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Solar Energy Property Taxes: Insight for Homeowners
Solar Energy Property Taxes Insight for Homeowners

Solar Energy Property Taxes: Insight for Homeowners

Published on:
January 29, 2024

More people are realizing the importance of using clean energy, like solar energy. But sometimes, choosing eco-friendly options can cost a lot of money. 

Buying solar panels or eco-friendly power stations is a big step towards helping the environment, but not everyone can afford it. 

And the recent solar energy property taxes made people more confused than ever. However, today, we will provide insight for homeowners struggling to understand solar energy property taxes.  

Luckily, Australia has ways to make being environmentally friendly cheaper. The government offers incentives and tax breaks to encourage people to use clean, renewable energy like solar power.  

But what does this mean, and could you qualify for it? What are tax breaks? Let’s learn everything.

What is Sun Tax? An Overview

In 2021, there was news that the Australian Energy Market Commission (AEMC) might let electricity companies charge people with rooftop solar panels to send extra power back to the grid.  

Even though these changes won’t happen immediately, it’s natural for people to be concerned. Solar energy from rooftop panels is important in Australia’s climate change and energy plans. Any changes to this could affect everyone in the country. 

Australia’s new “Sun Tax” is a fresh rule that charges people with solar panels when they send extra electricity to the grid. These rules started on 1 July 2022, but electricity companies can’t start charging solar owners until 2025. 

If you have solar panels or are thinking about getting them, should you worry about this? We think not, and most experts agree. 

Here’s why: 

  • This new charge only applies in areas that are part of the National Electricity Market (NEM). If you live in Western Australia or the Northern Territory, 
  • Each state government can decide if they want to enforce this charge. The governments of Victoria and Queensland have already said they won’t make solar owners pay it. 
  • Even if your state decides to go ahead with the charge, it won’t hurt solar owners much, and there are still plenty of benefits to having solar panels. 

The “sun tax” is part of the changes the Australian Energy Market Commission (AEMC) made. The AEMC is responsible for making rules for the electricity system that covers the National Electricity Market. 

The original rules for how the National Electricity Market worked were made 25 years ago. The rules have been updated to show how important solar power and other renewable energy sources are in the national energy mix. 

These new rules reward people with solar panels for sending clean energy to the grid. They also have pricing plans to discourage solar owners from sending electricity to the grid when it doesn’t need it.  

Network providers and electricity companies can charge households that send solar electricity to the grid when it’s not necessary. 

Sun Tax Initiation

It’s essential to note that the state governments decide if they want to put these new rules, including the solar export charge or “sun tax,” into action in their area. 

If they decide to proceed, the earliest you might have to pay charges for exporting solar power is in 2025.  

However, distributors will still have to offer a basic service for exporting solar energy up to a certain amount for free. 

How Much Will the Sun Tax Cost You?

According to the Australian Energy Market Commission, the average home with solar panels of 4kW or 6kW might pay around $70 more per year under the new rules. But they’ll save about $900 a year on their power bills. 

Also, if you use the pricing incentives, like getting more money for sending power to the grid when it’s not busy, you might not end up paying anything extra. 

In simple terms, there will likely be more chances to earn money from selling your solar power under the new rules than there are now.

Benefits of the Sun tax

There are other good things about the new rules for people with solar panels: 

  1. Distribution networks can’t stop you from exporting electricity anymore.
  2. Networks can’t add export charges without proving they help households.
  3. If you have a battery, you’ll get rewarded for sending power to the grid when it’s busy in the evening.
  4. You can be rewarded if you have an electric car that can share power with the grid. (If you’re interested, let us know, and we can set up a system for you).

Why You Shouldn't Worry

The Sun Tax isn’t as bad as some people say. The changes by the AEMC have more good things than bad for people with solar panels and solar batteries. The changes will happen slowly and only if the state governments agree. 

But if you don’t want to pay to send power to the grid, you can use your extra solar power for air conditioning, pool heating, or water. These things use very little electricity, and you can use your solar power for free. 

New air conditioners can connect to Wi-Fi. You can use an app to turn on your air conditioner at work, so you come home to a cool house without spending money on electricity. 

Air conditioners and all new electrical appliances are getting this feature. This is good news for people with solar panels and batteries because you can use all the electricity your panels make. 

This also means the “sun tax” isn’t a big problem. In a few years, you’ll probably wonder why you even worried about it!

What are the Federal Solar Power Tax Breaks?

Solar power tax breaks, also called rebates, are financial help from the government. They encourage people to make their energy using the sun. These help people pay for the costs of getting solar panels. 

The Australian government has a few programs to reach its Renewable Energy Target. One is the Small-Scale Renewable Energy Scheme.  

It encourages individuals and small businesses to use renewable energy. This includes solar panels, heat pumps, and other green technologies. 

Qualifying people can get a cost discount or small-scale technology certificates (STCs). These certificates help cover the costs of buying and installing the solar system.  

Each certificate is like a one-megawatt hour of renewable electricity. The number of certificates depends on when the system was installed and how much electricity it makes. 

Another program is the Large-Scale Renewable Energy Target. It’s about setting up big renewable power stations across the country. Energy providers can get large-scale generation certificates (LGCs) to sell to companies and people who use renewable electricity. 

These tax breaks make it easier for people in Australia to use renewable energy.

Can You Get Solar Power Tax Breaks?

The rules for getting solar power tax breaks can differ depending on where you live. For example, if you live in New South Wales, the rules might not be the same as in Victoria.  

But generally, to qualify, you’ll need to either develop or install solar power systems at your home. If you plan to add solar panels or another renewable energy source, checking your state’s rules is a good idea. We have more details on this below.

solar energy

Tax Breaks in New South Wales

In New South Wales, there used to be a program called the Solar Bonus Scheme, but it ended in December 2016. Now, two new programs encourage homeowners to use solar power.

Solar for Low-Income Households:

You might qualify for a free solar system program in a low-income household in NSW, including South Sydney, Central Coast, North Coast, and South Coast. You must own your home and agree not to receive certain ten-year rebates to be eligible. 

The Empowering Homes Program:

This program offers interest-free loans to help NSW residents install new solar batteries or upgrade existing systems.  

Depending on whether you’re installing a new solar panel system or upgrading an old one, you could get up to $14,000 or $9,000, respectively. Your household income should be less than $180,000, and you must live in specific areas to qualify for this program.

Tax Breaks in Victoria

In Victoria, various incentive programs help you use green energy at home.

Solar Battery Rebate:

If you’re a homeowner planning to install a solar battery, you qualify for a discount of up to $2950. To be eligible, you must own your home, have an existing renewable energy system, and meet certain income criteria. 

Virtual Power Plant Program:

This program offers a rebate of $4174 for installing an approved battery system. The eligibility criteria are the same as for the Solar Battery rebate.

Solar PV Panel Rebate:

Homeowners and renters in Victoria can get a rebate of $1400 for installing solar panels. There’s also an interest-free loan available for the same amount, but it’s only for homeowners who meet certain conditions.

Solar Hot Water Rebate:

Victorian residents can get a rebate of up to $1000 for installing solar hot water systems. To qualify, you must be a homeowner, meet certain income criteria, and have not received a rebate for solar batteries or PV panels.

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