Labor’s Solar Share Plan Caps Free Power for EV and Battery Owners
The Australian government’s proposed Solar Share plan to facilitate free power for electric vehicles (EVs) and home batteries has been limited by a 24 kilowatt-hour cap, disappointing those hoping for unrestricted access to electricity.
The plan, known as Solar Sharer, has captured attention for highlighting the advantages of Australia’s abundant midday solar energy whilst also raising concerns regarding the potential regulatory overreach into the retail electricity sector.
Details of the Solar Sharer Offer
Federal Energy Minister Chris Bowen aims to mandate that electricity retailers provide customers with three hours of complimentary power. This initiative intends to allow households without rooftop solar systems to benefit from the solar surplus that often results in negative wholesale electricity prices.
While some retailers already offer similar deals, Bowen’s goal is to establish this as a regulatory requirement, making it easier for consumers to navigate the often confusing electricity market and potentially reducing their bills.
Impact and Restrictions on Households
The government revealed a consultation paper on Friday, gathering input from over 70 submissions, most of which expressed support for the initiative. Nonetheless, they acknowledged that not every household would benefit equally. Specifically, homes will need smart meters and greater advantages will be afforded to those present during the daytime or capable of adjusting their energy use to the designated free hours.
For instance, single-person households with someone working from home might save around $150 annually, while a family of four could shift $800 to $1,100 worth of electricity consumption to the free hours under optimal conditions.
Concerns from Retailers
However, there are stipulations. Among the guidelines set forth for the Australian Energy Regulator, the government proposes a “reasonable use” standard limiting free power consumption to 24 kWh per day. This cap aligns with the average energy use of a four-person household but may disadvantage families with EVs, especially those positioned for faster charging.
Retailers have expressed worries that consumers with substantial home battery systems or multiple EVs might exploit the free power aspect by charging extensively during these hours and then using or exporting that energy later on.
Network Implications and Regulations
Submissions have also pointed out that without proper safeguards, excessive usage during the free hours could affect local networks, potentially increasing network costs. Additional guidelines focus on the tariffs applicable during other times of the day, as there are fears that retailers might hike evening rates to compensate for the costs of providing midday free electricity.
Moreover, it is suggested that the program be an “opt-in” option rather than a default for consumers, considering market efficiency, network expenses, and the viability of energy retailers. The scheme will also undergo two-year reviews and may vary based on regional conditions.
Implementation Timeline and Considerations
The federal government aims to have the Australian Energy Regulator complete the necessary regulations to roll out the offer in July 2027 for New South Wales, South Australia, and south-east Queensland, with a subsequent rollout in other areas the following year. Victoria, with its distinct regulatory body, is creating its own version of the proposal.
Bowen emphasised the abundance of rooftop solar in Australia, noting that its capacity exceeds that of all remaining coal-fired power stations combined. “The Solar Sharer Offer will facilitate the effective utilisation of our vast solar generation,” he stated, adding that the initiative would provide tangible savings for those households that can align their energy use with the free power availability. Furthermore, it aims to relieve strain during peak evening demand times, potentially lowering network and system costs.
Feedback and Criticisms
The consultation report highlighted widespread support for the proposal’s concept but noted that many participants urged for adaptability to specific regional needs and robust consumer protection measures. Yet, several retailers, academics, and stakeholders with jurisdictional interests raised concerns about the current formulation of the proposal, pointing to potential market distortions, cross-subsidisation issues, consumer negative impacts, and potential discouragement for future solar investments.
One of the primary issues raised relates to network tariffs, which presently do not have a complementary free-power period aligning with the new initiative. Consequently, retailers offering the Solar Sharer would still face charges during that time.
