Kevin Wen is one of a growing number of Australians with rooftop solar who have decided the economics of installing a battery storage system finally stack up.
In 2022, Mr Wen was getting about 15 cents per kilowatt-hour for exporting his excess energy back into the grid.
“Then they lowered the buyback price to 8 cents, and then 5 cents, and then 3 cents now,” Mr Wen tells ABC News.
“I just think it’s a scam, so now I would like to use my energy for myself.”
Kevin Wen has installed a battery at his Sydney home after falling solar feed-in tariffs. (ABC News: John Gunn)
He’s far from alone. About 75,000 battery storage systems were installed across Australia last year — up 47 per cent from 2023.
That brings the total of home battery storage systems across the country to more than 320,000, according to solar energy consultancy SunWiz.
Chris Williams, CEO of Natural Solar, a company that now installs about 100 batteries a week, says the reduction in solar feed-in tariffs has been a tipping point for many of his customers.
“Solar feed-in tariffs, effectively, are a rate that the household will receive when power is sent back to the grid during the day from your solar panels,” Mr Williams says.
“Now, that rate, historically, may have been 15 cents or 20 cents per kilowatt-hour fed back to the grid.
“What we’re seeing today, that might be as low as, you know, 2 or 3 cents in New South Wales, in Victoria, it might be as low as, you know, less than 1 cent.”
Solar tariffs have also been as high as 60 cents per kilowatt-hour in Victoria, while New South Wales also offered generous incentives for the solar power people used themselves.
In certain circumstances, Mr Williams says, nowadays households will actually be charged for sending power back to the grid.
“Instead of making money, they’ll actually have to pay a fee to send that power back.”
Rising power bills, which are set to increase again in July, by 2–9 per cent depending on where you live, are also driving the boom in household battery installations.
Mr Williams’s business has received 250 per cent more battery enquiries since the regulated price increases were announced just last week.
“Consumers and households are very sensitive at this point in time, particularly on the back of the cost-of-living crisis we’re in, when they see that their power price is going to go up.”
Solar installs dwarf battery take-up
Households can save about $1,500 a year on power bills with rooftop solar, and another $1,000 with battery storage, according to the Smart Energy Council.
More than 4 million Australian households and businesses have rooftop solar but, despite the additional savings, only about one in 12 have battery storage.
The high purchase price of batteries has been a barrier for many.
“Batteries are, on average, around about $10,000 per system.
“We have seen prices come down year-on-year by between 5 and 10 per cent and we do expect that trend to continue,” Mr Williams says.
“The average battery should have a return on investment between six to eight years before subsidies — including subsidies, that may be as little as five to seven years for the average household.”
Solar energy consultancy SunWiz has crunched the numbers on how long it takes to make your money back on a combined solar and battery system.
The “payback time” now sits at about 8.3 years, which includes a mix of subsidised and non-subsidised systems.
Battery subsidies are currently only available through the New South Wales and the Northern Territory governments.
Other jurisdictions — like Victoria, Tasmania and the ACT — offer interest-free loans for batteries.
As the federal budget and election loom, there are calls for a national government subsidy, similar to the existing scheme for rooftop solar, to further reduce the cost of batteries.
“Solar energy, of course, doesn’t work at night-time, so what we want is a battery booster scheme that helps people take the energy from the middle of the day and use it in the evening when they’re home from work and school,” Smart Energy Council CEO John Grimes tells ABC News.
The Smart Energy Council, a peak body for the renewable energy industry, is calling for a national subsidy of $350 per kilowatt-hour (kWh).
In layman’s terms, that would reduce the cost of a small 5kWh battery to about $3,000, or $7,000 for a larger 10kWh battery.
Mr Grimes says battery storage systems would allow households to avoid higher prices when cheaper solar energy is unavailable.
“What solar batteries do is, they time-shift energy from the middle of the day, when it’s super-cheap, to make that super-cheap energy available at night-time, when prices spike,” Mr Grimes says.
Modelling by the Smart Energy Council shows that if Australia reaches 1 million solar batteries by 2030, households will save more than $19 billion.
“There’s a saving not just for the householder, but for the whole community. That’s because we’re taking pressure off when electricity prices are high.
“The more solar batteries we can install, the more money we save, the more we save individuals and the more we help the environment.”
Other renewable energy industry groups, including the Clean Energy Council, are calling for a national rebate for batteries of up to $6,500.
Former RBA deputy backs battery subsidy calls
Last year, the centrepiece of the federal budget was the $3.5 billion in energy bill relief for households, which amounted to a $300 rebate for households and $325 for small businesses.
Those rebates not only reduced household power bills but worked to bring down inflation.
Former RBA deputy governor Guy Debelle argues there is a better way to shield households from energy price inflation, which is subject to global shocks such as Russia’s invasion of Ukraine.
The former central banker, who also spent a period at Fortescue Future Industries, says instead of bill rebates, money should be spent on subsidies for batteries and increased incentives for bringing down the cost of solar.
“The relief to household budgets is only temporary, while they’re receiving those cash payments.
“You could repurpose that money to provide them with the opportunity to get rooftop solar and batteries to provide much more long-lasting insulation from energy prices.”
Mr Debelle says those incentives should also target low-income households, strata buildings and landlords.
“Sun isn’t subject to geopolitics, so it’s not going to be affected by Russia invading Ukraine,” he says.
Kevin Wen is glad he’ll be less reliant on the grid and therefore less exposed to price spikes.
Mr Wen was able to get $2,000 off the cost of his home battery storage system under the NSW government scheme, but says higher subsidies would encourage more people to take up solar and batteries.
“If they want to promote green energy, it is really good to increase the subsidies right now … If they can increase it, that will be great for everyone.”
Energy experts spoken to for this story say increased subsidies, not loans, will be the best way to increase the uptake of solar batteries.
A spokesperson for the federal minister for climate change and energy Chris Bowen said in a statement:
“The government is always looking for ways to ease household budget pressure.
“Through our Household Energy Upgrades Fund, we’re providing $1 billion to help Australian home owners lower their energy bills through discounted green loans for energy upgrades, such as solar panels and batteries.”
ABC News (Australia)
