Calls for federal grants on home batteries as energy retailers slammed for 'un-Australian' solar payment drops - ABC News

Nov 06, 2024

Topic:Solar Energy

Neil Kumar has solar panels on his house but has also installed a second battery system. (ABC News: John Gunn)

Soaring power bills and plunging incentives for excess solar power sent to the grid are pushing more Australian households into installing home energy storage.

Yet these battery systems are still very expensive and don't stack up for many, leading to calls for federal subsidies and agitation from the federal Greens ahead of an election.

"Astute political parties will be jumping on this," energy economist Bruce Mountain said.

Solar power is typically used in real time to power a home when the sun is shining, with excess power that isn't used sent back to the grid, leading to a small financial benefit to the home owner.

Batteries can be used to store excess solar energy to be used at any time, such as heating in the evening or charging an electric vehicle when it is parked for the night.

Neil Kumar just installed his second battery in the garage of his family home in Penrith in Sydney's western suburbs.

The high-end Tesla battery was not cheap at $12,000, but he thinks it is worth it.

"It makes sense to actually recycle the energy that I'm producing in my own house rather than feeding it back to the main grid," he told the ABC.

Mr Kumar came to this conclusion after looking at how much cash he is getting back from his energy retailer for his excess solar power, know as a feed-in tariff (FIT).

FITs have been dropping across Australia.

In New South Wales, they have dropped from 10.2 cents per kilowatt hour in 2020 down to almost half that at 5.8 c/kWh in mid-2024, according to a recent report from the St Vincent de Paul Society.

Energy retailers are continuing to slash their incentives to take up solar energy as the grid becomes overloaded. (ABC News: John Gunn)

By this comparison, Mr Kumar has actually got a good deal at 7 c/kWh.

But he still does not think it is worth it.

"I'm literally getting $25 bucks in my pocket (a bill) for supplying the main grid," he said.

"When we were getting a better tariff [maybe], four or five years ago, I did actually make a decent profit."

FITs are dropping because the amount of solar being supplied to the grid has soared as more household install panels, according to the industry group for energy retailers.

"Feed in tariffs represent the value of electricity at the time of day where its being generated," the Australian Energy Council's (AEC) Ben Barnes told the ABC.

"There's a supply glut."

The plunging FITs are coming as the amount that Australians are paying back to energy retailers continues to soar, with power bills a continuing driver of inflation.

The AEC said this disjunct is occurring because providing power to households is more complex than taking it, with overheads such as the cost of poles and wires and running electricity companies driving up power prices.

Ben Barnes is the general manager of corporate affairs at the Australian Energy Council. (ABC News: Peter Drought)

Yet this rationale should be challenged, said Professor Mountain, an energy economist at Victoria University and the director of the Victoria Energy Policy Centre.

"It's partly rational and it's partly not," he said.

"Many of the retailers are figuring out that they can't compete by cross subsidising rooftop solar imports."

To the owner of Australia's biggest installer of battery systems, the situation with dropping FITs is "unfair".

Chief executive and founder of Natural Solar Chris Williams thinks Australian households invested in solar thinking the payback would stay higher for longer.

"What we're seeing with the solar feed in tariffs is really un-Australian," he said.

But Mr Williams's company is clearly benefiting off FIT rage.

The Sydney-based installer is typically inundated with enquiries for battery installations whenever a specific retailer or state announces yet another FIT reduction.

The amount of Australian homes with households batteries has soared in two years, from one in 60 to one in 40, according to figures from the federal government.

While FIT rage is pushing more people towards batteries, Professor Mountain says the economics of them won't stack up for every household.

Cheaper batteries are now down to about $6,000 to $8,000, but premium systems such as the Tesla installed by Natural Solar and just purchased by Mr Kumar, cost up to $12,000.

Households that use large amounts of power will more easily payback that initial outlay through the savings on their power bills, Professor Mountain says.

Chris Williams is the chief executive and founder of Natural Solar. (ABC News: John Gunn)

Smaller households still may find they're better off using their excess solar to charge up battery powered items during the daytime, he says.

Professor Mountain is actually in this position himself at his solar powered home in regional Victoria.

Despite just receiving a FIT drop, he is currently happy to use that excess power to power his electric car and scooter, rather than install a battery.

"For many customers, that's quite a hassle," he said.

"And so I think storage becomes an alternative opportunity for them to get better use of their solar.

"In combination with steeply rising grid prices and steeply falling sales prices for export of solar surpluses, batteries are making a lot more sense for many customers."

Mr Kumar reckons the second battery that he just installed in the garage of him family's home in Penrith will take him about eight years to pay back in savings.

And that doesn't include paying back the cost of the first one, which he found wasn't big enough to store his two-storey home's significant solar generated energy.

"It's a long term gain, but definitely just gives us the freedom to use things like air conditioning at night," he says.

Mr Kumar acknowledges that not many households can afford such a big outlay, especially during a cost of living crisis when everything from groceries to insurance has gone up quickly in price.

"I think the government should be helping out," Mr Kumar said.

There are a range of incentives on a state by state basis for battery systems. In NSW, for instance, grants are being launched from November that give buyers back up to $2,400.

Federally, the Labor government has launched a scheme that gives people lower interest loans to buy renewable energy items such as household batteries.

It says it expects to help about 110,000 households with this scheme, although the opposition is challenging the benefits of this as a "mirage".

Rocketing power prices have reignited interest in rooftop solar, but are low feed-in tariffs discouraging people from taking the plunge?

As power bills climb and FITS continue to drop, both the Clean Energy Council and the Smart Energy Council are calling for more federal incentives on household batteries.

Neither the government, federal opposition or Greens could share a specific policy on battery grants when approached by the ABC, with the federal government pointing to its low cost loans scheme.

"We need to be doing much, much more," Greens leader Adam Bandt said this week.

"And as we get closer to the election, the Greens will be pushing Labor to do more to get batteries into their homes."

Professor Mountain said grants for battery storage on homes could be a "vote winner" that would help bring down power bills in the long-term, compared to current energy inflation measures like temporary rebates.

"It was somewhat disappointing that the federal government doled out cash (to energy retailers) without getting something in return," he said.

"It should be doling out cash for the expansion of battery backed clean energy.

"It increases supply, and brings down prices for everyone.

"So it's not just a policy for the middle classes."

The AEC was reluctant to back calls for grants, with its spokesperson saying federal cash might be better served helping renters and apartment owners get solar panels themselves.

"[Batteries] are still not going to be beneficial for many customers [even] if the price of batteries came down significantly," Mr Barnes said.

LIVE

Topic:US Elections

Topic:US Elections

Topic:Explainer

Topic:US Elections

Topic:Solar Energy

Topic:Solar Energy

Topic:Solar Energy

Alternative Energy

Federal Government

NSW

Solar Energy

Topic:US Elections

Topic:US Elections

Topic:US Elections

Topic:Explainer

Topic:US Elections

Topic:Federal Government

Topic:US Elections

Topic:Rugby League

Topic:US Elections