On January 23, 2026, the federal government confirmed that Solar Sharer will proceed as planned, giving households 3 hours of free electricity from July 2026. But there's a catch that affects roughly 3 million Australian homes: if your hot water runs on a controlled load circuit, it's explicitly excluded from the free power window.
Quick Answer
At Battery IQ, we've analysed the Solar Sharer consultation papers and expert commentary. From July 2026, retailers must offer 3 hours of free midday power to households with smart meters in NSW, SA, and SE Queensland. However, controlled loads (off-peak hot water on dedicated circuits) are excluded. This affects approximately 30% of Australian homes, roughly 3 million households, who have infrastructure that was originally designed for exactly this kind of load-shifting.
What You'll Learn
- ✓What Solar Sharer is and who benefits
- ✓How controlled load tariffs work and why they exist
- ✓Why controlled loads are excluded (and the unintended consequences)
- ✓Which states get Solar Sharer and why others miss out
- ✓What you should consider doing with your hot water setup
The 24 kWh Daily Cap: Bad News for Battery Arbitrage
If you were planning to charge your battery or EV for free during the Solar Sharer window and then use or export that power later, the government has anticipated this. There's a 24 kWh daily cap on free electricity consumption.
Why 24 kWh?
The cap is set at the average daily consumption of a household of four. This allows genuine household use (running appliances, pre-cooling, etc.) while preventing customers from using the free window primarily to charge batteries or EVs for later arbitrage.
What Does 24 kWh Mean in Practice?
| Scenario | The Maths | Impact |
|---|---|---|
| Maximum draw rate | 24 kWh ÷ 3 hours | 8 kW continuous during free window |
| Tesla Powerwall 3 | 13.5 kWh capacity | Can charge from empty, but uses 56% of daily cap |
| Large battery (20 kWh) | 20 kWh needed | Uses 83% of cap, little left for other use |
| Typical EV (60 kWh) | 24 kWh max = 40% charge | Nowhere near a full charge |
| Two EVs | 120 kWh total capacity | Only 20% of what you'd want |
| Normal household use | Dishwasher, washing, AC, pool pump | Comfortably within cap |
If You Were Planning to Exploit This...
The arbitrage strategy of "charge battery for free, sell back at peak rates" is significantly limited by the cap. Even if you could charge a 13.5 kWh Powerwall for free, you'd have little cap remaining for actual household use during the free window.
Retailers specifically lobbied for this cap because they were concerned about "disproportionate benefit" to battery and EV owners who would maximise charging during free periods.
What Happens If You Exceed the Cap?
The consultation papers don't specify enforcement mechanisms yet, but the most likely outcome is straightforward: once you exceed 24 kWh during the free window, you revert to your normal tariff rate for any additional consumption. Your smart meter tracks usage in real-time, and anything over 24 kWh would be billed at your standard rate. There won't be a hard cutoff where power stops - it's purely a billing mechanism.
What About Three-Phase Homes?
Note: The consultation papers don't explicitly state whether the cap applies per household or per phase. However, based on how smart metering and billing works in Australia, we expect the cap to apply per NMI (household), not per phase.
Smart meters report total consumption at your connection point, and retailers bill at the household level. This means three-phase homes likely won't receive a higher cap (i.e., not 72 kWh across three phases).
| Connection Type | Max Simultaneous Draw | Can Max Out 8 kW Average? |
|---|---|---|
| Single-phase (63A) | ~14 kW | ✓ Yes, comfortably |
| Three-phase (32A/phase) | ~22 kW | ✓ Yes, with headroom |
Three-phase homes can more easily use the full 24 kWh simultaneously (running EV charger + battery + AC + hot water at once), but likely won't get a higher cap. The advantage is operational flexibility, not more free power.
Bottom line: Solar Sharer is designed for shifting regular household loads to midday, not for filling batteries. If you have a battery, your existing solar + storage setup likely provides better economics than trying to exploit Solar Sharer.
What Are Experts Saying?
Not everyone is convinced Solar Sharer is well-designed. Hamish McKenzie, Deputy Director of Climate Change and Energy at the Grattan Institute (and formerly VPP Strategy Manager at AGL), raised several concerns on the day of the announcement.
