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.
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.