Confused by the 'Sun Tax'? Learn how two-way pricing works, where it applies in Australia, and how to compare energy plans to protect your solar savings.
Published on 23/02/2026
By Pallav Verma
Energy Comparison
If you have solar panels on your roof or you’re thinking about installing them you might have heard rumblings about a "Sun Tax." It sounds scary, doesn't it? The idea of being charged for generating your own clean, green energy seems to go against everything we know about the benefits of solar power.
But before you worry that your solar savings are about to evaporate, it is important to understand what this charge actually is. Spoiler alert: it’s not technically a tax, and for many households, it won’t change the fact that solar is a great investment.
In this guide, we break down exactly what the Sun Tax is, how it works, and what you can do to ensure you are still getting the ideal deal on your energy.
The term "Sun Tax" is a colloquial nickname for a new two-way pricing system for solar exports in Australia. It isn't a government tax collected by the ATO. Instead, it is a network charge implemented by electricity distributors.
Historically, solar owners were paid a feed-in tariff for every kilowatt-hour (kWh) of excess energy they sent back to the grid. Under the new rules approved by the Australian Energy Market Commission (AEMC), distributors can now charge a small fee for exporting energy during specific times of the day—usually when the sun is shining brightest and the grid is flooded with power.
However, it’s not all bad news. This two-way pricing system also means you can be rewarded with higher payments for exporting energy during peak demand times, like in the evening.
To understand why this change is happening, we need to look at how the electricity grid operates.
Australia has one of the highest uptakes of rooftop solar in the world. While this is fantastic for the environment, it creates a challenge for the electricity grid. During the middle of the day (typically 10 am to 3 pm), millions of homes pump excess energy into the network simultaneously. This oversupply can cause "traffic jams" in the wires, leading to instability and operational challenges for network operators.
To manage this congestion, the new rules encourage households to use their solar power when it is generated, rather than sending it all back to the grid at once.
Under this system, customers may see:
The goal isn't to punish solar owners but to smooth out the flow of energy. It encourages you to maximize your own consumption or store excess power in a battery for later use.
Currently, the implementation of these charges varies by location. As of late 2025 and early 2026, the two-way pricing model is primarily applicable in parts of New South Wales (NSW) and South Australia (SA).
Other states like Victoria and Queensland have not broadly implemented a mandatory export charge yet. However, discussions around variable feed-in tariffs are ongoing across the country as networks aim to promote self-consumption.
If you live in New South Wales, this is particularly relevant. Navigating these changes can be tricky, so it is vital to check your plan. If you need help finding a retailer that offers fair terms, you can read our guide on choosing the best energy plan in New South Wales.
For most households, the financial impact of the export charge is expected to be minimal. We are talking about a few cents per day for the average user, which can often be offset by the rewards earned during peak times.
However, it is always smart to keep an eye on your bills. If you feel like your costs are creeping up, check if you are paying more than the average power bill in Australia. Understanding your usage is the first step to taking control.
You don’t have to simply accept higher costs. There are several smart ways to adapt to these changes and even turn them to your advantage.
The ideal way to avoid export charges is to use your solar power while it’s being generated. Set timers on your dishwasher, washing machine, and pool pump to run between 10 am and 2 pm. This is "self-consumption," and it’s the most efficient way to use solar.
Not all retailers will pass these network charges on to you in the same way. Some might absorb the cost, while others might offer better feed-in tariffs to compensate. It is crucial to compare energy plans regularly.
Sticking with the same provider for years can often lead to what is known as the "loyalty penalty," where existing customers pay more than new ones. You can learn more about this in our article: Are you paying the loyalty penalty?
Installing a home battery allows you to store that excess midday sun instead of exporting it for a fee. You can then use that free power in the evening when rates are highest.
If you have excess solar generation that you are being charged to export, why not use it to power more of your home? Switching from gas appliances to electric ones (like induction cooktops or heat pumps) can help soak up that extra power.
If you are building a new home, this is the ideal time to decide on your energy mix. You can read about the process of installation of gas connection in Australia to weigh up your options, or learn how to connect electricity to a new home in Australia if you decide to go all-electric.
Absolutely. Even with a small export charge, the savings from generating your own power far outweigh the costs of buying electricity from the grid. Solar remains one of the ideal ways to protect your household from rising energy prices.
The key is to be proactive. Don't just set and forget your system. By engaging in a regular energy comparison, you can ensure your plan features a feed-in tariff structure that suits your lifestyle.
The "Sun Tax" might sound intimidating, but it is really just a shift in how the grid is managed. With a few small adjustments to how you use power, you can continue to save.
At Electricity Provider, we believe you deserve to get a better deal on your utilities. That’s why we’ve done all the hard work—so you don’t have to! Whether you want to compare energy providers, check the latest gas electric comparison, or simply find a lower rate, we are here to help.
When you compare energy prices with us, you get a clear view of the market. We help you compare gas and electric plans so you can see exactly what you are paying for. A proper gas and electricity compare process can reveal hidden savings you didn't know existed.
Disclaimer: The content provided is for informational purposes only and is based on publicly available information. While efforts are made to ensure accuracy, readers should independently verify all details with relevant energy retailers or providers. Econnex Comparison may earn a commission from selected providers when users switch energy plans via its platform. Not all plans or providers available in the market may be included in the comparison, and availability can vary depending on location and eligibility. This content does not constitute professional advice.