Hamish McKenzie
Deputy Director, Climate Change & Energy, Grattan Institute
Former VPP Strategy Manager, AGL
"The Government's solution to undervoltage risk is also a non-solution. Having different time windows for free power in each DNSP doesn't address the grid stability issue because the issue exists at the feeder level, not at the distribution level."
"The decision to exclude controlled loads is a bad one. Excluding controlled loads from the free power window just gives households a massive incentive to switch their hot water from the controlled load to the primary circuit. Why pay 15c/kWh when you could pay 0c/kWh?"
"By successfully arguing for controlled load to be excluded, DNSPs have really shot themselves in the foot."
Source: LinkedIn post, 24 January 2026
Key Expert Concerns
- • DNSP time windows don't fix voltage issues - problems occur at feeder level, not distribution level
- • Controlled load exclusion backfires - creates incentive to abandon controlled loads entirely
- • Behavioural uncertainty - because it's opt-in, no one knows actual uptake or grid impact
- • May reduce rooftop solar installations - why pay $5k for panels when power is free?
The Surprising History of Controlled Loads
To understand why the controlled load exclusion is so ironic, you need to understand why controlled loads exist in the first place. The system was invented to solve a problem remarkably similar to the one Solar Sharer is trying to address today.
The 1950s Problem: Too Much Coal Power at Night
Coal-fired power stations were designed to run continuously. They couldn't easily ramp up and down. But electricity demand dropped significantly overnight when factories closed and families slept. State-owned utilities had abundant power with nowhere to send it.
The solution was elegant: create overnight demand by incentivising households to heat their water during off-peak hours. Utilities offered massive discounts (up to 75% off) for electricity used on a dedicated circuit they could control.
The Deal
What You Got
- • Much cheaper electricity (~15c/kWh vs 30c)
- • Larger hot water tank (to store heat all day)
- • Dedicated meter and circuit installed
What the Grid Got
- • Predictable overnight demand
- • Flexible load they could control
- • Better utilisation of baseload coal
This system was remarkably successful. By the 1970s, off-peak hot water had spread across Australia. Today, approximately 30% of Australian households (roughly 3 million homes) still use controlled load hot water systems.
The Irony
Controlled loads were invented to create demand for surplus overnight electricity. Today, we have surplus daytime electricity (from solar). The infrastructure to shift 3 million hot water systems already exists. But Solar Sharer excludes it.
How Does Off-Peak Hot Water Actually Work?
If you have off-peak hot water, your home has two separate electrical systems:
Your Home's Electricity
├── Main Circuit (general usage) → Meter 1 → ~30c/kWh
│ └── Lights, appliances, AC, EV charger, etc.
│
└── Controlled Load Circuit → Meter 2 → ~15c/kWh
└── Hot water system (dedicated, hard-wired)
The key difference: your Distribution Network Service Provider (DNSP) literally controls when power flows to the controlled load circuit. They switch it on during off-peak windows (typically 10pm-7am) and off during peak times.
| State | Controlled Load Options | Typical Operating Hours |
|---|---|---|
| NSW | Controlled Load 1 & 2 | CL1: 8hrs overnight / CL2: 18hrs |
| Queensland | Tariff 31 & 33 | Various off-peak windows |
| Victoria | Controlled Load (single) | Overnight, network-controlled |
| South Australia | Controlled Load (single) | Overnight, network-controlled |
| Tasmania | Tariff 62 & 63 | Two types available |
Why Separate Metering?
The separate meter lets your retailer charge different rates for your hot water versus general usage. It also lets the network physically control when your hot water heats, giving them flexible load they can shift around to balance the grid.
This flexibility is valuable. The network has historically used controlled loads to balance demand, reduce infrastructure costs, and maintain grid stability. That's why controlled load rates are so much cheaper.
Considering a Battery or Heat Pump Hot Water?
Solar Sharer changes the economics of home energy. See how a battery or heat pump fits your situation.
Calculate My SavingsWhy Are Controlled Loads Excluded from Solar Sharer?
The Australian Energy Council (AEC), representing retailers, successfully argued for controlled load exclusion in their submission to the consultation. Their reasons were both financial and technical.
