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Greens pledge $2.9bn to put battery storage in one million homes, businesses

Sophie Vorrath
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A scheme that would help more than one million Australian households install heavily discounted battery storage over the next five years has been announced by the Greens, as part of a new policy aimed at accelerating the shift to renewables.

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The nearly $3 billion policy – which would “redirect” money from fossil fuel tax breaks – was unveiled by Greens Leader Richard Di Natale and energy spokesperson Adam Bandt in Canberra on Thursday.

The five-year program would see individuals get up to half the cost of their battery storage system covered, up to a maximum of $5000 in the first year of the program, with the amount of the credit tapering off to $1,500 by 2021, to reflect the projected decline in technology costs.

A grant scheme targeting low income homes would also be made available. All up, the policy would support as many as 1.2 million households over the five years of the program, the Greens said.

The scheme would also cater to as many as 30,000 businesses, with a measure allowing battery storage assets to be depreciated for tax purposes over an accelerated period of three years.

The policy seems to acknowledge that while interest in battery storage uptake is taking off in Australia, and prices of the technology are coming down, the economics don’t yet stack up for the vast majority of households or small businesses.

Currently in Australia, the City of Adelaide offers a $5000 rebate per storage system to residents and the ACT has a $25 million program to support the roll out of storage to 5000 homes.

“Now is the time to jumpstart the battery industry, encourage the take up of storage and help make Australia a renewable energy leader,” said Bandt.

“With public interest high, now is the time for a targeted, 5-year support package to drive down costs and put battery storage in reach of every household and business.”

The Greens said both programs would be funded by savings, including $2.75 billion from the reform of accelerated depreciation concessions for fossil fuels intensive industries.

According to Parliamentary Budget Office costings, the household policy would cost $2,850 million, while support for business would cost $38 million over the forward estimates.

Senator di Natale said that driving battery uptake would also generate economic growth and jobs.

“Australia has some of the best battery technologies in the world and increasing battery uptake will help create advanced manufacturing jobs in regional communities,” he said.

“We will accelerate the take up of clean energy by redirecting money from fossil fuel tax breaks into support for battery storage in homes and businesses.”

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20 responses to “Greens pledge $2.9bn to put battery storage in one million homes, businesses”

  1. Brunel Avatar
    Brunel

    For that kind of money AUS could pay Tesla to build a Gigafactory in AUS – which would create jobs and exports.

    1. Alistair Spong Avatar
      Alistair Spong

      Except that we don’t have the population of Europe, China or the USA – even Aussie start Redflow manufactures in the states because it costs less and they have the capacity to do so

      IMO what a large roll out of batteries would do is make us experts in technology adaption , then companies could export that knowledge into other markets. We Aussies are inventors and adaptors.

      1. Brunel Avatar
        Brunel

        Israel has a tiny population and exports inverters that work with Powerwalls.

        Israel makes computer chips also.

        Sweden exports Volvo cars.

        Singapore has a smaller population than AUS and exports solar panels.

        1. Alistair Spong Avatar
          Alistair Spong

          That’s all great information , Israel is of course on the doorstep of Europe, Sweden also – I guess the point I’m making is that manufacturing hasn’t proven to be a big profit spinner in Australia since before the 80,s – why do you think this can change ? Especially when a company like Redflow goes to great lengths to relocate it’s manufacturing from Australia to the USA .

          1. Brunel Avatar
            Brunel

            How come they make great microphones in AUS.

            Why do you think AUS should not copy South Korea, Singapore, Israel, Ireland, when it comes to manufacturing.

            I suppose you do not want government to give a leg up to factories.

          2. Alistair Spong Avatar
            Alistair Spong

            Not at all mate , I think it would be great if Australia manufactured many more of its own goods. My point is that Australia seems to have lost its competitive advantage in this area of our economy. The Reduction of tariffs since the Hawke government have seen many industries from footware to clothing to automotive industries dwindle and collapse. I see no sign of either the major parties changing tact in this regard, and is why I question your initial statement that suggests you think taxpayers should be subsidizing manufacturing jobs – ie tesla – while we could debate the pros and cons of tariff reduction I think the better question is what is the best use of funds to expand renewable energy , the only working example I have is Redflow who have chosen to export there manufacturing to the USA , it would seem this company thinks that is the most efficient use of capital and hence possibly why the greens policy wants to subsidize installation – inventing and adapting pays better than manufacturing

          3. Brunel Avatar
            Brunel

            South AUS makes solar panels. Inverters are also made in AUS.

