Consumer protections under new sun tax rules: what do they amount to? - Solar Citizens

Consumer Protections Under New Sun Tax Rules: What Do They Amount To?

The Australian Energy Market Commission (AEMC) yesterday talked up new consumer protections in their final determination allowing rooftop solar owners to be charged for exporting. But what do these consumer protections really amount to? 

Not being one of the lucky ones to get an embargoed copy of the final determination, we got up at 1am on Thursday morning to comb through the rule change. We are certainly underwhelmed with the ‘concessions’ the AEMC has made. 

A ‘no charge’ option for ten years, but only with an export limit

One of the key consumer measures touted by the AEMC is giving consumers the ability to opt-in to network charging. If you don’t want to pay, you don’t have to, for ten years. It sounds pretty good, but what’s not talked about is that a solar household taking up this option will almost certainly face a strict curtailment on their exports.

South Australian Power Networks (SAPN) have released their proposed implementation of export charging, which shows that the ‘no charge’ option means a 1.5 kw export limit, down from the existing 5kw currently available free in South Australia. That means solar households that choose to opt-out will see their export income cut to less than a third of what they currently receive, not accounting for precipitously dropping feed in tariffs.

While SAPN is to be applauded for their transparency in releasing this proposal, what it shows is the potential for a substantial curtailment of existing rooftop solar exports across the grid if people take up this no-cost option. 

Rooftop solar is Australia’s clean energy success story – and is on track to surpass coal capacity by 2024 but if those panels are preventing from exporting we won’t see the positive emissions reduction and wholesale power price benefit.

No charges until July 2025

Protecting existing solar owners from the impacts of export charging until 2025 is mostly a concession to the States, many of whom have expressed concerns about the impact on people who invested in solar in good faith before this rule change was even anticipated. 

However, the draft determination noted that the export charges would most likely come in after the current revenue determination period, which for most DNSPs is 2024, given the complexity in negotiating new tariff arrangements in the middle of a determination period. So the 2025 date looks like just an extra six month breather on what was going to happen anyway. And important to note this is not ‘grandfathering’ existing customers, where existing solar owners are protected from fees for as long as they have their rooftop solar systems, which has been proposed.

Zero export limits

One of the biggest reasons some in the solar industry have supported the proposed rule change is the promise that it will end the imposition of static zero export limits. However, if you read the fine print of the rule change networks do retain the ability to impose zero export limits if it’s necessary for the ‘safe, secure and efficient provision of the network.’ I would have hoped that’s why they were imposed prior to the rule change so this looks just like a codification of existing practice.

Larger distribution connected generators 

One additional issue that’s been little discussed is the impact on larger distribution connected generators like wind and solar farms, or even gas plants; for example the 46MW Canunda wind farm in South Australia that is connected to the distribution network. Solar Citizens has been advocating for community owned renewables for many years now but these larger community owned projects, like Haystacks Solar Farm in regional NSW, will be impacted by these new changes. 

These distribution connected generators will now be subject to export fees, even though their larger cousins connected to the transmission network don’t have to pay. Attempts to impose export fees on transmission connected generators have been lost recently as part of the CoGATI process.

This is a real concern for a number of reasons: it disproportionately impacts medium scale renewables, which is where most community owned energy is, and there are also potentially lost efficiencies if the larger generators are forced to connect to the transmission network in order to avoid the fees.

So where does that leave consumers?

The final determination is not a significant departure from the draft, which raised concerns among stakeholders that consumers would not be adequately protected under the new rules. In their final ruling, the AEMC has reinforced their guidelines, but still ensured that networks are given spacious and sweeping outs. The burden of ensuring fairness and adherence will still fall on under-resourced community groups. 

Provided at AEMC’s DER Integration Public Forum, May 2021
[2] ‘Rooftop solar will eclipse coal-fired power in 2024’, Australian Financial Review, January 27 2021
[3] Australian Energy Market Commission, Draft Determination - ERC0311 and RRC0039, Access, pricing and incentive arrangements for DER, 25 March 2021, page 143 - 144
[4] Major Energy Users, Submission to Distributed Energy Resources Integration ERC0311 and RRC0039