Australian Regulatory Authority Again Proposes a Tax on Power Export from Rooftop PV Systems

published: 2021-04-26 9:30 | editor: | category: News

According to reports from Australian news agencies, the Australian Energy Market Commission (AEMC) is again putting forward the controversial proposal that owners of rooftop PV systems should be taxed for selling their electricity to power distribution companies. AEMC is responsible for designing the rules that regulates the country’s energy market.

In its draft proposal, AEMC recommends that owners of rooftop PV systems pay around AUD 0.02 per kWh for exporting power to the grid system during the daily peak generation period. The commission’s own pricing model shows significant variations in tax bills based on customer type, generation capacity, amount of power exported, etc. All in all, a 5kW system could be charged as much as AUD 100 annually.

AEMC says that a “solar tax” is a signal to system owners that they need to adopt battery energy storage systems in order to help alleviate the problem of grid congestion. It also asserts that only those who have systems with a sizable generation capacity (e.g., 10kW) and sell a lot of power will be noticeably affected. Even so, their revenues will remain fairly considerable.

Another argument from the proponents of the tax is that households without a rooftop PV system should not subsidize the cost of dealing with grid congestion. Earlier in March, transmission authorities in the state of South Australia remotely switched off thousands of rooftop PV systems for a while because an oversupply of power was destabilizing the regional grid system.

AEMC raised the proposal for a solar tax several times over the past years, but it backed down due to fierce opposition from advocacy groups for renewable energy. Opponents argue that power distribution companies and utilities should be the ones that bear the costs of integrating distributed generation technologies into the wider transmission network because they benefit from the pricing of renewable energies.

Solar Citizens, which is one of the advocacy groups, states that since there is no charge on coal- and gas-fired power plants for supplying electricity to the grid system, then homes and businesses with rooftop PV systems should not be penalized for doing the same thing. Opponents furthermore point out that owners of residential PV systems lack sufficient financial incentives to install battery energy storage systems, which can be too costly to bring about an immediate return on investment.

AEMC’s latest voluminous report with the model for rate calculation is a significant departure from its earlier recommendation for a mandatory flat fee. “This is about creating tailored options, not blanket solutions,” said AEMC chief executive Ben Barr.

In its coverage on this topic, Australian newspaper Financial Review reported that number of homes with a rooftop PV system in the country has come to around 2.6 million. Whether a solar tax will dampen this growth remains to be seen. AEMC will be receiving public feedback on its proposal until May 13 and then make its final decision in June.


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