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What is the ‘sun tax’?

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In this Canstar Blue article, we explain how the new ‘sun tax’ will work in Australia. We’ll also break down the proposed costs and impacts for households with rooftop solar.

If your household has rooftop solar panels installed then you may have already heard the news of an impending ‘sun tax’ in Australia. For those that haven’t: it’s a new export tariff for solar customers that’s set to change the way small-scale energy generation operates in the nation, particularly when it comes to the state of solar feed-in tariffs.

The tariff in question has been subject to much ridicule, given the controversy surrounding how it will change the current crediting system for rooftop solar exports. But just how much of an impact is this ‘sun tax’ really set to have on households and small businesses in Australia? And is there any reason for customers to be concerned? Canstar Blue reveals what rooftop solar owners can expect, from costs to start dates, below.

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What is the ‘sun tax’ in Australia?

The ‘sun tax’ is a new export tariff that’s set to see rooftop solar owners charged for sending their solar exports back to the grid. The somewhat controversial tariff, which was first introduced by the Australian Energy Market Commission (AEMC) in August 2021, will operate under a two-way pricing structure that rewards customers for sending their solar exports into the grid at times of high demand. The tariff however, also penalises them for sending their exports at times when the network is already overloaded with solar power, such as the middle of the day.

The export tariff was proposed as a way to prevent further gridlock on the electricity network for households and businesses, particularly in times of peak demand. With the two-way system in place, it is hoped that supply disruptions will lessen as households will be encouraged to use their solar energy first, rather than just sending it back into the grid for a big bill credit and overloading supply.

By changing this structure, it is hoped that solar customers will shift their behaviour and send their exports at times when the grid needs it most. This, in turn, would prevent renewable energy generation from being wasted and help to support energy supply for households and businesses on the grid.

How much will the sun tax cost your household?

The sun tax is still in its preliminary stages for most of the nation. However, some distributors in New South Wales and the Australian Capital Territory have already proposed how these costs may look for households and businesses.

According to proposals shared with the Australian Energy Regulator (AER), rooftop solar owners on the Ausgrid, Essential Energy, Endeavour Energy or Evoenergy networks could soon be looking at charges of between 0.94 cents per kilowatt hour (kWh) and 3.6c/kWh for exporting above their set limits.

The limits proposed vary from yearly to monthly and on some networks even hourly or seasonally. Most reward windows though, appear to be within late afternoon/early evening hours, as to align with times of peak demand.

Distribution Network Export Limit Export Times Export Costs
Evoenergy 5kW/hour Export Charges: Applicable to exports above 5kW within the hour, between 11am and 3pm Export Rewards: Applicable to all exports between 5pm and 8pm daily Export Charges: 1.642c/kWh Export Rewards: 4.92c/kWh
Ausgrid 2,500kWh/year or 6.85kWh/number of days in the billing cycle Export Charges: Applicable to exports above the limit between 10am and 3pm Export Rewards: Applicable to all exports between 4pm and 9pm daily Export Charges: 1.18c/kWh Export Rewards: 2.19c/kWh
Endeavour Energy 2kW/month Export Charges: Applicable between 10am and 2pm Export Rewards: Applicable between 4pm and 8pm on a seasonal basis Export Charges: 3.6c/kWh Export Rewards: 11.03c/kWh or 3.336c/kWh
Essential Energy 1.5kW/month Export Charges: Applicable between 10am and 3pm Export Rewards: Applicable between 5pm and 8pm Export Charges: 0.94c/kWh Export Rewards: 13.67c/kWh (residential)

Source: Solar Citizens, Summary of charges by NSW Distributed Network Service Providers. Accurate as at May 2023.

While a couple of cents may not seem like that drastic a charge, Solar Citizens, an independent community solar advocacy group, has estimated that these costs would likely increase electricity bills for households and businesses with systems larger than 3kW.

Initially, these costs could add more than $30 per year to energy bills for households with a 5kW solar system, Solar Citizens estimates. This number however, is likely to increase as the tariff is further integrated.

Other distribution networks have yet to share their proposed costs for the two-way tariff.

For those households concerned about the potential additional costs, it should be noted that the AEMC and AER have also agreed to include a ‘free’ export option for solar customers. This means customers would be free from potential charges for exporting above limits or outside of peak hours. However, it does mean that they won’t be rewarded as highly for exporting at the right times.

Compare Solar Plans & Prices

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Ausgrid network in Sydney but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Citipower network in Melbourne but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Energex network in Brisbane but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on SA Power network in Adelaide but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

When does the sun tax come into effect?

The new export tariff rule regarding the sun tax came into effect in July 2022 but most households and businesses won’t be impacted until about 2025, depending on the state or territory applicable. This is because all distributors are required to submit the AER a price proposal demonstrating a need for this tariff before they are allowed to implement it. These processes are reviewed at different times depending on the state or territory involved; however, the approval date does not necessarily relate to the implementation date of each scheme.

What will households need to do to make the most of the sun tax?

With the sun tax closing in on the horizon, there may be some households and businesses with solar feeling a little hopeless towards their future export endeavours. But it doesn’t necessarily need to be all doom and gloom ahead. There are a few ways in which households can prepare and make the most of these incoming two-way pricing tariffs.

The first is making the most of solar storage systems, such as batteries. With a solar battery installed, households are able to store their unused solar energy for use at a later time, instead of immediately exporting it. In terms of the so-called ‘solar tax’, having a solar battery can help households and businesses to accommodate the different export times by allowing them to store their energy until a time of high demand, avoiding financial penalty for exporting at the wrong time.


What are the cheapest solar batteries in Australia? Find out in Canstar Blue’s battery buying guide.


Alternatively, households that have an electric vehicle (EV) with a charger installed at their property may wish to use their vehicle battery to export power to the grid during times of high reward.

For homes without a solar battery or EV available to them, it may instead be a case of diverting their surplus solar energy generation to powering their air conditioning, electric pool heat pump or hot water heat pump. This can help to prevent exporting too much power over the limit set by the network distributor.

It’s important to remember that households will also have the option of a ‘free’ export tariff. So, if you are concerned about how the new tariff may impact your solar savings, you can also choose to not partake in the two-way pricing scheme.

In the meantime, if you are a solar household that is looking to make the most of your feed-in tariff today, then be sure to check out our latest Solar Energy Provider customer satisfaction ratings. Here, we reveal the brand that Aussie households have declared top-notch for solar electricity plans, including feed-in tariffs and products. To see this year’s winner, click the button below.

Compare Solar Energy Providers

Image credit: Diyana Dimitrova/Shutterstock.com. 

Kelseigh Wrigley
Energy Specialist
Kelseigh Wrigley covers Australia's retail energy market, growing her industry specific expertise over the last 2 years. She holds a Bachelor of Journalism at the Queensland University of Technology and has contributed her skills to online publications Hunter & Bligh and local radio station 4ZZZ.

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