Push and pull factors to accelerate battery adoption in NSW

The last few weeks have been huge for home battery adoption in New South Wales. The new battery rebate is going to provide a major boost to the confidence of householders and business owners looking to make an investment in energy storage. And tariff changes for solar homes are likely to make batteries even more attractive.

The new solar battery rebate comes in the form of an up-front subsidy between $1,600 and $2,400 grant. And while it’s not an amount that will make the investment a trivial one, it sends a powerful message and adds to the growing list of reasons why households should make the most of the solar they generate on their roof and adopt energy storage.

The rebate will be available from Nov. 1 and is a part of the NSW government’s Peak Demand Reduction Scheme. The targeting of the program in this way makes sense on an electricity network basis, by taking aim at serving electricity demand locally at the time when it is most challenging, and expensive, to do so.

Photo: Government of NSW

The NSW climate change and energy minister Penny Sharpe spoke to this when announcing the new battery rebate: “This is a targeted action to support those with solar to take the next step to lowering their bills by using renewable energy. It also supports the state’s transition to renewable energy.”

It should be noted that the rebate won’t only apply to those adding a battery to an existing solar array. The government advises that for new solar-plus-storage installations the rebate will folded into the quote for the entire system.

“Approved suppliers”

The rollout timing also appears well judged. Although, in saying that, homeowners and businesses should be encouraged to act fast and begin seeking providers of residential solar and batteries sooner rather than later – as demand stemming from the rebate is likely to be high. And the end of the calendar year generally sees a surge in solar and battery installation activity as people tick off an important item on their “to do list” before the dawn of a new year.

By allowing some five months before the home battery rebates begin to flowing, the government has given itself sufficient time to assess and register the “approved suppliers” that can supply the systems under the program. It is vitally important that the new rebate scheme be insulated from unscrupulous or incompetent providers that may supply sub-standard components or botch installation.

Safety is paramount in distributed batteries. More than 250,000 Australians have already entrusted the solar and battery industry not only with their energy independence and security, but also with their safety.

It is encouraging to see that home batteries are overwhelmingly safe and that failure rates, as a proportion of installations, are falling – according to data compiled by US industry association American Clean Power. However, keeping homeowners and their families safe must remain an absolute priority if solar batteries are to become commonplace.

Orchestrate and prosper

There is a virtual power plant (VPP) component to the new NSW battery rebate. Two payments of between $250 and $400 will be available for homes and businesses that take part in a VPP – potentially maximising their financial returns from the battery and undoubtedly enhancing the utility of the energy storage throughout the network for the wider community.

The government says that it consulted “extensively” with VPP providers, and RePosit Power in particular, in the creation of the rebate policy. RePosit CEO Dean Spaccavento described this aspect of the policy as being a “win-win” for consumers and the electricity network.

“’Home batteries are now playing a crucial role in a cleaner, more secure energy future for NSW and earning money for their contribution.”

There have been some mixed signals from consumers about VPPs. While it makes sense to orchestrate the distributed energy resources, including batteries, in a way that supports the grid, some may be reluctant to give away at least some of the control they have over their battery system. Remember: many invest in a battery for energy independence.

Additionally, the virtues of VPPs can be a difficult thing to communicate. This can lead households to opt out of programs. Less tricky to understand are the use cases of home batteries themselves: allowing access to solar after sunset, providing backup power, and future-proofing households and businesses from future electricity rate rises or changes in tariff structure.

The push factor

The new subsidy isn’t the only factor that is making home batteries more attractive. Unfavourable solar tariffs, with rock-bottom for solar fed into the grid and sky-high rates for electricity drawn from the grid, have long been a driver of battery uptake. And in NSW, tariffs are only getting worse for solar homeowners.

In recent days, a picture of how new “two-way tariffs” will impact homes and small businesses that have invested in rooftop solar has become more clear. Major distribution network operator Ausgrid unveiled the structure of its solar tariff. And it looks mightily like a tax on solar.

The Ausgrid “two-way tariff” will involve a $1.2 c/kWh charge when solar electricity is exported between the hours of 10am and 3pm. On the other hand, it will provide a payment or credit of $2.3 cents/kWh for power fed into the grid during the peak demand period, which is 4pm to 9pm.

Not all solar power produced by a rooftop system will attract a change, under the Ausgrid scheme. There will a “free threshold”, or an amount of electricity free from an export tariff between 10am and 3pm, that will change each month. The amounts are between 192 kWh and 212 kWh.

Alongside Ausgrid, Endeavour Energy and Essential Energy have been allowed by the regulator to put such tariff structures in place. And with regulators next ruling on how distribution companies can structure their fees in South Australia and Victoria, in 2025, it could be a trend that goes national after the change in NSW.

Battery boom

While it’s not yet clear how electricity retailers will pass on the new charges from electricity distribution companies, it is obvious that they make batteries more attractive. Exports can be easily limited to below the “free threshold” by charging the battery with rooftop solar, while the battery could discharge to the grid during the late afternoon or evening – if it makes sense for the household to do so.

The equity and even need for such tariff changes is contested. While regulators appear to have accepted that distribution companies need to invest in their poles and wires, and control systems, to cope with growing rooftop solar, it is disputed by some experts.

Australia’s world-leading rates of rooftop solar uptake has made policymakers and regulators think differently about our energy system. And, at the same time, the need for and effectiveness of home batteries is increasingly becoming understood by our politicians and businesses alike.

The Clean Energy Council hit the nail on the head when reacting to the new NSW battery rebate: “It is fantastic to see a strong focus from the NSW government in ensuring that behind-the-meter batteries are more accessible to households, building on the continual success of Australia’s world-leading uptake of rooftop solar.”

It’s equally fantastic that the new battery subsidy will make the decision to invest in energy storage an increasingly easy one.

By Chris Williams | June 5th, 2024 | Categories: Home Energy Storage, News

These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes a general energy usage of 4000kWh/year for a residential customer on Energy Locals Time of Use Tariff – (TOU – Peak, Off-Peak & Solar Sponge).

The reference price is set by the Australian Energy Regulator (AER) for a financial year in relation to electricity supply to residential customers in the distribution region and is based on an assumed annual usage amount. Any difference between the reference price and the unconditional price of a plan is expressed as a percentage more or less than the reference price. The terms of any conditional discounts are shown, along with any further difference between the reference price and the discount applied if a condition is met, expressed as a percentage more or less than the reference price.