Rooftop solar owners have to pay a fixed daily energy supply charge regardless of how much grid energy they use or export.
It should be prorated to grid use, but it has become the goose that laid the golden egg, accounting for nearly half the overall electricity cost.
The daily energy supply charge is not as regulated as the cost of energy and has steadily been rising from between 10-20 cents in 2020 to between $1 and as high as $2.84 in 2025 (NSW source). It is the same amount as those without rooftop solar.
The lower end daily energy supply charge usually relates to users on Time-of-Use tariffs (peak, shoulder, off-peak and seasonal). The higher daily supply charge usually refers to Demand tariffs, fixed tariffs (same price per 24 hours) and free electricity offers (sometimes linked to EV charging or pool filters).
A higher daily energy supply charge also affects solar feed-in tariffs (FIT). The more you pay per day, the higher your FIT. Although that is now a measly <4 cents per kWh, and some States charge a Sun tax and rooftop solar feed-in tariffs to reduce again.
Bottom line, at least for Ausgrid NSW, you will pay about $450 ($1.25 per day) and up to $1,036.60 ($2.84 per day) regardless of how much energy you feed in. And you cannot go off-grid because, legally, if it’s possible to connect to the grid, you must.
This is grossly unfair. Compare this to EV owners not having to pay the Government fuel excise of 51.6 cents per litre (free road use), getting FBT and Luxury Car tax breaks, home charging station subsidies and more perks to encourage EV use.
Why the daily energy supply charge rip-off?
To a considerable degree, it is because NSW, Victoria and South Australia sold the silverware (poles and wires) to private companies that exist for the benefit of shareholders (Source). Many are foreign companies.
- EnergyAustralia is owned by China Light and Power (China)
- Cheung Kong Infrastructure/Power Assets owns a 51% share in both CitiPower Electricity Distribution Network Victoria and Powercor Electricity Distribution Network Victoria (China).
- Cheung Kong Infrastructure owns a 50% share in the transmission link, which transports renewable energy from the Mt Mercer wind farm to the Victorian grid (China).
- Cheung Kong Infrastructure/Power Assets owns a 51% share, on a 200-year lease, in SA Power Networks’ Electricity Distribution network (China)
- A 99-year lease of electricity transmitter TransGrid to a consortium comprising Canadian, Middle Eastern and local investors.
- ENGIE and Simply Energy are 100% foreign-owned (French)
- Energy Australia is owned by CPL (China)
- Jemena is owned by 60% China’s State Grid Corporation and 40% Singapore Power (China)
- ActewAGL is 50% owned by Jemena (China)
- Jemena Electricity Distribution Victoria owns 34% of United Energy Electricity Distribution Victoria (China).
- Nectr is owned by Hanwha Energy (South Korea)
- OVO Energy has substantial UK interests and AGL
- Powershop (Shell multinational)
- Tango is owned by China’s State Power Investment Corporation (China)
- Chow Tai Fook Enterprises owns Alinta Energy (not mentioned on its website), which rivals Origin Energy and AGL Energy for size. It owns Pinjarra Power Station, Western Australia; Wagerup Power Station, Western Australia; Yandin Wind Farm, Western Australia; Braemar Power Station, Queensland; Bairnsdale Power Station, Victoria; Loy Yang B Power Station; Victoria; Glenbrook Power Station, New Zealand; Reeves Plains Power Station, a new gas-turbine power station in South Australia
The majority of energy retailers (excluding the big three) are privately owned (click on the image to enlarge).
The renewables push has placed an extraordinary strain on the poles and wires. The Australian Energy Market Operator’s ‘Integrated System Plan’ advocates a coordinated approach to the development of transmission infrastructure to support lower emissions (Paris Accord, which means depreciating or eliminating lower-cost coal-fired power) and generation (renewables, roof-top solar, solar farms, wind, and gas) to meet customer demand.
In layman’s terms, it is a bloody lot of taxpayers’ money when there are many other alternatives, like more realistic net-zero time frames and using the money instead for community batteries (a global solution that immediately works). Read Solar Sharer – Will it help anyone?
CyberShack’s view: the daily energy supply charge rip-off for rooftop solar owners
I have been closely monitoring my grid dependence after installing rooftop solar, and frankly, it is now down from 22% to between 2 and 5% since I increased the battery capacity from 10 to 15 kWh (yes, I used the 30% Government rebate).
So far (1 January to 9 November – 312 days)
- Produced 9,300 kWh (2,900 kWh of which charged batteries)
- Used 5,700 kWh (2,300 kWh from batteries at night in peak and shoulder tariffs)
- Imported 1,300 kWh from the grid (mainly at peak rates earlier in the year when it was rainy for an extended period)
- Exported 4,200 kWh to the grid at a lousy FIT of 4 cents or $168.
- Will pay nearly $400 (312 days) in the fixed daily energy supply charge.
- And saved the planet 6.7 tonnes of CO2
But here is the cracker. 1300 kWh imported divided by $400 charge means that it costs me an extra 31 cents per kWh on the 1300 kWh imported.
In short, you can turn your power off at the mains, go on a holiday, or just sit in the dark. But you will still have to pay a daily energy supply charge.
There is one reason why we have supply charges on our electricity bills, and that is profit maximisation. It would be fairer to simply increase the electricity tariff slightly and remove the daily energy supply charge. But hey, energy retailers can sit back and know that about half their revenue comes from that, regardless of how much electricity is used!
