Australia has so much solar that it’s offering everyone free electricity

The Australian government is floating a scheme that would share the benefits of solar power with everyone on the grid, offering totally free electricity to ratepayers in the middle of the day, when the sun is shining the strongest.

Australia is a sunny place. It’s kind of known for it. It’s the sunniest continent, and the sunniest country outside of the Middle East/Africa, with extensive photovoltaic power potential across its entire territory.

In recognition of that, Australia has been installing lots of solar power. Formerly a coal-heavy nation (for which coal is still its 2nd-largest export), solar and wind have rapidly taken over Australia’s electricity grid, pushing coal and methane gas out of the equation.

This has taken a big chunk out of Australia’s electricity-related climate emissions, and of course resulted in clean air benefits as dirty coal is pushed out of the grid. And climate emissions matter a lot for Australia, a country that is becoming more unbearably hot and suffering more fires due to climate change. (Though Australia is also a great example of how global cooperation on environmental issues can fix a huge problem, as they are the primary beneficiary of global action on closing the hole in the Ozone layer)

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So solar power has been a great thing for Australia, especially with rooftop solar on Australian homes.

But it can lead to swingy electricity supply, given that solar only generates electricity when the sun is out.

How swings in solar supply and electricity pricing work

Most areas have certain times of day where more electricity is used than others. These are referred to as “peak hours” and generally they happen in the early evening, when people get home from work, turn on the HVAC, cook dinner, do laundry and the like.

But there are also certain times of day when more electricity is generated, and that’s particularly the case in places with high solar penetration. Solar obviously generates energy only during the day, and creates a peak of generation in the middle of the day, when most people are at work.

There are ways to mitigate this – for example, with batteries, which Australia has also used a lot of (and is thinking about extending that to EV batteries too). Wind power also helps, since wind tends to pick up in the hours that solar is dropping off.

But another way to mitigate it is through simple economics. Offer people lower prices in the hours that electricity is more abundant, and higher prices in hours where it isn’t. Then, people will tend to use electricity when they can – especially if they have shiftable loads like electric cars, laundry, pool pumps and such, which don’t need to be on at the same time every day (unlike HVAC, cooking, and lighting, for example).

Most electricity providers will offer something like this, called a “time of use” plan. These plans differ in their rates and peak hours depending on your location and how the supply/demand curves work for electricity there (and have seen common use among electric car owners because of the outsized effect an EV has on home electricity use).

On the utility side, though, the swings in price can be much more drastic. Wholesale prices for electricity can go up to multiple dollars per kilowatt-hour during times of extreme demand when the grid is stressed, and electricity prices can even go negative when there is little demand and lots of supply, particularly on an islanded grid like Australia (this also happens in Texas, where the grid is largely disconnected from the rest of the US). These swings are ironed out for the consumer, so things aren’t as spiky for us, but it can be quite a rollercoaster on the grid side.

In Australia and other places with high solar penetration, these negative electricity prices often happen during the day. That’s when generation is the highest for solar panels, and household loads are typically low.

Australia proposes letting everyone benefit from negative wholesale rates

So, the Australian government has decided on a scheme to bring those electricity savings to the consumer, with what its calling its “Solar Sharer” program.

The program would require electricity retailers to provide free electricity to everyone for at least three hours a day, in recognition of the incredibly low wholesale cost of electricity during daytime due to extensive solar power penetration.

These would likely be in the middle of the day, when most people aren’t home. However, every home has some amount of shiftable electricity load, and the Solar Sharer scheme would encourage people to make use of that. With modern appliances that can be scheduled to start in the middle of the day, people can just plan to do laundry, run the dishwasher, run the pool pump, or charge their car at noon, instead of whenever else they were going to.

Additionally, people could fill up a home battery during the day, and then use that electricity during peak hours when rates are higher. And this plan will help to incentivize private installation of batteries, or other shiftable loads.

The overall effect of this is that it will help to iron out electricity use, making it track more closely with electricity supply, reducing the need for grid upgrades to manage swings in generation. Just turning on this simple behavioral switch, and then publicizing it so customers know to use electricity in the free hours, will both help the grid and help ratepayers save money.

Better yet, this scheme will apply not just to people who have solar or home batteries, but to people who live in places where they can’t put up solar – those who live in apartments and the like. The government says it will require companies to offer this scheme to all customers, not just those with solar.

The government did receive some pushback from electricity retailers, who feel they were not properly consulted on the plan. But Australia’s Climate Change Minister Chris Bowen said he would make “no apologies” if this scheme reduced their margins, and that “consumers are put first” as reported by the Australian Broadcasting Corporation.

The government plans to implement the scheme starting in July next year, first in Queensland, New South Wales and South Australia. If it works well, other regions will get it starting in 2027.

Electrek’s Take

Australia is doing a lot of great things with electricity, and acting somewhat like a natural laboratory for a lot of ideas that people have been talking about for a long time. Since the whole country has similar solarization, it can work somewhat as a unit in pushing for solar power, and for reforms to help enable it.

It’s already working on V2G, with a huge trial started recently, and the wide adoption of solar and batteries is proving that even a solar-heavy grid can still work. And an idea like this, showing how simple economics can be used to change consumer behavior, could provide a model for the rest of the world on how to usher us into a cleaner energy future.

So we’ll be watching with interest how this turns out – I think it will likely turn out quite well, if the government goes through with it fully.

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