            Along with tiles and windows.

            I doubt the Greens think we should stop making hybrid cars in AUS.

        2. Geoff Avatar
          Geoff

          and yet we export coal, gas and iron ore – materials that are severely damaging to our health and environment whether it being the extraction or usage phase.
          the SA government has already approached Tesla to build a factory in their state, but they politely declined.

          1. Brunel Avatar
            Brunel

            SA approached too late and that was for a car factory not a battery factory – for which AUS has raw materials in the ground.

            Israel also exports computer chips.

  2. Diana Avatar
    Diana

    Tend to agree with other contributors here – why don’t we use the big bucks to build a big technology outlet that benefits us here and overseas? A huge amount of money to subsidize batteries for exactly the same cohort (those with mortgages) to add to the huge amount of subsidies made available to them to put on “free roof insulation”, solar hot water and the solar panels to generate what goes in to the batteries continues to ignore that many, many people don’t have the mortgage advantage, or a suitable roof (a lot of apartment blocks can’t be retrofitted, or huge towers of apartments can’t support significant solar to offset resident bills). Why on earth would the Greens just do another Rudd/Gilliard preferential subsidy, costing billions, and have a partial, puny and barely there plan for everyone else’s ability to cope? Why do they have to wait until “distributed solar”, ie, mum’sn’dads homes – are we really sure about the integrity of those panels, those batteries, for mum’n’dad homes as an alternative for commercial outlets? – years in to the future to experience “relief” in bills because price rises are “slowed”. What about indenturing everyone now, all at the same time? Can’t we build banks of solar everyone can buy in to? And subsidize that?

  3. Khalid Amir Mahmoud Abdulla Avatar
    Khalid Amir Mahmoud Abdulla

    I’m a big fan of solar & storage, but I’m not convinced that a solar panel on every roof and a battery in every garage is the best solution. People put a lot of emphasis on the benefits of generating electricity close to where it is used, suggesting that transmission and distribution losses are avoided.

    This doesn’t really stack up. The round-trip DC efficiency of a Li-Ion battery is around 90-93%, so they have 7-10% losses. Let’s call it 10% to allow for the AC-DC losses not considered. In Australia average transmission and distribution losses are just 6% (http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS/countries/1W-AU?display=graph ).

    A few years ago I did a study looking at the relative cost-effectiveness of installing storage to smooth out temporal fluctuations in renewable energy output, or transmission to smooth out spatial fluctuations. There were many assumptions made in the study, and some of the cost numbers are now out of date, but I still agree with the conclusion that it is cost-effective to transmit large quantities of energy over large distances, if the only alternative is installing an increased amount of storage (https://www.researchgate.net/publication/272172048_Selecting_an_Optimal_Combination_of_Storage_Transmission_Assets_with_a_Non-Dispatchable_Electricity_Supply )

    1. Ian Avatar
      Ian

      I might be out of line here, but a large part of the cost of a distribution network is the design for peak loads. A thick wire is needed to supply enough power for a short peak load event whereas a much thinner one would do for average power consumption. Local solar and storage can reduce those peaks especially peaks produced by the notorious air conditioner.

      1. Khalid Amir Mahmoud Abdulla Avatar
        Khalid Amir Mahmoud Abdulla

        Hi Ian, that’s a very valid point; and is one of the reasons that combining storage to smooth out time-based supply/demand mismatch and transmission to smooth out location-based supply/demand mismatch is effective.

        If you limit yourself to one or other option (at one extreme having isolated energy supply systems for each user, and at the other having no storage at all), you tend to end up with a higher cost solution.

        I’d like to add I’m a big supporter of the Greens, and the proposed scheme (from what I’ve read of it so far). The reason I made my comment is that the long wires we use to transmit power are very visible, so I think people’s intuition is that they result in high losses, whereas in fact they are really very efficient.

        1. Ian Avatar
          Ian

          Nice way to categorise types of supply/demand mismatching, temporal and spacial. You are saying the losses for long range transmission and for round trip battery storage are very similar. With the advent of cheap solar there need be no spacial mismatch for edge of grid situations ( specifically, remote towns) , but there is a severe temporal mismatch, both diurnal and longer term. What would be cheaper to supply this temporal mismatch? Batteries or grid connectivity?

