Battery storage: Are Australian households about to charge into market?

The expected boom in battery storage in the Australian household market has been predicted for a couple of years. But now, it seems, thanks to a crucial state political battle, a move to local manufacturing, and soaring grid prices, the time may finally have come.

Talk to any installer and battery storage manufacturer and they will tell you there is no doubting the public interest. Apart from the early adopters, most of the public have been making enquiries and waiting for a significant price signal. It seems that might have arrived.

Bruce Mountain, a leading Australian energy analyst who heads CME, sparked huge interest earlier this week with his latest analysis which shows that the combination of a 5kW rooftop solar system and a Tesla Powerwall 2 battery storage unit was “significantly cheaper” than grid power.

That’s not to say it is significantly cheaper to quit the grid, but it shows that – thanks mainly to the soaring cost of grid power -– a household installing solar and batteries would achieve significant savings, and quickly pay back the cost of purchase.

This is confirmed by one of Tesla’s big rivals, the German battery storage manufacturer sonnen, which has just announced plans to build Australia’s first large battery storage manufacturing plant, in Adelaide, with plans for 50,000 units in the first five years.

It’s a sure sign that the company expects the local market to finally take off and Chris Parratt, the head of sonnen Australia, says rooftop solar is “running hot”, and the interest in public forums held by the company in recent weeks is immense.

“Everyone wants a battery,” he tells RenewEconomy. “The payback is awesome in states like South Australia and Queensland, well under what we expected it to be. It’s under a 7 year pay-back.”

LG Chem, the maker of what appears to be the most popular battery storage unit in Australia, has long held this to be the case, saying

The economics, however, have been given added momentum by the fierce political battle in South Australia, which is witness to a three-way contest between the two major parties and the Nick Xenophone SA Best,

Both major parties, knowing that electricity costs and reliability are a key focus for voters, have unveiled  major battery storage incentives.

Labor has unveiled a Tesla-inspired virtual power plant that will seek to install rooftop solar and a Tesla battery in 50,000 homes – firstly in social housing and then in privately owned low-income households.

The proposal is to provide the equipment at no upfront cost, but to charge the household for the use of the rooftop solar and storage. It will slash the annual electricity bill by 30 per cent, Tesla and the SA Labor government claim.

The battery storage units, and through them the rooftop solar panels, will be linked to create a “virtual power plant” that could, in theory, deliver up to 250MW of capacity, and 650MWh of storage, to the market operator, or at least offer that as a reduction in peak demand.

Labor has followed up with a separate scheme to provide $100 million to provide another 10,000 households with “interest free” loans to buy solar and storage.

Well, not exactly interest free, it will be a 7-year interest holiday. But if Mountain and Parratt’s estimates are right, then the savings on the electricity bill should have easily made up for the capital cost of the equipment by that time.

The program will favour local products, which has prompted sonnen to announce the creation of its own manufacturing operations in Adelaide, and a new headquarters for the Asia-Pacific region. It remains to be seen which other battery manufacturers follow.

The SA Liberals have their own $100 million scheme, offering a $2,500 grant for 40,000 “means-tested” households, although these units, unlike the Tesla power plant or sonnen installations, will not necessarily be linked into a virtual power plant.

Chris Williams, the head of Natural Solar – a leading installer of solar and battery storage systems – says the South Australian initiatives will double or treble the battery storage market in that state within the next year.

“Much like the solar boom that took place from 2009-2012, this will be the move that will bring battery power into the mainstream market and make this form of technology available to the masses,” Williams says.

He says customers are being driven by three factors: attractive pricing; reliability of supply offered by battery storage; and independence from the grid.

“This rebate will mean that South Australian residents, who crave this reliability the most, will no longer need to pay any money upfront to have their solar and battery solution installed and will reap the benefits of savings from day one.”