The NSW government has quietly cancelled a $50 million program to establish a 200MW virtual power plant, to cover the costs of an election promise to provide interest-free loans to households for solar and batteries.
The now canned Smart Energy for Homes and Businesses program, announced in late 2018, was to provide rebates for households and businesses of up to $1000 to connect household appliances, including batteries and smart air-conditioners, to demand response and virtual power plant systems.
Through the program, the NSW government hoped to gain the ability to control up to 200MW of demand response and virtual power plant systems to manage times of peak demand.
Previous energy minister Don Harwin launched the program in December last year, announcing that the state Coalition government was seeking expressions of interest for providers of demand response and VPP services.
However, in the lead up to the NSW election, the Berejiklian government promised it would provide interest-free loans to up to 300,000 households installing rooftop solar and batteries, dubbed the “Empowering Homes Program.”
The NSW Department of Planning and Environment has now confirmed it will cancel the $50 million demand response and VPP program and use the funds to pay for the interest-free loan program instead.
The Coalition’s election policy costings, published by Parliamentary Budget Office, for the Empowering Homes program showed the government’s intention to re-allocate the $50 million of funding from the Smart Energy for Homes and Businesses program to cover the costs of the interest-free loans.
The policy details were published just five days before the NSW election.
Expressions of interest for the cancelled virtual power plant program closed on 14 December and RenewEconomy understands that applicants have yet to hear any news directly from the NSW government about the future of the program since that time.
The Department indicated that an update would be provided “in early 2019”, but information about the program has since been removed from its website.
Enquiries posed to the office of new energy minister Matt Kean were referred to the Department of Planning and Environment, who confirmed the cancellation of the VPP program.
“No agreements will be entered into under the Smart Energy for Homes and Businesses program, but its funding will still be committed to supporting investment in clean and renewable energy,” a spokesperson told RenewEconomy.
“Expressions of interest received for Smart Energy have been of great value and will inform the development of Empowering Homes.
“The Department appreciates the time and effort put into these EOIs and will be in touch with all interested parties as we finalise details, and to keep them informed of future opportunities.“
NSW Labor energy spokesperson Adam Searle told RenewEconomy that it was troubling that while the Government has announced two different energy policies, that there has been no progress since the election in March.
“They one policy, which they’ve now scraped for a new policy,” Searle said.
“It has been three months since the election, and we have no sign of either of these policies. This is symptomatic of the mess they have made of energy policy in this state”
NSW Greens MLC David Shoebridge said that the shifting of funds was a clear sign that the NSW Government needs to introduce a dedicated target for renewable energy uptake.
“With no state wide renewable target the only thing the State Government has is a series of ad hoc programs, and now one of those appears to be heading to the scrap bin,” Shoebridge said.
“This was a $50 million program that was designed to save additional capital expenditure to meet peak energy demand. This is demand that happens on only a handful of afternoons and evenings a year.”
“We need strong binding state targets and real commitment to programs that will reduce demand and deliver new renewable energy, to save household budgets and the environment.”
Loans of up to $9000 per battery system and up to $14,000 per solar-battery system will be available under the new Empowering Homes program, but it is unclear when the program will be launched, or whether there will be a requirement for system owners to participate in a VPP program.
Reposit Power, who has developed an energy management system that supports the integration of solar and battery systems into virtual power plants, was disappointed to see the cancellation of the NSW Government program, but was hopeful that lessons could be applied to future programs.
“It is sad to see the program being wound down, and we hope the learnings from the program to date can be retained by the NSW Government”, Reposit’s head of business relations Alan Reid said.
“We see consumers getting more involved in managing their energy use and asking more questions of their retailers. Any program that seeks to incentivise increased adoption of innovative technologies by households needs to consider both affordability and greater choice for consumers.”
“It has been heartening to see Governments looking to get on the front foot to support grid management services, which are ultimately to the benefit of both the grid and for consumers”.
The government hopes to support the installation of up to 3,000MWh of storage capacity to be added to the NSW energy system under the Empowering Homes program.
The interest-free loans will only be made available to own-occupier households, and will be means capped for households with combined annual household income of up to $180,000.
The $50 million in funding has been drawn from the NSW government’s $1.4 billion Climate Change Fund.