IEEFA: Solar Sharer Tariffs Could Save Australian Households Thousands Annually

Solar sharer tariffs offering free electricity during the middle of the day could help Australian households save hundreds or even thousands of dollars annually when combined with measures to shift electricity consumption, according to a briefing note released by the Institute for Energy Economics and Financial Analysis (IEEFA).

Australia’s rapid growth in rooftop solar has pushed wholesale electricity prices to very low levels during the middle of the day. In response, electricity retailers in New South Wales, South Australia and South-east Queensland, as well as Victoria from next month, will be required to offer electricity plans providing three free hours of daytime power.

IEEFA’s briefing note, Growing the Benefits of Solar Sharer Tariffs, examines how households can maximise the benefits of these tariffs and highlights policy measures that could enable wider consumer participation.

Household Savings Opportunities

IEEFA’s modelling across Sydney, Melbourne, Adelaide and Brisbane identified several opportunities for households to reduce their electricity costs by shifting consumption into free daytime periods.

For electric hot water systems, shifting controlled loads from overnight to the middle of the day using a timer could deliver annual savings of $577 to $1,028. Households using gas hot water systems could save $323 to $623 per year by switching to electric systems equipped with timer controls and using solar sharer tariffs.

Electric vehicle owners could also benefit significantly. A household with one EV could save $731 to $893 annually by charging during the free daytime period, while households with two EVs could achieve savings of $1,341 to $2,257 per year.

IEEFA also identified opportunities for battery storage. A typical apartment equipped with a 5 kWh battery could save between $366 and $644 annually under a solar sharer tariff, even without access to rooftop solar. The findings highlight the potential benefits of reducing regulatory barriers to plug-in battery systems in Australia.

Solar Sharer Offers Expand

The Australian Federal Government launched the Solar Sharer Offer in July, requiring retailers covered by the Default Market Offer to provide plans with three free hours of electricity each day. Victoria’s Midday Power Saver is scheduled to take effect next month.

Several retailers are already offering voluntary solar sharer plans with longer free periods, higher consumption caps and, in some cases, higher evening feed-in tariffs.

IEEFA noted that regulated and competitive solar sharer plans can differ significantly in terms of potential savings. Some market-based offers provide longer free electricity periods or higher consumption limits, which could benefit households capable of shifting larger electricity loads to the middle of the day.

Certain plans also offer higher evening feed-in tariffs, allowing households with batteries to earn more by exporting stored electricity to the grid during higher-demand periods.

Policy Barriers Remain

Despite the potential savings, IEEFA said several barriers are preventing more households from benefiting from solar sharer tariffs.

Renters may not have the ability to replace gas appliances with electric alternatives, while Australian appliances have limited flexibility standards. Consumers may also lack awareness of optimal EV charging times, and plug-in battery systems continue to face regulatory hurdles.

IEEFA said households unable to shift their electricity demand are less likely to benefit from solar sharer tariffs. It recommended policies supporting greater adoption of flexible electric appliances, flexible EV charging and solar-plus-storage solutions for apartments and rental properties.

The organisation also recommended that the federal and Victorian governments continue improving regulated solar sharer tariffs.

Potential measures include extending the free electricity window, introducing a regulated minimum evening feed-in tariff and reviewing the existing 24 kWh daily consumption cap.

IEEFA said solar sharer tariffs could also help unlock additional capacity from Australia’s existing battery fleet by encouraging households to import electricity from the grid when power is abundant and inexpensive, while exporting stored energy during periods of higher demand.