar energy is another swing of the stick to get consumers into line and open up new revenue streams.

Ausgrid is attempting to push solar owners to use their own solar energy as its generated instead of trying to sell it to their neighbours. It is also the hope that this will incentivise homeowners to buy electric vehicles or batteries for their homes as they will need new ways to soak up as much of their own solar energy as possible.

But unfortunately not everyone can go out and buy a new car or install a battery at their home. So who wins?

Homes with enough disposable income who can afford a battery, an EV, and an upgrade to their home today will be the winners. They will be able to sell their energy to the grid when its a positive return for them and store their solar energy when the return on exporting would be negative.

Anyone else who cannot afford a method to store their solar energy - or significantly increase their excess energy usage every afternoon - will have no other option than to pay the fees.

Rebates and fees proposed at the same time

The Ausgrid proposal came out strikingly close to the release of the federal budget. Which, in turn, makes for some easy comparisons between the two.

In the federal budget it was announced each Australian will get a $300 rebate on their energy bill, a $3.5 billion package in total. A big win for many, especially those struggling to make ends meet at the moment.

At the same time we have the Ausgrid proposal that will disincentivise many to install solar out of fear of paying more on their energy bill or at the very least reduce the return on investment when buying solar. All in an effort to raise money so the distributors can upgrade the powerlines and prepare for the future needs of the energy grid. For those who don't need $300 released in $75 increments, their portion of that $3.5 billion would have been better spent upgrading the grid. In turn, preventing the creation of solar penalties and passing along the costs of upgrading the grid to homeowners.

I'm certainly not trying to get political in this newsletter. The point is that there was a missed opportunity to lessen or even eliminate creating any penalties for installing renewable energy. We should be encouraging people to invest into renewable energy and making that choice easier, not harder.

Granted, Ausgrid is only one small part of the country, but if the grid isn't upgraded fast enough, these penalties can spread to other distributors as well. I guess we'll see what happens!

Figuring out the perfect solar system for your home

We have built a calculator that can take your energy consumption patterns for every hour of the year and model in what kind of solar system would be perfect for you. Figuring out the perfect-sized solar system that will allow you to harvest the right amount of sunlight that your home needs.

This would save you more money as don't get oversold on a system you don't need. In the end helping you avoid any future fees that might come up for exporting solar.

If you want to see what the perfect solar system would look like for your roof based on your actual consumption patterns, then reach out, and I will get you access to the solar analysis tool.

It's free and only takes a few clicks to connect to your data. No hardware devices or home visits needed.