What is a solar sponge tariff?

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This Canstar Blue guide explains how solar sponge tariff works, who can access it and whether it could help you save on your energy bill.

As rooftop solar systems have become increasingly popular, the power grid is dealing with an influx of solar energy exports. This is especially the case during the middle of the day, when solar energy exports are at their highest. Unfortunately, this peak export time doesn’t align with the usage habits of most households, which means solar energy goes to waste and puts unnecessary strain on the grid. This is why the ‘solar sponge tariff’ has been introduced, to combat this dilemma.

Canstar Blue uncovers how the solar sponge tariff differs from other tariffs, as well as other details below.

What is a solar sponge tariff?

A solar sponge tariff is a time of use (TOU) electricity tariff for households. So instead of households on this tariff paying the same electricity rate all day, the rate becomes cheaper during a certain period of the day. This period is generally between 10am and 3pm, where there is the biggest discrepancy between the amount of solar power being created and the level of demand.

The idea is that a solar sponge tariff “soaks up” excess solar power generated during this time. Then rewards customers with cheaper rates when they shift their usage to the middle of the day, instead of during the afternoons/evenings when demand is highest.

How do solar sponge tariffs work?

A solar sponge tariff works by charging customers different rates for electricity usage, depending on the time of day. With the use of a smart meter, customers will be charged a smaller amount for usage during off-peak times but more in peak times.

To get the most out of a solar sponge tariff, households will need to shift their energy usage habits to align with off-peak times. This can be done in small ways, such as putting your washing machine on a delayed start or running the dishwasher in the morning instead of the evening. Flexible pricing tariffs may not help to make energy bills cheaper if households don’t change their energy usage habits. In fact, it may increase power bill costs.

Who can access solar sponge tariffs?

Anyone can access a solar sponge tariff – whether you have solar panels installed or not. The main thing that may prevent a household from accessing a time of use tariff with a solar sponge period is the type of meter that is installed. Solar sponge tariffs require a smart meter in order to accurately measure the time of use data.

Access to a solar sponge tariff will also be dependent on the distribution network a household is located in. Some areas may not offer this kind of tariff.

Read more: How to get a smart meter

Which states and territories offer solar sponge tariffs?

Solar sponge tariffs were first introduced in South Australia, but are now also available in New South Wales (Endeavour Energy network only), South East Queensland and Victoria. Unfortunately, the Australian Capital Territory, Tasmania, Northern Territory, Western Australia and the Ausgrid and Essential Energy networks in New South Wales are yet to implement solar sponge tariffs. This is expected to change in the next three to five years.

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What to consider before signing up to a solar sponge tariff

Using a solar sponge tariff means that peak energy times – when people typically use the most power – will become a more expensive time to use energy. And while it means that off-peak times become significantly cheaper to use power in, if households can’t shift a large portion of their energy usage to fit these times, then any potential savings could become void.

If you decide to go with a solar sponge tariff, the most important thing to consider before switching is your personal energy usage and habits. This might mean taking a look at the biggest power users in your home. Some appliances you might need to consider switching usage for include:

1. Dishwashers
2. Washing machines
3. Clothes dryers
4. Air conditioners
5. Ovens
6. Slow cookers
7. Electric vehicle charging
8. Pool pumps
9. Heaters
10. Charging appliances, such as speakers.

Customers with a solar battery may also find some added benefit from a solar sponge tariff by aligning their solar energy usage with their plan’s peak times. This way, they can avoid paying for grid energy during the most expensive part of the day.

Should I switch to a solar sponge tariff?

This decision comes down to whether or not shifting a large portion of your energy usage can justify potential cost savings from off-peak rates. If you are in a position where you can afford to rotate most energy usage to the middle of the day, then there could be an opportunity to save on energy bills with a solar sponge tariff – particularly if you also have solar energy generation and storage on your property too.

However, if you don’t think that shifting power usage will be a simple task, it may be safer in the long term to stay on a single-rate tariff and focus instead on finding cheaper usage or supply rates. You are not only getting significantly cheaper rates for off-peak times, but also considerably more expensive rates for peak times – in most cases, even more expensive than average rates on a standard single rate tariff.

If you’re unsure of whether your household may benefit from a solar sponge tariff, it might be worth reaching out to your retailer and seeing which options they think will suit you best based on your past usage data.

In the meantime, if you’re on the hunt for a new single rate electricity plan then be sure to head to Canstar Blue’s free comparison tool below. Here you’ll find a range of energy offers available in your area. To get started, just add your postcode.

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