The Feed-in Tariff Death Spiral

From Jul 2025, NSW became the first Australian state to charge solar households for exporting energy to the grid. The charge of 1.2c per kWh applies across Ausgrid, Endeavour Energy, Essential Energy networks.

NSW becomes the first Australian state to introduce an export charge for rooftop solar. The charge of 1.2c/kWh on exports is designed to fund network upgrades needed to handle increasing solar volumes. For a typical 6.6kW system exporting 10kWh/day, this costs roughly $44 per year.

While framed as a cost-recovery measure for network upgrades, the charge further erodes the case for exporting solar. Combined with declining FiTs, it makes the case for batteries and self-consumption even stronger.

SA Power Networks has invested $82 million in network infrastructure specifically to manage the challenges of high rooftop solar penetration, including voltage management and reverse power flows. South Australia has the highest rooftop solar penetration in the world, with solar generating more than 100% of state demand on some days.

The cost of managing these exports is ultimately passed through to all electricity customers, adding pressure to further reduce feed-in tariffs. SA's experience previews what other states face as their solar penetration grows.

AEMO data shows that only 0.5% of rooftop solar energy is exported after 5pm, when electricity demand peaks. The vast majority of solar exports occur between 10am and 2pm when demand is low and wholesale prices are often near zero or negative.

This mismatch between solar export times and peak demand is the fundamental driver of declining FiTs. Your solar produces the most energy when the grid needs it least. Batteries solve this by storing midday solar for evening use, when electricity is most valuable.