💰Financial Risk
Under Solar Sharer, retailers must provide power for $0 during the free window. But they still pay network charges (DNSP tariffs) to deliver that power. If energy-hungry appliances like hot water run uncapped during free hours, retailers face large network costs with zero revenue to cover them.
⚡The "Voltage Cliff"
Most controlled load appliances use "dumb" timers. If the free window starts at 11am, millions of hot water systems would switch on simultaneously at that exact second. This instantaneous demand spike could cause voltage drops, appliance malfunctions, or tripped circuit breakers across the network.
From the AEC Submission (28 November 2025)
"The group reached a consensus that controlled load should be excluded from the SSO free energy blocks. The inclusion of controlled load presents financial risks [and] network stability concerns. Most controlled load appliances operate on 'dumb' timers. If the offer launches with a free window starting at 11am, millions of devices would likely turn on simultaneously at that exact second."
These are legitimate concerns. The infrastructure wasn't designed for synchronized daytime operation. But as Hamish McKenzie points out, the exclusion creates its own problems.
The Policy Contradiction: Making the Grid Less Flexible
Here's where it gets interesting. The controlled load exclusion, while solving short-term problems, may create larger long-term ones.
The Perverse Incentive
Consider a household with off-peak hot water:
- • Current situation: Hot water on controlled load = ~15c/kWh (overnight)
- • After Solar Sharer: Hot water on main circuit = 0c/kWh (3 hours free)
The maths is obvious: Why pay 15c when you could pay nothing?
McKenzie predicts households will get electricians to move their hot water off the controlled load circuit onto the main circuit. In Queensland, 1 in 3 solar installers already recommend this for customers with rooftop solar.
The Consequences
DNSPs Lose Flexible Load
The network currently has control over when ~3 million hot water systems run. As households abandon controlled loads, DNSPs lose this flexibility.
More Uncontrollable Daytime Demand
Hot water heating moves from controlled overnight to uncontrolled daytime. The network can't manage when these systems run anymore.
The Voltage Cliff Happens Anyway
The problem they tried to avoid (synchronised hot water startup) happens anyway, just through the main circuit instead of the controlled load circuit.
The Alternative That Wasn't Chosen
The Australia Institute published research in July 2024 suggesting a different approach: reprogram the existing 3 million controlled load systems to run at midday instead of overnight.
Their analysis found that off-peak hot water could absorb approximately 4,000 GWh of flexible demand, coincidentally almost exactly the amount of solar being curtailed each year. The infrastructure already exists. The signals just need to change.
Instead, Solar Sharer excludes controlled loads, which will likely accelerate their abandonment. As McKenzie puts it: "By successfully arguing for controlled load to be excluded, DNSPs have really shot themselves in the foot."
Should You Switch Your Hot Water Off Controlled Load?
Given the economics, moving your hot water from the controlled load circuit to your main supply is worth considering. Here's the practical breakdown.
The Break-Even Calculation
| Factor | Controlled Load | Main Circuit + Solar Sharer |
|---|---|---|
| Rate | ~17c/kWh | 0c/kWh (3hr window) |
| Avg daily hot water use | 3.5 kWh | 3.5 kWh |
| Daily cost | $0.60 | $0.00 |
| Annual cost | ~$220 | ~$0 |
| Annual savings | Baseline | ~$220/year |
11 months
Break-even @ $200 cost
17 months
Break-even @ $300 cost
22 months
Break-even @ $400 cost
What's Involved?
The electrical work is straightforward. An electrician moves your hot water system from the dedicated controlled load circuit to your main switchboard. The job typically takes 1-2 hours.
| Item | Cost | Notes |
|---|---|---|
| Electrician call-out + labour | $200-400 | 1-2 hours typical |
| Timer switch (optional) | $30-80 | Set heating for 11am-2pm |
| DNSP meter change (if requested) | $0-150 | Varies by distributor |
| Total typical cost | $200-500 | Depends on your situation |
Can You Heat a Full Tank in 3 Hours?
Yes. A standard 3.6 kW element in a 250-315L tank can heat from cold to full temperature in 2-3 hours. During the Solar Sharer free window (11am-2pm), most tanks can be fully heated. You'll want a timer to ensure heating happens during the free window rather than at random times.
