Solar Sharer Policy Compromised by Retailer Interests, Says Energy Expert

A policy aimed at providing households with free solar energy has been hindered by a regulatory framework prioritising the interests of electricity retailers over consumer savings, asserts veteran electrical engineer Ty Christopher.

Christopher, who heads the Energy Futures Network at the University of Wollongong, regards the federal government’s Solar Sharer initiative as a commendable piece of public policy. However, he believes its core aim—facilitating access to affordable daytime solar energy for households without rooftop installations, thereby reducing their bills—has been undermined by the concern for “retailer viability” in its implementation.

The Compromise of Consumer Savings

Christopher explains that “retailer viability” essentially means ensuring retailers do not suffer financial losses. When regulations are crafted to prevent any monetary impact on retailers, he argues, it inherently limits the potential savings for consumers.

Speaking on the SwitchedOn podcast from Renew Economy, he accused retailers and gentailers of effectively diluting the policy’s original intentions to deliver tangible benefits to consumers.

Details of the Solar Sharer Scheme

The Solar Sharer programme mandates significant retailers in NSW, South Australia, and south-east Queensland to provide eligible customers with three hours of complimentary electricity each day. Its primary target includes those without access to rooftop solar, such as renters and apartment residents.

The concept hinged on potential bill reductions, with Energy Minister Chris Bowen suggesting that households would achieve “direct bill savings” by shifting their energy consumption to the free hours, promoting it as a means of alleviating the financial strain of electricity costs.

The Australian Energy Regulator (AER) reassured that the intention remains intact, stating, “The Solar Sharer Offer was designed to ensure that customers shifting their load during the free hours would benefit compared to those on the residential time-of-use Default Market Offer,” as shared with Renew Economy.

A Closer Look at the Market Dynamics

However, there’s an important caveat. The Solar Sharer is a regulated offer within the Default Market Offer (DMO) framework, which isn’t competitive; instead, it acts as a protective pricing mechanism for customers who do not compare market rates. Therefore, while using energy during the free window may benefit some Solar Sharer customers compared to the fixed DMO rates, it may not necessarily equate to a better deal than other available market offers.

Christopher warns that issues surrounding Solar Sharer became apparent during its initial consultations, especially when “retailer viability” was included alongside consumer-centric goals. He contends that regulators need to challenge industry narratives more robustly.

“There has been insufficient pushback against what the retailers have been asserting,” he claims. “It’s structured to ensure retailers remain financially secure, and by design, it’s not going to deliver significant savings for consumers.”

Unpacking the Hidden Costs

The real obstacles become evident when examining the Solar Sharer offers currently being rolled out by retailers, as highlighted by Gavin Gilchrist from Inner West Community Energy. Customers on Solar Sharer may face inflated daily supply charges and usage rates that exceed those found in competitive market deals outside the three-hour complimentary window.

Christopher argues that retailers have safeguarded themselves against energy and revenue losses by raising standing charges. “They still profit regardless of whether consumers use more or less energy,” he explains. He notes that daily charges under Solar Sharer can surpass other offers by as much as 10 to 20 per cent, with even more pronounced increases in electricity prices during non-free hours.

Debunking the Myths of Solar Savings

The AER acknowledges that rates outside the free period are deliberately set higher to help retailers recover costs associated with the free hours. However, Christopher insists that this strategy fundamentally undermines the initiative’s goal of providing free electricity benefits to consumers.

For households consuming 21 to 22 kWh daily within the Ausgrid network in Sydney, he calculated that an AGL customer could end up paying around $400 more annually on Solar Sharer compared to alternative AGL offers, prior to accounting for any savings achieved by using energy during the complimentary hours.

He found similar discrepancies with Origin offers. Consequently, customers must substantially utilise the three free hours to merely break even with cheaper market options. “To come close to balance, you would need to shift at least $400 worth of energy into the solar sharer window,” he concludes.

The True Beneficiaries?

Gilchrist’s analysis echoes these findings, indicating that high-consumption households on Solar Sharer could find themselves hundreds of dollars worse off compared to more economical market alternatives if they don’t manage their energy usage effectively. The AER also acknowledges the possibility of cheaper competitive offers, admitting that “the Solar Sharer Offer may not suit every household.”

Christopher emphasises the implications of this for the target audience of the initiative, noting that while households with substantial battery storage can take advantage of free charging during Solar Sharer hours, those in rented accommodation or social housing—who were meant to benefit from the policy—are less likely to have such facilities. “The regulator had a chance to rectify this issue but did not seize it,” he states.

Time for Change

In light of these findings, Christopher suggests that two critical changes could enhance the Solar Sharer policy. “The standing supply charge should align with those of other tariffs provided by retailers.” Additionally, he advocates for the prohibition of retailers from levying higher charges on Solar Sharer customers for energy consumed outside the free period compared to other comparative offers.

This situation illustrates a wider issue within Australia’s electricity market regarding the industry’s influence over regulation. Christopher notes, “Solar Sharer is indicative of broader systemic flaws rather than an isolated incident.” He advises consumers to conduct thorough comparisons of their energy options, as navigating the available plans can be complex and confusing, with Solar Sharer being merely one of the many.

For the full interview featuring Ty Christopher, tune in to the SwitchedOn podcast.