Battery installations in Australia up 20%, here’s why

Battery installations in Australia up 20%, here’s why
Last year the number of residential battery systems installed in Australia increased by 20%. The 31,000 battery systems that were installed is a remarkable number, considering Australia entered a recession in September last year for the first time in almost 30 years. This article considers some of the key drivers behind the growing market adoption of small-scale battery storage systems in the Australian market.

Reduction in Feed-in Tariffs

The rate solar system owners can earn for selling energy back to the grid (Feed in tariff) has fallen significantly in the last 2-3 years in line with decreasing wholesales prices. In fact in many states, the wholesale cost of electricity moves into negative prices in the middle of the day when rooftop solar system generation peaks.

Many solar system owners have export rates of up to 70% or 80% and have been left searching for alternative means to create value from their surplus energy. This has been observed as one of the underlying drivers to battery take up.

In our recent analysis, we can see that even with the lower solar feed in tariffs the economic case to install a battery does not stack up. There are other non-financial factors that we need to consider when assessing the demand for battery storage systems.

State-based Solar Battery Rebates

The below table outlines some of the battery schemes that have come out in Australia over the last 3-4 years.

  Current Rebate Launched in
South Australian Home Battery Scheme Up to $300 per kWh installed 2018
NSW Interest Free Solar Loans Interest free loans of up to $9,000 to retrofit a battery 2020
ACT Battery Rebate $825 per kW of Sustained Peak Output 2016
Solar Victoria $4,174 per household 2019

With some of these programs were introduced several years ago they have been progressively building awareness. Many of these schemes help consumers with the financial return of investment for their battery system whilst supporting grid stability and resilience.

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The Emergence of Virtual Power Plants

Only 3-4 years ago Virtual Power Plants were in concept phase only with no programs available anywhere in Australia. In the last 12 months the number of options available to consumers has skyrocketed with many companies looking to get involved in a potential new source of revenue and customer loyalty.

See the below table which summarizes several of the main Virtual Power Plant programs currently available in Australia and the value they are offering customers.

VPP Benefits Eligible Batteries  
Simply Energy VPP $1,275 to $2,550 in VPP access credits Tesla Powerwall, LG Chem, Eguana Technologies, Sonnen, Varta  
AGL VPP $280 for first 12 months; $1,000 off a battery if sign up for 5 years Tesla Powerwall, LG Chem (with SolarEdge)
Shinehub SA Community VPP $2,000 battery discount if sign up at time of battery purchase; 45c / kWh for charging and discharging through the battery Alpha ESS
Tesla Energy Plan Receive $220 per year in grid support credits; Save on the upfront cost of a Tesla Powerwall Tesla Powerwall
sonnen Sign up bonus of $100 and save up to $24 a month or; Through sonnenFlat pay a flat fee of $49 to $69 per month for battery and all energy usage sonnen
Discover Energy VPP Solar feed in tariff of 45c for first 300kWh; 25c for subsequent 300kWh and 9c thereafter Alpha ESS, LG Chem, BYD, Sungrow
Stoddart VPP Add a discounted battery to a free solar system (Only available to owner-occupiers building a new home) TBC
Diamond Energy Gridcredits 100 Premium feed in tariff of 100c per kWh in addition to solar feed in tariff at peak event times on the grid LG Chem, Solax Triple Power, Must Include Reposit Box
Social Energy VPP Feed in tariff of 40c per kWh for first 300kWh and 10.75c thereafter; Minimum feed-in payments guaranteed at $450 p.a for a 9.6kWh battery and $600 for 14.4kWh batteries or larger Solax Triple Power, Duracell

Some of the above schemes, when coupled with a state-based rebate scheme can start to offer customers a reasonable return on investment with a payback period as low as 5 years for a good case.

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Increasing Climate Change Awareness

Climate change has been at the center of politic debates in Australia for more than a decade with particular attention growing on the current Coalition Government’s lack of meaningful action and continued support of fossil fuel sectors.

In the global context, Australia is a relative laggard in introducing climate policy which is creating increasing tension within political parties and

Climate change rallies were coordinated across all major cities in Australia in the lead up to the pandemic and in research conducted by the Australian National University found that 52% of voters was important when deciding their vote in the 2019 Australian federal election. This percentage is expected to increase progressively over next decade.

One of the main actions homeowners can take to reduce their own carbon footprint is to install solar. While solar alone can tackle 30%-50% of the predominantly coal-based power used on the Australian grid, a solar and battery system can get that figure closer to 100%.

Inevitably this is strong motivator to buying batteries for environmentally conscious Australians.

Notably left out of the list of driving factors for battery demand is the cost of batteries. We have seen little movement in battery prices in the last few years with the average cost of batteries only dropping 3% since February 2020 according to the Solar Choice Battery Price Index.

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