Australia: AEMC shies away from “solar tax”

The hotly-contested “solar tax” charged to households feeding their electricity in to the grid has been abandoned by the Australian Energy Market Commission (AEMC), after being suggested as the only possible way for a distribution network service provider to charge small generators for network use.

In the final version of its report on the Distribution Market Model, Australia’s policy maker for the energy markets said that if consumers want to use the electricity from their solar panels or batteries they can, and if they do not need it – or value the income more from selling it more than their own use – they can sell it to whoever values it the most at a particular point in time.

Noting that the issues of access and connection charging received the most comment from stakeholders, the AEMC concluded that further work is needed to understand whether distributed energy resources create benefits, or impose costs on the distribution network.

The report adds that further work is needed in order to understand what consumers want, adding that loss of open access for distributed generators or imposition of charges for export of energy from distributed generators may prompt a death spiral.

However, the AEMC also expresses its preliminary view that one-off connection charges may not be appropriate when there are large amounts of distributed energy resources connected to a network, because the costs caused and benefits created by those resources are variable.

Moreover, the policy maker underlines that a high penetration of distributed energy resource would affect its ability to manage power system security. According to the AEMO’s report, the uptake of distributed energy resources will continue to increase, reaching nearly 20 GW of rooftop solar PV capacity by 2036/37, up from less than 5 GW in 2017, whereas residential and commercial battery storage uptake will in the same period exceed 5.5 GW.

“Distributed energy technologies can provide benefits to consumers, networks and wholesale markets. We need a way to allow consumers and their retail energy service providers to determine where they can get the most value at any point in time,” AEMC Chairman John Pierce said, adding that more investment in fast response and flexible distributed technologies can make the power system more secure and reliable.

Recently, AEMC proposed new rules to better manage frequency and strengthen the power system, referring to the risks of the power system’s changing generation technologies and recognizing the important role of battery storage.