Getting it right: How to make the “Solar Sharer” work for everyone

On paper, the government’s proposed "Solar Sharer Offer" (SSO) sounds like the kind of policy win that everyone should cheer for. The pitch is delightful: Australia has too much solar power in the middle of the day; the grid is literally overflowing with sunshine: let’s give households free energy during 11am and 2pm. 

But as the economist Milton Friedman famously warned, "There is no such thing as a free lunch." 

Last week, the regulatory brains of the energy sector got together to, in the words of one attendee, "break their brains" over how to implement this. The consensus? Industry wants this to work. No one wants to see solar curtailed or wasted. But, if we rush its implementation without addressing the laws of physics or the realities of human behaviour, we risk confusing customers, making implementation mistakes and creating unfair costs for the very people this policy is meant to help.  

Here is a no-nonsense guide to making the SSO work without cooking the goose. 

Decide who we are trying to help 

The biggest conceptual headache right now is where the SSO sits in the regulatory landscape. Currently, officials are trying to shoehorn this new offer into the existing "Default Market Offer" (DMO) framework. 

For the uninitiated, the DMO is essentially a safety net. It is a price cap designed for disengaged customers; people who don't shop around, don't look at their bills, and just want a fair price for keeping the lights on.  

By contrast, the SSO is a high-engagement, dynamic product. To get any value out of it, you have to actively shift your washing, your cooking and your cooling to that window. If you sit around on the couch and keep using most of your energy at 6pm, you might end up paying more to subsidise the free hours. 

We need to think about who the SSO actually for. This seems like a simple question, but the answer determines whether the policy is fair or regressive. 

If the objective is purely physics and just soaking up as much solar as possible, then the ideal customer is someone with a massive home battery or an electric vehicle (EV). They can use up huge amounts of free energy at noon and store it for later. 

But here is the rub: people with big batteries and EVs are generally wealthier. If they get their energy for free, someone else has to cover the costs of running the retail business, as well as the network operator’s poles and wires. That "someone else" is usually the renter, the apartment dweller, or the low-income family who can't afford solar panels or batteries. This creates a "cross-subsidy," where the poor effectively pay for the rich to charge their EVs for free. 

That’s why the regulations need to explicitly state a social objective. The goal should be to deliver the benefits of solar to people who have barriers to owning their own, such as renters and non-solar households. 

To achieve this, we need to establish a specific customer profile that is distinct from the standard DMO. And we must acknowledge that this product isn't for everyone. Defaulting a passive, disengaged customer onto a complex time-of-use tariff could actually harm them financially if they don't change their habits. By keeping the SSO an “opt-in” choice for engaged customers, we protect the integrity of the safety net. 

Solve the "voltage cliff" before we jump off it 

Here is a scary thought: what happens if two million households all program their electric hot water systems to turn on at exactly 11am to catch the free energy? 

Most electric hot water systems are controlled by "dumb" timers. If you tell the market that power is free starting at 11am, everyone will set their timer for 11am. Then, when that clock strikes 11, the grid could experience a massive, instantaneous spike in demand. This could lead to a voltage drop and potentially cause appliances to malfunction or fail and in some cases, trigger circuit breakers to shut down; exactly the type of poor user experience that energy retailers wish to avoid.   

We need to exclude controlled loads (dedicated circuits for hot water and slab heating) from the SSO for now.  

This isn't about being stingy; it's about physics. Until we have smart meters capable of staggering start times, there may be risks to system stability from a massed, synchronised switch-on. 

First let’s launch the SSO for general household usage: lights, TV, cooking, air conditioning. Let customers get used to shifting their daily habits and leave the heavy usage appliances (like hot water heaters) out of it until the network technology catches up to the policy ambition. 

Align the costs with the promise  

Right now, there is a fundamental disconnect in the machinery of the market. While the SSO mandates that retailers charge customers $0 for energy at lunchtime, the networks will currently still charge retailers to deliver that power. 

In simple terms: the retailer collects zero revenue but still receives a bill for using the network. 

This "cost misalignment" is unsustainable. If retailers are forced to absorb these network costs, they will have no choice but to recover them elsewhere, likely by raising rates in the evenings. To make the SSO work, distribution network tariffs must be aligned with the retail offer: if the customer pays nothing, the network charge for that window should ideally be zero (or close to it). 

Until those network tariffs can be reformed, the policy also needs immediate guardrails to make the SSO financially viable (and also to address the aforementioned potential voltage issues).  

We should support fair use caps to ensure the financial costs are shared fairly. Even if the energy is free, the cost to transport it through the network is not. Without a cap, a user with a large battery could import huge amounts of energy for $0, leaving other customers (like renters) to pick up the tab for the network delivery charges. 

A reasonable daily limit would allow a family to run ordinary household appliances, while preventing unfair cross-subsidies and voltage issues. As the market matures and network tariffs align, we can think about transitioning these battery 'super-users' to a future version of the SSO designed specifically for high-capacity storage. But for day one, we need to walk before we run. 

Don’t ask retailers to predict the future 

Under current "Better Bills" regulations, energy retailers are required to tell customers if they could save money by switching plans. This works fine for standard flat rate plans where past usage predicts future costs. 

But for the SSO, the past is irrelevant. The whole point of the product is that the customer changes their behaviour. 

If a retailer looks at a customer's past data (where they used lots of power at 6pm) and calculates the SSO price, the calculation will say: "Don't switch, this is more expensive." But if the customer plans to start washing their clothes at noon, they would save money. 

Conversely, if a retailer predicts savings assuming the customer will shift load, and then the customer doesn't, the customer gets a higher bill and the retailer gets in hot water for misleading them. Trying to calculate a "Better Offer" for this product by the start date is a fool’s errand.  

That’s why we need a safe harbour for the first year. The government should remove the obligation for retailers to perform "Better Offer" calculations for the SSO for the launch date. 

Instead of giving customers a potentially misleading dollar figure, we should focus on education. Let’s provide clear information: "This plan works if you can shift your usage. If you can’t run your appliances during the day, this isn't for you." Give consumers the information they need to make an informed choice and avoid forcing retailers to effectively use a crystal ball.  

The bottom line: evolution, not revolution 

The SSO is a glimpse into the future of the energy market: a world where demand follows supply and customers are rewarded for being flexible.  

But getting there requires a map, not just a mandate. By treating the SSO as a unique product rather than a standard safety net, excluding heavy controlled loads until the grid is ready, making sure retailers’ costs are aligned and removing impossible calculation requirements, we can start to build a policy that actually works. 

Let’s treat the start date as the beginning, a pilot, not the finish line. If we prioritise "getting it right" over "getting it done fast," we can turn a potential regulatory headache into a genuine win for Aussie households.