Energy Giants Warn: Free Power Scheme Could Benefit Wealthy Households Most

January 19, 2026 — 5:00am You have reached your maximum number of saved items. Remove items from your saved list to add more. Save this article for later Add articles to your saved list and come back to them anytime. Major energy retailers have asked for more time to comply with rules forcing them to offer three hours of free daytime power, and warn the scheme needs more work to avoid disproportionately benefiting customers with batteries and electric cars while leaving lower-income households behind. In a series of talks held over the holiday period, executives from across the power industry urged the government to delay the rollout of its so-called Solar Sharer plan by at least a year. The proposed rules, set to take effect from July 1, are an attempt to spread the benefits of the clean energy transition by compelling retailers to offer free electricity to opt-in customers in the middle of the day, when rooftop solar regularly floods the grid with more supply than it needs and causes prices to crater. Representatives from two of the nation’s largest power companies, AGL and EnergyAustralia, told government officials they supported the intent of the reform: encouraging more people to use power when cheap renewable energy is most abundant could ease demand surges after sunset and smooth out volatile price swings. However, they backed calls for the scheme to be delayed until at least mid-2027, amid warnings that full implementation this year would be “extremely challenging”, as there are concerns that the design needs more work to avoid causing unintended consequences. Advertisement One of the central concerns was that the plan, without significant structural changes, could drive up prices at other times of the day and create a “cross-subsidy” whereby renters and other households unable to shift their usage times may end up paying for benefits flowing to those who can capitalise on the “free” power window to fill up their battery systems and electric cars. The government indicated it did not intend to delay the start date, according to government and industry sources briefed on the discussions but not authorised to comment publicly. This meant retailers in NSW, South Australia and south-east Queensland, where the Australian Energy Regulator sets safety-net conditions, would be required to offer the opt-in plan from July, the sources said. Energy Minister Chris Bowen said the move was a logical step in a nation with more solar panels per person than anywhere else on Earth, and the government was committed to ensuring “we get this reform right”. “It makes sense that people should be able to benefit from our abundance of clean, cheap power,” Bowen said. Advertisement “We’re consulting closely with networks, energy users and industry.” Solar Sharer, if designed well, could help lower system-wide costs and “make the energy transition fairer and more accessible”, EnergyAustralia said in its submission. But without “careful implementation”, the retailer said, there was a material risk that it could “actually make customers worse off, or at best involve material implementation costs without delivering savings for individual customers or the energy system”. AGL, one of only a few Australian retailers to already offer a plan built around free access to power in the middle of the day, said it believed it was premature to lock “free” periods into the regulated pricing structure, and more time was needed. “We are concerned that a rushed implementation risks creating unintended consequences and will introduce further complexity into the regulatory framework,” the company said in a submission. Advertisement A key problem, industry leaders argued, was that the proposal mandated retailers offer $0 per kilowatt-hour for a three-hour window without reforming other underlying costs that they must pass on. These include network tariffs for the use of power line infrastructure, which account for about one-third of a typical bill, and the cost of environmental certificates to demonstrate the use of renewable energy. Unless other costs are also reformed, retailers would need to charge higher fixed rates and charges for afternoons and evenings to recoup their losses, they said. This could create a risk that customers who sign onto the Solar Sharer plan, but are unable to shift enough of their electricity usage into the free daylight hours – such as people who work during the day – could find themselves paying higher bills. AGL said the scheme should include safeguards and limits on which customers could use the scheme to avoid unfair “cross subsidies”. The Australian Energy Council, which represents top power generators and retailers, said the policy in its present form was “not cost-reflective, introduces systemic risk and may lead to negative outcomes for the very consumers it is intended to help”. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning. You have reached your maximum number of saved items. Remove items from your saved list to add more. More: Energy Electricity Renewables Nick Toscano is a business reporter for The Age and Sydney Morning Herald.Connect via Twitter or email.