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Australian households to install one million batteries by 2020

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Households on Australia’s National Electricity Market are still expected to install a total of one million battery storage units within just three years, according to the latest estimates of global investment group Morgan Stanley – in a rush to the technology driven by some of the highest electricity prices in the developed world.

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Speaking at the Solar and Energy Storage Conference in Melbourne on Wednesday, Morgan Stanley’s lead equity research analyst for Australian utilities and infrastructure, Rob Koh, said his company expected behind the meter battery installations to hit 1 million by 2020 – and that’s just for the east coast, on the NEM – up from a total of just under 30,000 at the end of this year.

With the number of Australian households to have installed solar nearing the 2 million-mark, that number is not necessarily s stretch. But to put it in some context, the Australian Solar Council is predicting home battery take-up of about half that number – a national total of 540,000 by 2020.

So what will drive the run on behind the meter batteries that Morgan Stanley is predicting.

“We think that’s a function of both economics, and also behaviour,” Koh said, citing data gathered by Morgan Stanley through a recent consumer survey.

“The survey that we did suggested that people were willing to pay a premium of about 20 per cent, versus what they rationally should to reduce their (electricity) bills,” Koh said.

Koh says that’s an effect of the same kind of “loss aversion theory” that helped shape one of the most successful rooftop solar markets in the world.

And it’s caused by Australian households being exposed to a market where wholesale electricity pool prices “are the highest in the OECD world right at the moment,” at around $130/MWh, says Koh.

And they’re not expected to stop there. Driven by a combination of high gas and coal prices, a disfunctional FCAS market, and uncertainty over the removal of baseload coal generation like Hazelwood, Morgan Stanley expected retail prices to rise another 10 per cent on average over the next year.  

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  • trackdaze

    consider that 20% above parity price adoption to represent is a vote of no confidence in the generators,retailers, networks and the federal government

  • Johnnydadda

    That’s some market power!
    Makes me wonder if we could force an increase in the feed in tariff by all agreeing to switch off our generation for a couple of hours, a power strike along the lines of the US operator who said something like, ‘a power outage is good for business, it makes them realise how much they need us’.

    • Rod

      I used to think that but now with such high penetration such a move would likely cause serious problems and possibly wide spread black outs. We came within 20MW of another State black in SA when TIPS had a substation fire a couple of Months back and the voltage fluctuation caused all the PV to island.
      The recent regulator rulings recognising PV value are a good start. The equivalent to yearly forecast wholesale price seems pretty fair to me.
      Having said that, I’m still on a premium FiT which is very generous.

      • Johnnydadda

        Here in WA I’m paid $0.07kwh and have to buy it back at $0.24kwh. It’s just rude.
        I have a lovely new pole in front of my house though, replaced just before the election.

        • Rod

          Spare a thought for those in SA (not on a premium FiT) who get 6c kWh and pay 34c kWh!
          It will be interesting to watch how the WA subsidy will be wound back.

  • Joe

    1 million battery installs in 3 years….I’d love to see that! On that scale the price of batteries will be dirt cheap, time for me to join in.

  • howardpatr

    What Tesla, Panasonic, LG is charging for residential energy storage is so much more than what it costs and what they are charging EV manufacturers.

    Hopefully the technology developed by 24M and being evaluated by NEC will be one of the forces that bring battery costs closer to $300 per Kw.

    That is what see many battery systems installed with new and existing PV installations.

  • Just_Chris

    I live in Victoria every year in January I go through every no lock in electricity and gas contract available. I just had my electricity bill and if you take the price and divide it by the total number of units that I use then I pay 0.19 $/kWh. If you put my usage data into uSwitch (a UK price comparison web site) and find the most popular rate in the South East of the UK then I would pay the equivalent of 0.22 $/kWh. How is that “the most expensive power in the world”? I am a bit of an odd case because I have an electric car so a lot of my power usage is off peak but even so my usage pattern is not that strange especially if you consider that the weekend is off peak. I think if people shop around they could (on average) make much bigger savings than purchasing a battery.

    I would argue that Australians are more motivated to buy a battery because they are fed up with large corporations and their politicians ripping the system rather than to save money – most are already paying a 20% price premium just because they don’t shop around. The pool price for power is higher than anywhere else in the world at the moment but if the generator and retailer are the same company who is loosing money? The pool price has also only increased recently so what does that mean? has the price of generating power risen or are we seeing some other factor driving the “market”? Also who does a high pool price benefit? gentailers, who does it hurt? pure retailers. Who controls the pool price? gentailers.

    • Mike Shackleton

      Victoria has enjoyed the cheapest power in the country because Hazelwood was able to churn it out for about 5c/kWh but since the closure I’ve noticed a jump in the power price. We still have the best rates in the country and I believe the cost per kWh of solar + powerwall 2 in South Australia is now competitive with the grid supplied price, depending on usage patterns. Once you’ve bought the battery and solar you’ve effectively put a cap on your power price for the effective life of the battery. Remember they are saying a warrantied life of 10 years for batteries and 20 years for panels but the reality is they will last longer than that, even if the capacity drops.

  • George Darroch

    Cost of installation will be the key metric. I’d like to see that come down with competition and learned efficiency.

    • john

      I totally agree charging upward of $2000 to terminate 6 wires and do the software settings is not exactly a fair price.

      • solarguy

        Clearly you don’t understand what’s involved installing a battery system.

    • solarguy

      Installation costs will plateau early but will not keep dropping, simply because it can’t. The only joy to be had going forward will be batteries will get cheaper.