A fixed daily energy supply charge as a large proportion of the bill enables the cost per kilowatt-hour to appear lower. But the Catch-22 is that there is less incentive to conserve electricity, less incentive to invest in energy efficiency measures such as insulation, rooftop solar/batteries or energy-saving appliances.
Rooftop solar owners end up paying comparatively higher energy prices per kWh if the charges are average across energy use.
I am not suggesting that there be anything else than the elimination of the charge and moving to a user-pays tariff basis. That would quickly encourage rooftop solar and energy conservation.
This also applies to water and sewage supply charges and anything where you have to pay a fixed price to use an additional cost service.
10 comments
Josh
Is anyone here using the AMBER service (25% owned by com bank I recall) 25$ a month access to wholesale grid prices. Could outweigh the 25? Let us all know?
Ray Shaw
I looked closely at Amber last week at a reader’s request and became more confused than ever. In addition, Amber has email spammed me ten times a week since. I did my sums, and for my circumstances (10Kw solar and 15kWh battery), EnergyAustralia was a far better deal with upfront costs. I may not like the supply charge! It all comes down to how much solar you produce, how much you use, how much you recharge batteries and what you import and export. The wholesale energy carrot means nothing if you have solar. Amber was also very pushy to join its VPP – no thank you.
Chris
They are called utility for a reason. There is a standing cost to maintaining a connection to a property regardless of how little or much it is used. Maybe think of it like a gym membership. If you want to be a member, there needs to be a gym and equipment and staff even if you are watching a film on the couch. The current system is fairer for those that don’t have the capital or property to make their own electricity. Maybe a system that is free to connect to but the minute you import or export one kWh in a year, you pay the whole cost of keeping that connection for a year? In your model a 4000kWh per year user would pay an extra 10c per kWh to absorb the daily charge ($400), you would pay $130. Now the utility has to cover your missing $270. They would have to charge you both 15c extra per kWh. Now the 400kWh user is paying $600 for the same connection and infrastructure you are getting for $195. The costs of building and maintaining the network are not proportional to the amount of energy moved and much of the spending in recent year has been to enable the solar export that provides cheap daytime energy and a little offset to the cost of buying power when the sun is not shining.
Ray Shaw
You can’t blame a fella for trying. My key message (and I will need to revisit this) is that the daily supply charge and FIT are less regulated, and the easy way for electricity retailers to make money without actually selling anything. I have just done the sums and that $400 per year is now adding 30+ cents per kWh to the already high TOU costs. In fact, the less grid power I use, the higher the amortised supply charge. e.g., power imported this year is a measly 1300 kWh. Divide $400 by that, and it’s 31 cents per kWh on top of the tariff. The more you produce, the more it costs and solar users need to find lower supply costs.
Dale
Hi Ray, I have 8.8KW in solar panels and a 16.11KW battery (Sigenergy). Since the installation of my panels and battery my, only cost has been the daily fixed charge.
I disabled the export feature as in Vic I was only getting 1 cent a KWh (I exported 500KWh for a whole $5 return).
I refuse point blank to give my retailer and distributor free power from a system I made the substantial capital outlay on. The consumer pays for any capital outlay the suppliers and distributors make, yet they pay me a pittance for my power on my capital outlay. It’s a joke, so on principle I refuse to share.
And I didn’t claim the 30% government rebate as I don’t want to get sucked into the VPP black hole.
Josh
100% no matter what your solar investment and initial gains, come year 5 or 10 you will always be back to square one with everyone else due to this daily charge and ‘rising admin fees’ It is rubbish and they know this, but no one is going to stop them.
Ray Shaw
Thanks, Josh – great community feedback. Since the poles and wires and everything else were sold to the Chinese (apart from WA and QLD), we have been gouged. Add in the renewables targets and the cost of meeting them, and we are double-gouged. Politics aside (really, this is not a political forum), we governments needs to focus on what lowers the cost of living, and energy is a large part of that. When the world’s biggest polluters (China, Russia, USA and Asia Pacific) pay little more than lip service, they remain polluting as it’s cheaper energy.
Ray Shaw
Man after my own heart! My 10 KW system now has 15kWh of batteries and could still charge them a further 860 times with what I export (4.3 mWh at 4 cents per kWh). My grid use is now an average of 2% (maximum), so my bills are now for that damned daily supply charge. As for VPP – a real scam!
Chris
The supply charge and rates are really the only way that retailers can play at the margins. Have a low daily charge and high unit rates for low use customers and the reverse for high use customers. Customers can easily manage a value decision with one variable. Make it 2 or 3 and now you need some data and a spreadsheet and now if you are winning in summer you are losing more in the winter. Change your rates and ratios every 6 months and no one knows what is good and bad anymore. The only way to sort this out is standardise the charges across the retailers and then can compete on advertising and smiley call centres. Or just don’t have them….
Louise
I don’t believe there is a ‘requirement’ to connect to the grid. You can be off-grid but still need to satisfy your local council building and safety requirements for ‘adequate services’. I ran my farm off grid for years, just on solar and a rarely used backup petrol generator. However, if you are off-grid, you also can’t be paid to put energy back in of course which many people wish to do, even at the current low rates available.