Australia’s supply of household batteries is threatened by a proposal to increase the cost of connecting to the electricity grid, say energy experts who warn the energy regulator’s proposals could leave homeowners with thousands of household batteries worse off.
The Australian Energy Market Commission is moving forward with a proposal to change the way electricity companies pay for the costs of maintaining poles and cable networks, which comprise about 50 per cent of the average household’s electricity bill.
It is struggling to find ways to pay for maintenance of the national grid as the rise of solar energy – 4.3 million solar homes and 500,000 residential batteries – significantly reduces household electricity consumption.
Grid storage charges are expected to decrease under the current variable charge system, which is charged for the amount of electricity used from the grid.
Electricity costs paid by households largely consist of two parts: the cost per hour of electricity used and the network charges for maintaining the national grid that supplies power to the home.
The commission has proposed that the centerpiece of its reforms will be a shift to higher, fixed network charges, which will create a “more equitable sharing” of the costs of maintaining the national grid.
Experts say adopting a fixed charge could cut costs for wealthy, large families who are among the biggest energy users, who could benefit by as much as $1,400 a year. But it could also leave low-income households $200 a year worse off, and those with solar panels and batteries $700 out of pocket.
Energy Minister Chris Bowen has said the rapid use of batteries is essential to create a national grid powered by clean energy. Its Affordable Home Battery program cuts about 30 percent off the cost of installing a battery.
He seemed suspicious of the commission’s recommendations.
“We’ve been clear to industry and regulators: Reform must deliver the affordable bills, better reliability and modern grid and services we all deserve,” Bowen said.
“This is a controversial and complex area, requiring careful and considered reform to balance the interests of those who have invested in solar and batteries, and those who have not.”
Green Energy Market consultancy director Tristan Edis said higher, fixed network costs would increase electricity costs for a household with rooftop solar and a 20-kilowatt-hour battery, over its 15-year life, by about $6000 in Melbourne and about $8500 in Sydney.
“This completely erodes the value of the state’s $4,500 battery rebate and could potentially cripple what has been a very successful program,” Edis said, adding that the popularity of Bowen’s home battery program has had a significant impact on the world.
Australian household installation for March was equivalent to 9 per cent of global battery capacity installed by electricity companies and about half of what Europe delivered.
The commission’s proposal included a model that said the average battery owner would receive $3312 less in energy savings over 10 years under higher, fixed network costs, compared to current rules.
Commission chairwoman Anna Collyer said the proposed changes would also aim to reduce network costs by allowing power networks to charge “power” network charges that include grid area and maximum usage time in the cost. It claimed these changes could reduce costs by $6 billion over five years.
It will also implement consumer protections, which have yet to be finalized, to ensure that low-income households and battery investors are not worse off, Collyer said.
“By putting these important safeguards in place, we can ensure that these cost structures are not just passed on to customers. That’s why we focus on both at the same time.”
Collyer said the commission received strong criticism from earlier consultations, including battery owners who said they should not be pressured into participating in state and federal government programs that encouraged them to cut their reliance on the national grid.
“We don’t want people to feel that they were encouraged to invest their hard-earned money and then find that their investment isn’t worth as much as they were expecting,” Collyer said.
The commission’s recommendations included modeling that said the average two-person household with solar panels and batteries could save up to $600 a year by 2040, if energy charges and consumer protections were put in place.
Without talking about the details of the commission’s recommendations, the head of the Grattan Institute, Tony Wood, said it is a good principle to ensure that all those connected to the network pay a good share to maintain it, regardless of how much electricity they use.
“If you’re relying on your water supply, and you’re just using your own tanks, you’re still paying for the fact that there’s a connection on your property whether you’re using it or not,” Wood said.
“If you have an electric car, you have to pay the road user fee because you are using the road.
“The same thing applies here. If you’re still using the internet, you still have to pay.”
Mike Foley is the climate and energy columnist for The Age and The Sydney Morning Herald.Connect through email address.
