Simon Hackettt, the head of Australian battery storage manufacturer Redflow, has called on state governments to offer incentives that would encourage consumers to swap their generous solar feed in tariffs and instal battery storage in their homes instead.
Hackett proposed the idea at the recent Australian Energy Storage conference in Sydney, where he said that the solar tariffs – such as those in Queensland and South Australia which last well into the 2020s – are overly generous. Victoria and Western Australia also have some long-lasting premium tariffs.
Solar households on these tariffs have already paid off their solar systems, and the continuing payment of the feed in tariff is a burden on other consumers. Better, Hackett says, to find a formula to swap that liability and encourage battery storage, which could provide obvious benefits to the grid and other consumers.
“From a public policy point of view, continuing to pay solar feed-in tariffs beyond this point represents a substantial forward liability that does not deliver improved public good outcomes,” Hackett says.
As he told RenewEconomy at the conference: “I don’t need my feed in tariff. It is outrageous how much money I get paid, and the panels are paid for. You can buy a damn good battery storage system for $20,000, and I am going to get paid a lot more than that through my feed in tariff.”
He suggested a formula to translate the outstanding liability to buy a complete battery system or use it to subsidise the installation. He says battery storage can “solve a lot of problems at once.”
Hackett, as executive chairman and the largest shareholder in Redflow, would stand to benefit from any such arrangement because it will boost demand for battery storage in Australia and his products as well. The new Redflow 10kWh ZCell system, to be released in August, will attract a price of just under $20,000.
Australia is seen as the most attractive market for battery storage in the world because of its high penetration of solar and high electricity prices. Ironically, though, it is only likely to happen with households who do not have the premium feed in tariff, and who only get paid between 4c/kWh and 8c/kWh for their exports.
In other states, such as Queensland where more than 200,000 homes will enjoy a 46c/kWh tariff until the late 2020s, and a similar scheme in South Australia, there is no incentive to install battery storage.
In NSW, where the 60c/kWh and 20c/kWh gross feed in tariffs end at the end of 2016, the market is expected to be strong for battery storage as some 146,000 solar households look to extract maximum value from their solar output by putting it in storage rather than exporting to the grid.
Hackett says the battery swap idea can serve as both a public policy and industry development agenda while removing these long term liabilities from the public purse.
“This involves inviting consumers to voluntarily trade in the residual life of their FIT for funding to buy a home battery energy storage system. This would have the dual benefit of eliminating a long-term liability for governments while kickstarting a home energy storage industry in Australia.”
“The remaining forward liability for a given customer can be readily estimated based on past subsidy payment patterns. In many cases, governments may actually spend less by using the repurposed Feed-In Tariff payments to subsidise an energy storage system than to fund a long-running tariff.”
Hackett said the solar FIT buyout concept has been discussed in the Australian renewables sector, and was reportedly under consideration by the Queensland Government. As RenewEconomy wrote last year, Ergon Energy was researching the idea and putting forward a proposal to the government.
“It has the virtue of re-using funds previously committed to kickstarting the PV solar panel sector to encourage emerging new home energy storage sector – with associated jobs and business growth,” Hackett said.
“Just as with solar PV incentives, it will prove politically popular with citizens who increasingly regard home energy storage as a way to increase their energy independence and reduce electricity costs.
“Widespread energy storage will also benefit far-sighted electricity companies by reducing demand during peak power usage periods and giving them the potential to buy home-stored energy as a ‘virtual’ on-demand power source rather than relying on fossil-fuelled driven peaking gas generators.
“At a national level, widespread energy storage, both at the consumer and the grid level, will help Australia achieve its international carbon reduction commitments by time-shifting renewable energy so it can be used 24/7, not just when the wind is blowing or when the sun is shining.
Giles Parkinson is founder and editor of One Step Off The Grid, and also edits and founded Renew Economy and The Driven. He has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.