The Compliance Question
Technically, changing your metering arrangements requires notification to your retailer and DNSP. However, here's the practical reality:
- •The controlled load meter stays in place - it just shows zero usage
- •DNSPs don't inspect what's connected to which circuit
- •Battery installers routinely move hot water to main circuits so solar/battery can power it
- •Your retailer may notice zero CL usage and enquire, or they may not
The Honest Assessment
The formal notification process exists, but enforcement is essentially non-existent for this type of change. Many households make this switch when getting solar or batteries installed without explicit DNSP approval. The main risk is insurance complications if something went wrong with non-compliant electrical work - so make sure a licensed electrician does the job properly.
Who Should Do This?
| Your Situation | Recommendation |
|---|---|
| Getting a battery installed anyway | ✓ Definitely - ask your installer to move it |
| Have solar, no battery, home during day | ✓ Good candidate - maximise your solar |
| No solar, eligible for Solar Sharer | Maybe - do the maths for your situation |
| In Victoria (no Solar Sharer yet) | Wait - see what VDO offers in 2027 |
| Planning to upgrade to heat pump | Don't bother - just do the heat pump upgrade |
Which States Get Solar Sharer?
Solar Sharer is being implemented through the Default Market Offer (DMO) framework, which only covers three regions. Other states have different regulatory systems.
| State/Region | Regulator | Solar Sharer Status |
|---|---|---|
| NSW | AER (DMO) | July 2026 ✓ |
| South Australia | AER (DMO) | July 2026 ✓ |
| SE Queensland | AER (DMO) | July 2026 ✓ |
| Victoria | ESC (VDO) | Consulting - possibly 2027 |
| Regional Queensland | Govt-regulated (Ergon) | Not included |
| Tasmania | State-regulated (Aurora) | Not included |
| ACT | Own reference price | Not included |
| WA / NT | Not in NEM | Separate grid - not included |
Why Only DMO States?
The Default Market Offer is a federal price safety net regulated by the Australian Energy Regulator. Solar Sharer is being implemented by modifying the DMO rules. States with their own price regulation systems (Victoria's VDO, Tasmania's Aurora, regional QLD's Ergon) would need to implement similar schemes separately.
Victoria is the most likely to follow. The Essential Services Commission is already consulting on a "solar soak" tariff for the 2026-27 Victorian Default Offer, which would create a similar low-cost midday window.
What Should You Do?
Solar Sharer changes the economics of home energy. Here's how to think about it:
If You Have Off-Peak Hot Water
You have a decision to make. Your options:
| Option | Pros | Cons |
|---|---|---|
| Keep controlled load | No changes needed, reliable ~15c/kWh | Miss out on free Solar Sharer power |
| Move to main circuit | Access 0c/kWh free window | Pay ~30c/kWh outside free hours; need timer |
| Upgrade to heat pump | 3-4x more efficient; works great with solar | Upfront cost ($2,500-$4,500 after rebates) |
Our view: If you're considering changes anyway, a heat pump hot water system is often the best long-term choice. They're 3-4x more efficient than resistive heaters and work excellently with solar (daytime or battery-stored). See our heat pump hot water guide.
If You Don't Have Solar
Solar Sharer is designed for you. You can benefit from Australia's solar abundance without installing panels:
- • Make sure you have a smart meter (contact your retailer if unsure)
- • When Solar Sharer launches, opt into a participating plan
- • Shift what you can to midday: washing, dishwasher, EV charging, pool pump
- • Consider appliances with timers for set-and-forget scheduling
If You Have a Battery
Solar Sharer includes a daily usage cap specifically to prevent battery owners from "exploiting" the free window by charging batteries and discharging later. However:
- • Your existing solar + battery setup likely provides better economics anyway
- • VPP participation may offer more value than Solar Sharer arbitrage
- • Focus on optimising your energy plan for your actual usage patterns
Key Takeaway
Solar Sharer is one piece of a changing energy landscape. The bigger opportunity is whole-home electrification: combining solar, batteries, heat pump hot water, and smart energy management. That's where the real long-term savings are.
Not Sure Where to Start?
Upload your electricity bill and get personalised recommendations for your home - including whether switching your hot water makes sense.
Analyse My BillFrequently Asked Questions
What is the Solar Sharer program?
