Time of use tariffs foreshadow Solar Sharer challenge

Hey Reader, welcome to The Energy's weekly data newsletter. This week we explore the challenges with time of use tariffs as the market considers how it will deliver on the Solar Sharer promise.

Fine in theory

Energy policymakers have long cherished the idea of "time of use" and other smart tariffs nudging energy users in the direction of more rational use of their solar panels, batteries, EV chargers and grid power supplies.

The argument is simple in theory and familiar, but difficult in practice.

Households that make optimal use of their own solar generation during daylight hours — to drive energy hungry appliances or charge batteries or vehicles — and supply surplus stored energy to the grid during evening peak demand periods also help to smooth out the peaks and troughs of the grid.

Conversely, households that flood the grid with solar power during the day because they're at work or can't be bothered to schedule their appliances and batteries to soak it up reinforce grid peaks and troughs and undermine system stability.

So we should encourage them to do the right thing by offering time of use tariffs, "three for free" daytime offers, "peak energy rewards", cheap EV charging rates and other flavours of smart tariff.

In practice, consumer reaction to such cunning "nudges" has been mixed at best.

The St Vincent de Paul Society and Alviss Consulting attempted to make sense of the reasons why (beyond sheer inertia) and suggest solutions in its December 2025 Tariff Tracker.

Bill stack

To summarise: distribution networks (the poles and wires that distribute energy from transmission substations to homes and businesses) and retailers need to be more imaginative; and government comparison sites should do a lot more to explain the multiplying menu of smart tariffs and offers to consumers.

First though, we need to understand how retail electricity bills stack up.

Apart from GST, energy bills comprise four main types of charges: Network Use of System (NUOS) or poles and wires; wholesale energy; retail costs; and "green schemes".

Estimated bill stack for selected regulated/standing offers (top) and market offers (bottom). Average annual bill based on offers taking effect post July 2025 (6,000kWh per annum, single rate, excluding GST). *Source: St Vincent de Paul Society/Alviss Consulting*

These charts show the bill stack for selected distribution networks (see box below for geographic areas) in the National Electricity Market.

NUOS and wholesale charges duke it out for the largest bite of the typical bill, discounted "market offers" squeeze retailers' margins, and green costs — despite what you may hear — take just a nibble.

These figures are slices of typical bills, which (in the NEM) are lowest in dollar terms in Tasmania and Victoria, and highest in South Australia and NSW.

Victoria: Citipower (Melbourne CBD and inner suburbs), Powercor (Melbourne western suburbs, central and western Victoria), AusNet (Melbourne north and east, northeastern Victoria), United Energy (southeast Melbourne, Mornington Peninsula), Jemena (north-west greater Melbourne).

ACT: EvoEnergy.

Queensland: Energex (southeast Queensland).

NSW: Ausgrid (Sydney, Newcastle, Hunter), Endeavour (greater western Sydney, Blue Mountains, Southern Highlands, Illawarra, south coast), Essential (regional, rural and coastal NSW)

SA: SA Power Networks (statewide).

Solar squeeze

Rooftop solar got its early growth from renewable energy rebates and generous solar feed-in-tariffs. As it grew and destabilised the grid, feed-in-tariffs were slashed and retail bills for solar households edged up.

Rooftop solar installations didn't fall much though, because falling solar system costs and rising grid power prices still made it a no-brainer for most households.

Average annual feed-in tariff credits were slashed in 2024 (top), and typical annual retail bills for solar customers increased post July 2024 to post-2025 (bottom); 6,000kWh per annum, single rate, GST incl). *Source: St Vincent de Paul Society/Alviss Consulting*

The squeeze on solar households should have nudged more consumers to take advantage of time of use and smart tariffs and enrol in virtual power plants.

At the same time, the roll out of smart meters has hit 61% across the NEM (ranging from 39% in ACT to 47%-50% in Queensland, SA and NSW to 83% in Tasmania and 100% in Victoria).

That should mark a "pivot point" nudging retailers and customers towards more innovative smart tariffs, the Tariff Tracker says.

But so far it hasn't, at least not to the extent anticipated.

There are 345,000 time of use customers in Ausgrid's networks, 395,000 in SAPN's, 67,000 in Tasnetworks', 53,000 in Citipower's and just 20,000 in Energex's.

One reason is the roll out of such tariffs is mixed across the NEM. Distribution networks offer time of use and — in some states — daytime "solar soaker" tariffs, but the extent to which retailers — which charge customers — pass them on or vary them differs a lot.

For example, in Ausgrid's distribution areas, there are significant differences between surveyed individual retailers' tariff structures and between retailers and networks' tariff structures.

All except AGL apply a shoulder rate (or a three-part tariff) and different weekday and weekend charges. Six out of the 11 charge peak rates all year; the rest for only eight months.

The NUOS share of fixed costs also varies widely. from 38% (Momentum) to 67%. A low NUOS share of fixed costs indicates the retailer is recovering more of its wholesale and retail costs from fixed charges, as a hedge against solar+battery households buying less grid power.

NSW: Retail offers compared to Ausgrid’s time of use offer. ("Yes": retailer is following underlying network tariff; "No": it is applying its own structure; * Offer includes shoulder rate ^ Calculations do not include any additional discounts ^^Apply different rates to weekends and weekdays). *Source: St Vincent de Paul Society/Alviss Consulting*

South Australia: Retail offers compared to SA Power Networks’ TOU offer (RTOU). (* Standing offer only ^ Calculations do not include any additional discounts). *Source: St Vincent de Paul Society/Alviss Consulting*

Light touch

Queensland and SA (above) also show variation, and these two states include "solar sponge" tariffs between 10am-11am and 4pm. (None of the surveyed retailers offered solar soaker tariffs in Ausgrid's area, despite NSW having the largest rooftop solar fleet.)

Retail offers in NSW, Queensland and South Australia are lightly regulated; the Default Market Offer is just a benchmark for discounting.

But customers often need to be on specific underlying network tariffs to qualify for retailers' time of use or solar soaker offers, and information about this is patchy.

The federal government's Energy Made Easy website does not show underlying network tariffs. Some retailers, for example AGL, make the customer check if they are on the specified network tariff; others such as Alinta obligingly list qualifying network tariffs. The Victorian Energy Compare website is similarly light on information about eligible network tariffs.

In the more tightly regulated markets of Victoria, Tasmania and ACT, retailers do not vary the underlying network tariff structure at all. All surveyed retailers in Citipower's Melbourne CBD and inner suburbs network areas follow the underlying network tariff structure.