          To answer this we would need to look at the ” storage ” requirements. I think this could be categorised into at least two extreme requirements. The diurnal requirements time-shifting daytime solar to nighttime peak and other consumption. Then there is the standby function of ” storage “, this is a much higher storage capacity to last several days of inclement weather. Standby electricity storage or supply would have to last a few days and thus be multiples of daily storage.

          This is the rub. Short of using local standby fossil fuel generators for very occasional prolonged absences of sunny weather, or oversized battery banks, long transmission lines will probably still be needed.

          I cannot understand why a company like Redflow with its flow batteries does not see this. That is the advantage of a flow battery. The expensive parts of a flow battery like the pumps, controllers, reactor chambers contribute to the peak power output, but the reagents and the reagent storage containers are cheap and can be made very large. They could make a battery with 100 KWH of storage with a 10 KW peak output for not much more than the cost of a 10 KWH / 10 KW battery.

          Spacial mismatch of supply and demand I would see as being situations where solar cannot be installed in sufficient quantities such as in inner city and apartment dwelling. This problem is often paraded as the unfairness of solar subsidies: renters and City dwellers cannot participate. Well, the answer is simple, allow the use of the grid to transmit electricity from a private point of production to a point of consumption. The grid is then used as a transmission service and is paid a fee for their service.

          1. Khalid Amir Mahmoud Abdulla Avatar
            Khalid Amir Mahmoud Abdulla

            Hi Ian, I don’t quite agree with your comment that “with the advent of cheap solar there need be no spatial mismatch for edge of grid situations”.

            As you point out if you have your solar panels (generation) and demand in the same location there is an inherent diurnal mismatch (generation peaks around mid-day, and domestic load tends to have a morning and evening peak). So one solution would be to install enough storage to smooth our this diurnal mismatch.

            Taking the idea of spatial smoothing to its extreme: if you have a transmission system which spans the equator you could solve the diurnal mismatch without using storage.

            This idea may seem a little infeasible/ridiculous, but the modelling I wrote up in this paper (https://www.researchgate.net/publication/272172048_Selecting_an_Optimal_Combination_of_Storage_Transmission_Assets_with_a_Non-Dispatchable_Electricity_Supply ) suggests that connecting the east and west coasts of Australia to make use of the 2-3 hours time difference in PV generation and demand profiles would be lower cost than installing additional storage as an alternative (see Figures 4 and 5 in particular).

            The modelling in this paper is highly simplified, but as a result the assumptions I make about the costs and capabilities of various technologies are very transparent (Tables I – Table V). And under the assumptions made, installing transmission assets over long distances to offset the need for additional storage helps to reduce overall costs.

    2. Dan Avatar
      Dan

      Hi Khalid,
      It’s about the cost, in NSW off peak is roughly $0.10 Kwh and peak is $0.50 Kwh so a loss of 7% to 10% at $0.10 (or $0.01) is highly acceptable when you are saving $0.40 Kwh or net $0.39 after the distribution loss.

      1. Khalid Amir Mahmoud Abdulla Avatar
        Khalid Amir Mahmoud Abdulla

        Hi Dan, thanks for the response. I agree with you that for an individual residential user the current tariff structure means there are a number of ways in which energy storage could generate economic value (best use of a time-of-use tariff as you mention above, and of course solar-self-consumption for those receiving a $0.06 or so feed-in-tariff).

        Of course this potential economic value needs to be traded off against the cost of the battery, and the cost of using it. Lazard’s levelised cost of storage analysis (https://www.lazard.com/media/2391/lazards-levelized-cost-of-storage-analysis-10.pdf ) suggests each kWh you put into and then take out of a battery costs $1.00 – $1.60 (for Li-Ion in a residential application, Slide 10). These numbers are based on the fact that a battery can only charge/discharge a certain number of times before it needs to be replaced.

        That said, the cost of batteries, and energy storage in general, will fall. And they will fall faster with more deployments, so in general I’m a supporter of the Greens and this scheme.

        My original comment was just to highlight that despite the vast distances over which centralised generation (be it hydro, utility scale PV, or coal) is transmitted in Australia, this transmission itself is quite efficient.

  4. Ian Avatar
    Ian

    Initial reading of this scheme proposal sounds like a rerun of other earlier renewables schemes, with the supposed middle class welfare, but a second look is far more helpful.

