SerpApi.Org
For years, solar panel owners in countries across the world received generous payments for exporting electricity they did not use back to the grid.
The reasoning was simple. If governments wanted to meet their net zero targets, incentives were required to encourage homeowners to make a significant upfront investment in green technology.
But as solar panels became more widespread, countries with the sunniest climates started to notice a problem.
When solar power generation peaked in the middle of the day, demand for electricity was at its lowest. This placed the energy grid under significant strain as excess power pushed up voltages to levels that threatened network blackouts.
In Australia, a crude solution was devised by the national energy market body.
At certain times of the day, rather than paying solar panel owners for their excess power, they would be charged instead. Called the “sun tax”, it was hoped that the intervention would encourage solar panel owners to shift their demand to off-peak times to dodge the fees, alleviating pressure on the network.
While Britain might have worse weather and fewer rooftop solar installations than Australia, there is growing concern that our energy network might soon suffer from the same frailties.
In April, Britain’s National Energy System Operator (Neso) warned that it would be forced to use “more tools, more often” to keep power networks stable when sunny weather caused surges in energy generation.
This raises the prospect that policymakers might soon have to intervene to stabilise the energy grid. Could Britain too be forced to adopt an Antipodean-style “sun tax”?
Australia’s solar dilemma
Australia leads the world in rooftop solar due to the rapid pace of solar installations across the country since the early 2010s, which were initially encouraged by generous government subsidies. Today, more than four million homes – roughly four in 10 – have solar panels.
As early as 2017, the national body responsible for setting rules in the national electricity market, the Australian Energy Market Commission (AEMC), expressed concerns about the impact of surging solar power on the grid.
Gabrielle Kuiper, an energy expert, said: “Around 10 years ago, people were really worried. They talked about reverse flows through substations or the potential for the grid to fall over.”
In 2021, the AEMC decided to act, proposing new powers for network providers to introduce what it called “two-way pricing”. This would better reward solar panel owners who released energy to the grid at peak time but would also penalise those who did so at times when more electricity was not needed.
As well as shifting consumer behaviour, the charges were intended to provide money for grid upgrades so that the network could handle more solar power in the future.
Heidi Douglas, of consumer group Solar Citizens, said: “The only thing you could do to avoid the charge was to shift your demand – put your washing machine on or cook a roast dinner in the middle of the day. But that obviously was not convenient for the majority of people.”
So far, two states – New South Wales and South Australia – have introduced charges. The level of fee and the exact hours at which it is charged vary depending on the state and provider. However, as a general rule, the tax would amount to a bill increase of around A$30 (£16) a year for the average solar panel owner, according to Solar Citizens.
“The charges aren’t huge but it was the principle that everyone was unhappy about,” Ms Douglas added.
“The government has put in incentives to encourage the billions of private domestic capital that has been invested in rooftop solar and batteries. Then for the networks to propose the sun tax, it’s changing the ground rules. People are getting mixed signals and that’s not good for consumer confidence.”
Last year, the number of solar panels installed fell to its lowest level since 2018, according to Australia’s Clean Energy Regulator.
The AEMC said that its reform of solar export pricing should not be characterised as a sun tax.
Anna Collyer, the chairman, added: “The purpose was to help more rooftop solar connect and export over time, not less.
“Without reform, the risk was either more constraints on solar exports or inefficient network investment that would ultimately be paid for by all consumers, including households that cannot access or afford solar.”
Miliband’s solar drive
The Government says that it has no plans to introduce a “sun tax” in Britain. But former energy secretary Ed Miliband has openly praised Antipodean energy policies in the past and he describes Chris Bowen, the Australian climate minister, as a “friend”.
While the sun tax in Australia was proposed by the independent AEMC and not the national government, solar export payments in Britain are assured by the “smart export guarantee”, a government-backed scheme. Currently, suppliers must always pay solar panel owners for excess energy they release back to the grid.
But Labour has looked to Australia for inspiration in a number of policy areas in the past two years, most recently announcing it would introduce a ban on social media for children aged under 16.
Admittedly, Britain’s adoption of rooftop solar has been significantly slower than that of Australia. According to government figures, almost 1.7 million homeowners have installed solar panels, fewer than half the number Down Under with a population around two-and-a-half times the size.
But Labour has ramped up incentives for green technology in recent months.
As part of a net zero drive announced by Miliband in January, households will be eligible for low-interest and zero-interest loans to buy solar panels. Plug-in solar panels are also expected to become widely available in shops within months.
Data from the Microgeneration Certification Scheme showed that there were more than 250,000 new solar installations in 2025, the highest total ever recorded in a single year.
New Octopus tariff lowers off-peak export prices
Britain’s shift to solar comes at the same time as Neso’s warning that gluts of solar power and “low demand” periods were making the grid more difficult to manage.
There are also signs that Britain is already moving in the direction of a “sun tax” to manage periods of excess solar energy, according to Jason Howlett, of trade body Energy Storage Association.
“We’ve not quite got to that point where you’re charged to export,” he said. “But it was only last month that Octopus launched a new tariff which increased the payments for exporting during peak hours and lowered the export price outside of those times.”
Supplier Octopus currently has a tariff that rewards solar panels with a 12p payment for every unit of energy they export regardless of the time of day. Its new “prime outgoing” plan increases these payments to 16p between 4pm and 7pm but reduces them to 9p at other times.
Furthermore, the Government has recently moved to lower more generous payments to solar panel owners on the “feed-in tariffs” scheme, which ran from 2010 until 2019. The move will reduce the income homeowners receive for exporting energy in the future compared with if no changes had been made to the scheme.
According to Mr Howlett, the key to avoiding the need to introduce future penalties for solar panel owners is to ramp up the deployment of batteries to store excess energy.
“We have had almost an obsession with generating clean power but now at certain times of the day we’ve got nowhere to put it,” he said. “Batteries really do work. I run my home for next to nothing because I have both solar and energy storage.”
Despite strongly pushing solar power, the Government has been less ambitious about rolling out batteries to store surplus supply.
Under updated housing rules, developers building new homes will almost always have to install solar panels but batteries have not been mandated in the same way.
The warning signs are clear and a lack of battery storage combined with surging solar exports to the grid could at some point force the Government to reconsider its commitment not to introduce a sun tax.
Others are less convinced that Britain will be required to resort to more punitive measures similar to those implemented in Australia.
Chris Hewett, of trade association Solar Energy UK, said: “We are seeing encouragement to shift demand at peak times but the main difference between us and Australia is they do have a lot more solar for meteorological reasons.
“I think it’s pretty unlikely that we’ll have the sort of measures that they are looking at in Australia.”
A Department for Energy Security and Net Zero spokesman said: “We have no plans to introduce a similar charge in the UK. The UK’s unified grid system means we don’t face the same challenges as Australia’s regional grids.
“Through our warm homes plan, low-income families could get a heat pump, solar panels and a battery at no cost at all as we lift up to one million households out of fuel poverty.”
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