Solar Sharer is a federal government initiative requiring energy retailers to offer households at least 3 hours of free electricity during peak solar generation (typically 11am-2pm) from July 2026. It applies to NSW, SA, and SE Queensland initially, with other states potentially joining in 2027.
What is a controlled load tariff?
A controlled load tariff is a cheaper electricity rate for appliances on a dedicated circuit (usually hot water) that the network can switch on/off remotely. You get around 50% cheaper power (~15c/kWh vs 30c/kWh) in exchange for the network controlling when your appliance runs, typically overnight.
Why is my hot water on a separate meter?
Your hot water system has a separate meter so it can be billed at a cheaper controlled load rate. This system dates back to the 1950s when utilities needed overnight demand for coal power stations that ran continuously. The separate circuit lets the network control when power flows to your hot water.
Will Solar Sharer include my off-peak hot water?
No. The government has explicitly excluded controlled loads (including off-peak hot water) from the Solar Sharer free power window. Your hot water on a controlled circuit will continue to operate on its existing overnight schedule and tariff.
Why are controlled loads excluded from Solar Sharer?
Two main reasons: 1) Financial risk - retailers would pay network charges but receive $0 revenue. 2) Grid stability - millions of hot water systems switching on simultaneously at 11am could cause voltage drops. Most controlled loads use "dumb" timers that can't stagger their start times.
Should I move my hot water off the controlled load circuit?
It depends. Moving to main supply would let you use free Solar Sharer power (0c/kWh for 3 hours) instead of controlled load rates (~15c/kWh). However, you'd pay full rates (~30c/kWh) outside those hours. The maths only works if you can reliably heat water during the free window.
Which states get Solar Sharer?
From July 2026: NSW, South Australia, and South-East Queensland (these use the Default Market Offer framework). Victoria is consulting on a similar scheme for 2027. Regional Queensland, Tasmania, ACT, WA, and NT have different regulatory systems and aren't included initially.
Do I need solar panels to benefit from Solar Sharer?
No. Solar Sharer is designed to share Australia's abundant solar generation with all households, including renters and those without rooftop solar. You just need a smart meter and the ability to shift some electricity use to the free midday window.
How much could I save with Solar Sharer?
Government estimates suggest: shifting 10% of usage saves $150-400/year; shifting 20% (dishwasher, washing, dryer) saves $300-790/year; shifting 25-30% including EV charging saves $800-1,100/year. Savings depend on household size and ability to shift loads.
Is there a limit on how much free power I can use?
Yes. Solar Sharer has a 24 kWh daily cap on free electricity, equivalent to the average daily consumption of a household of four. This prevents battery and EV owners from exploiting the free window. With a 3-hour window, this means a maximum continuous draw of 8 kW.
Can I charge my home battery for free with Solar Sharer?
Only partially. The 24 kWh daily cap limits how much you can charge. A Tesla Powerwall 3 (13.5 kWh) couldn't fully charge from empty within the cap. Large batteries (20+ kWh) would exceed the daily limit. The cap is specifically designed to prevent battery arbitrage.
How much does it cost to move hot water off controlled load?
An electrician typically charges $200-400 to rewire your hot water from the controlled load circuit to your main switchboard. You should also set up a timer to ensure heating happens during the Solar Sharer free window. The break-even period is roughly 11-22 months, after which you're saving around $220/year.
Do I need to notify anyone if I move my hot water circuit?
Technically, you should notify your retailer and DNSP about metering changes. However, if you simply rewire the hot water to another circuit without removing the controlled load meter, the meter will just show zero usage. Many households do this when getting batteries installed without formal notification. The controlled load circuit still exists - it just has nothing connected to it.
Is the 24 kWh cap per household or per phase?
The consultation papers don't explicitly state this, but based on how smart metering and billing works in Australia, we expect the cap to apply per household (per NMI), not per phase. Smart meters report total consumption at the connection point, and billing is done at the household level. This means three-phase homes likely won't receive a higher cap than single-phase homes.
Written by the Battery IQ research team. Last updated 26 January 2026. Sources: DCCEEW Solar Sharer Consultation Outcome Paper (23 Jan 2026), Australian Energy Council submissions, The Australia Institute research, Grattan Institute analysis. Expert commentary from Hamish McKenzie, Grattan Institute.
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