    The greens have rightfully identified electricity storage as being the next link in the renewables deployment chain. Distributed storage has the advantage of leveraging public money with the population’s personal money, $3 billion could buy $6 billion worth of battery storage. ( at $1000/KWH that is 6 GWH at current prices, may be more as prices of batteries drop.) It would also serve to retain ownership of storage in voter’s hands. This will effectively provide a huge support base and lobbying group for future renewables deployment. Storage will also, strangely enough, be beneficial to coal generators. In the same way that storage can modulate intermittant electricity generation from renewables it can time- shift energy production from constant coal generation to variable load demand.

    As others have said, the idea of generating manufacturing jobs through this scheme is pure fantasy, but carefully crafted, it could lure more overseas manufacturers to compete for the business this scheme could generate. It would add weight to the fable that Australian is the “first mass market for battery storage” . A bulk buying mechanism could drive imported battery prices down for example.

    The subsidising of battery storage could be directed at areas of the energy network that would most benefit the switch to renewables. Some examples could be 1.edge of grid applications such as isolated rural towns. 2. New subdivision developments with minigrid power supply. 3. Subsidising a combined roof top solar, home battery storage and electric vehicle package. 4. Home storage could be conditional on other home energy efficiency measures, such as solar hot water/ heatpumpHWS/ winter heating, home insulation. 5. Link in home storage with FiT, time of feed in where a premium is paid for electricity exported at peak consumption periods. 6. Encouraging community solar gardens and allotments with subsidised storage where power generation and storage can be remote from the person’s accommodation allowing renters and inner city dwellers to benefit from distributed solar and storage.

    We really not need to poo-poo this idea but to support it wholeheartedly. a little dialog and fine tuning of this scheme could make it highly effective at achieving this country’s transition to renewable energy.

    1. Diana Avatar
      Diana

      No one is poo-poo’ing the idea, per se, Ian but its simply not good enough anymore to throw huge amounts of the public’s money in to just one cohort of society (self owned roofs). In 2013, under their Safe Climate suite of Bills, the Aust Greens had a policy where over 8 million homes in the land would receive actual energy efficiency hardware, regardless of self-ownership or investment property. The Greens pulled this policy at the last minute (think costed at about 4 billion, and utilised off the shelf products, which essentially this battery plan now will too), and it was the first and last time I saw anything close to promising everyone got a hard and immediate benefit for a several billion dollar energy idea, subsidized by everyone’s money. Years have passed and we have not moved on to ensure that resiliency subsidies, incentives and benefits (from free roof insulation to subsidized solar hot water and rain water tanks to the discount mechanism on solar and the huge cost of FiTs) are extended to a whole lot of other people, without mortgages, in an appropriate alternative form. We congratulate new technology all the time, but we can’t find a way to make the outcome fairer? This new policy is not it, the Greens haven’t sought to move it to a wider level of permeation such as, as you say, buy in ops like solar gardens and allotments. We could do a lot more in the energy space for $3bn than essentially subsidize mums’n’dads mortgagees again. Please look up Simon Sheik (Get Up, Future Super – fossil-free investments only)’s new initiative of bringing home owners together in a bulk purchase program, where I believe three battery types will be on offer and under expert guidance, to bring down the prices. Sheik intends to set this up now in NSW, followed by the rest of Australia in 2017. Look, if batteries are the next wave and we are doing this for the sake of clean energy, climate change and our children, then surely people will join such a scheme to ensure batteries get a lot cheaper, without expect more subsidization – because there is an alternative. There are better, fairer ways to exhaust three billion dollars in the clean energy space than what the Greens pose this time, without any acknowledgement of who is still not getting any solar benefits, four years on.

  5. Pedro Avatar
    Pedro

    Having worked in the PV industry since before the PVRP, I have to admit that subsidies do work in stimulating business, but I think there are better levers to use to get a better uptake. Upfront subsidies normally have a significant administrative cost which is essentially money wasted doing busy work. subsidies also have the effect of devaluing the product. For example the STC up front discount has created this market expectation that a 5kW system is around the $5000 mark installed, this is simply not the case, the gear alone for reasonable quality is around the $7K mark wholesale. Overall up front discounts end up favoring cheap crap, by distorting the perceived value between various quality levels! Please lets not go there again.

    In my opinion sort out the NEMO and get some fair FIT pricing for energy fed into the grid when required from batteries. Also stop governments subsidizing power to keep prices low for political expediency. Yes, power prices would go up to what they should be and that would be reason enough to store your PV power for later use.

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