The So-Called “Sun Tax” – Much Ado About Nothing?
There has been a fair bit of uproar in the Aussie solar community over the so-called “Sun Tax.” While it sounds like an alarming development for those invested in solar energy, early analysis shows that it might not be as concerning as many think. Dubbed the "Sun Tax" due to its introduction of two-way pricing on solar exports, the reality is that this change will likely have minimal financial impact on most solar system owners.
What is the “Sun Tax”?
The term “Sun Tax” refers to a change in how some electricity distributors price the energy you export to the grid. Essentially, it’s a two-way pricing system that includes both penalties and rewards based on when you send solar power back to the grid.
The aim of this pricing structure is to encourage solar owners to consume more of their own energy during peak sunlight hours (10 am to 3 pm) by slightly reducing feed-in tariffs (FiT) during this period. Conversely, it rewards homeowners for feeding energy back into the grid when it’s most needed—typically late afternoons through to the evening hours (4 pm to 9 pm).
While some have voiced concerns about this approach, labelling it a tax, it’s essentially a restructured FiT scheme designed to stabilise the grid and better manage the increasing volume of solar energy being exported.
Crunching the Numbers: How Much Does It Really Cost?
Early figures from indicate that the financial impact of this so-called “Sun Tax” is far from catastrophic. Using data from Australian solar owners, the average annual cost impact of the two-way pricing scheme was found to be just $28.96—equivalent to about 8 cents a day. That’s roughly the cost of a coffee each month or a small carton of beer over the course of a year.
Here’s a quick breakdown:
- Maximum Benefit: $17.95
- Maximum Cost: $9.92
- Mean Cost: $28.54
- Median Cost: $25.78
Even for a larger system, such as a 15kW installation, the additional cost was a mere $94.92 per year. This cost impact is relatively insignificant when you consider that this particular system still earned $1,510.63 in feed-in tariff credits annually after the “Sun Tax” was applied.
Should You Buy a Battery to Avoid the Sun Tax?
With the introduction of the new pricing scheme, some solar owners have been prompted to consider investing in a home battery. However, it’s important to recognise that avoiding the “Sun Tax” should not be your primary motivation for making this significant investment.
A typical battery like the Tesla Powerwall would take some time to pay off (depending on your usage). While batteries offer many other benefits—such as energy security during blackouts and the ability to store excess energy for use during high-demand times—the financial justification purely for avoiding two-way pricing just doesn’t add up.
A Balanced Approach: Maximise Self-Consumption and Monitor Your Usage
To truly optimise your solar system’s performance under the new pricing scheme, focus on increasing your self-consumption. Use more of your solar-generated power during the day by scheduling energy-intensive activities like running the dishwasher, washing machine, or pool pump during peak sunlight hours. Additionally, monitor your energy usage to ensure you’re getting the best return from your system.
Conclusion: Much Ado About (Almost) Nothing
The “Sun Tax” might sound scary, but for most Australian solar owners, the financial impact is minimal. Rather than rushing into a battery purchase out of fear, take a moment to crunch the numbers and explore other strategies to maximise your solar savings. By being smart about when and how you use your energy, you can continue to enjoy the benefits of your solar system without worrying about small fluctuations in feed-in tariffs.
If you’d like to explore how this new pricing scheme might impact you or find out more about how to optimise your solar system, feel free to get in touch. Let’s work together to make sure your system is performing at its best and delivering maximum value.