What Is the Sun Tax in Australia and How Do You Avoid It?
With many power grids now flooded with solar energy during the day, some states are rolling out a ‘sun tax’ to change user behaviour. So how do you avoid the tax, or even use it to your advantage? Learn how battery storage and smart energy management can maximise your solar savings.
Key Takeaways:
The sun tax is a new 'two-way' pricing structure that charges a small fee for solar exports during specific daytime hours. It was introduced to improve grid stability and fund network upgrades - both of which help drive down electricity costs for everyone.
The sun tax doesn't apply in every state, though some have achieved a similar outcome by cutting feed-in tariffs instead. It's worth checking the rules in your state to understand exactly how your solar exports are being valued and charged.
The most effective way to avoid the sun tax is to reduce what you export to the grid during the day. You can do this by using more of your solar power as it's generated, or by storing the excess in a home battery for use later.
What is the sun tax and why is it being introduced?
If you already have solar panels or are considering getting them, you may have heard about the sun tax. This ‘two-way’ pricing structure, which charges a small fee for solar exports during specific hours, is the latest step in Australia’s ever-evolving solar journey.
The best way to understand the sun tax is with a quick history lesson. Back in 2008, many state governments started introducing solar feed-in tariffs, which paid a flat rate for every kilowatt-hour (kWh) of solar energy generated or exported to the grid. Following the lead of solar pioneers like Germany and Japan, feed-in tariffs drove a rapid uptake in solar installations, when even a modest 3 kW system could cost $20,000!
Almost two decades later, Australia now generates more solar energy per capita than any other country in the world. Consequently, not only have our feed-in tariffs significantly declined over the last ten years, but some states have now introduced a sun tax. This new pricing structure aims to disincentivise people from exporting solar power during periods of low demand. In other words: if you export solar power when the grid doesn’t need it – most commonly between 10am and 3pm – you may be charged a small fee.
The state-by-state rollout of the sun tax has a few key objectives:
Improve grid stability
Too much solar power feeding into the grid at once can cause voltage spikes, power cuts, and drive up the cost of maintaining the network.
Make pricing fairer
When more people self-consume or store their excess solar power, it’s easier for network owners to plan upgrades and create fairer pricing structures.
Support renewables
The sun tax encourages more investment in batteries and other forms of energy storage, which supports Australia's clean energy transition.
By charging for solar exports, the sun tax encourages more people to use or store their solar energy when the grid doesn’t need it, and export power when it does.
When and where does the sun tax apply?
Selected states began rolling out a sun tax in July 2025, and in some cases only within certain networks or specific solar-heavy regions.
At the time of writing this article (May 2026), the sun tax applies in the following states:
New South Wales: Several network providers, such as Ausgrid, have introduced a sun tax. For example, some customers are charged 1.2c per kWh for exporting solar power between 10am and 3pm, but credited 2.3c per kWh for exporting between 4pm and 9pm.
South Australia: SA Power Networks introduced a sun tax in July 2025. It typically charges 0.75 - 1.2c per kWh exported between 10am and 4pm. It only applies to solar exports above a daily ‘free’ threshold, which is typically 9 kWh.
Queensland also submitted a proposal to start a sun tax in 2026, but it was rejected.
At this stage, the sun tax only applies in NSW and SA. While Victoria, Queensland, Tasmania, WA, and NT do not currently have one of their own, many have slashed feed-in tariffs or imposed daily export limits to shift the focus from exporting to self-consumption.
How can you avoid paying the sun tax?
As the sun tax only applies to daytime solar exports during specific hours, it creates a powerful incentive to change your energy usage patterns.
You can avoid the sun tax in Australia by doing the following during daylight hours:
Running energy-hungry appliances like washing machines, dishwashers, and pool pumps
Pre-cooling or pre-heating your home (with electric systems)
Charging your EV
Storing your excess solar energy in a battery
If your house is typically empty during the day, manually running appliances can be a challenge. However, many have timers, delayed-start functions, or wireless apps that can make self-consumption a lot easier.
At 1KOMMA5° Australia, our new Heartbeat AI home energy manager can maximise your solar savings automatically. It can learn your household’s energy patterns, monitor the electricity market and weather forecasts, and ensure you always use the cheapest and greenest power available. Contact us to discover the future of New Energy.
How installing battery storage can help you avoid high costs
With feed-in tariffs decreasing and the sun tax rolling out (or being considered) across many states in Australia, installing battery storage has never made more sense. Rather than exporting excess solar for a low or negative return, a battery enables you to store this energy for later use. This saves you the full retail price of buying power from the grid, which is far higher than even the most generous feed-in tariff. For example, each kWh you export may earn you 5c, but storing it and using it later could save you 35c.
While some states now charge for solar exports during low demand, they also pay higher rates for exporting when demand is high, often between 4pm and 9pm. If your battery has smart energy management software, you can automatically sell excess power to the grid when it makes the most financial sense.
In addition to maximising your solar savings, a battery can enable your home to run 24/7 on solar energy alone. This can virtually eliminate your carbon footprint and ensure you always have backup power available in the event of a blackout.
How to future-proof your setup against changing tariffs
While the rollout of a sun tax in Australia has been controversial, it's also another important step in our world-leading solar journey. Ultimately, its main goal is not to increase your power bills, but to encourage you to self-consume your solar power or store it in a battery.
If you want to future-proof your setup, here's what to look for:
A battery with sufficient capacity. A 10–15 kWh battery is typically enough to cover an average Australian household's evening energy needs. If you have an EV or a larger home, consider going bigger.
A battery with a high cycle life. Look for a warranty of at least 10 years or 4,000 cycles. Leading options include the 1KOMMA5° battery, Tesla Powerwall, Sungrow SBR, and BYD Battery-Box range.
Smart energy management software. The best systems use AI such as Heartbeat AI to automatically decide when to store, consume, or export power based on weather forecasts, your usage patterns, and real-time electricity prices — maximising savings without any manual effort.
Compatibility with your existing inverter. If you already have solar panels, check whether a battery can be retrofitted to your current inverter, or whether you'll need a hybrid inverter as part of the upgrade.
By adjusting your energy usage and embracing battery storage, you can not only avoid the sun tax but support Australia's clean energy future.
If you’re looking to install and home solar and battery system, 1KOMMA5° Australia can provide honest advice, premium equipment, and an expert system design. To discover more about our clean energy solutions – including our new Heartbeat AI home energy manager – contact our team online or call us on 1300 976 040.
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