Constant reminders of the precarious state of Australia’s transitioning electricity grid could be pushing more consumers into residential batteries – even when the cost-benefit equation isn’t going their way.
What is tipping more people into buying household batteries is energy security, says Chris Williams, the chief of Natural Solar and 1Komma5.
“We’ve seen a trend for a couple of years now [of people installing solar batteries for energy security] and I think it comes on the back of the rolling blackouts, or the threats of rolling blackouts,” Williams told RenewEconomy.
“When [NSW energy minister] Matt Kean stood up last winter and said please don’t use your dishwashers as we’re at risk of blackout, that kind of commentary really rocks the foundation of energy security in people’s minds.”
Russia’s war on Ukraine sent fossil fuel prices rocketing last year, leading to coal power plants owners refusing to switch on their generators and forcing AEMO to step in and take control of the East Coast’s generating assets to prevent an energy market collapse in mid-June.
Decreasing solar feed-in tariffs is frustrating rooftop PV owners into storing their own power, and buying an electric vehicle begins to change the economics of batteries, he says.
Natural Solar saw a 400 per cent increase in battery sales in 2021, from a low base of 81 to 504. Williams thinks the increase in 2022 is “about” 200 per cent.
Higher power bills and feed-in tariffs that have plunged to single digit cents/kilowatt hour (kWh) make grid energy and solar panels alone less attractive.
Comparing payback periods of between an at-best six years and 11 years, according to data from Solar Choice, with warranty periods now stretching out to a decade, mean the calculus is more likely to edge into profit than even money or a loss, depending on where you live.
As at August last year, it cost $5250 to install a 3kWh battery and inverter system and $19,800 to install an 18 kWh system, Solar Choice data showed. Only in Perth was the payback period less than two decades for a solo battery operation, whereas a battery with solar panels could achieve payback in the six to 11 year time frame.
An isolationist mindset is driving some battery purchases as well.
Reducing reliance on big energy retailers, the concept of “taking control” of their energy supply, and reducing the so-called sun tax, a fee for solar panel owners to use the energy grids they’re exporting into, are reasons people are using when buying batteries, says Liam Navon, sales manager for solar and battery retailer Smart Energy.
According to Navon, the percentage of his company’s sales that include a battery or solar and a battery has grown to close to 50% (see chart below).
“With the current spike in the cost of living, Australians are making more emotional decisions when it comes to big purchases,” Navon told One Step.
“They’re factoring in how things can benefit them in the long run, and provide a sense of security.”
The 7-18 per cent increases in AEMO’s default energy offer in May last year, which many expect to lift again this year to fund still-high wholesale electricity prices, is not only feeding inflationary pressures but leading many consumers towards a DOY mindset when it comes to electricity.
It’s a trend when AEMC says it is
And yet it’s not clear that this mindset shift is a trend across the whole consumer battery buying market — and it’s still a very small market.
Only 50,270 small scale systems were installed in Australia as of August 2022, according to the Clean Energy Regulator.
SolarQuote’s “Interest Index” shows the number of people saying they wanted a device for both backup and going as off-grid as they can has stayed static between 52-60 percent over the last two years.
Requests for information on installing solar panels and a battery at the same time was 18 per cent in January, the same as in 2022, although that rose from 15 per cent in 2021 and 6 per cent in 2020.
However, Australian Energy Market Commission (AEMC) appears to be anticipating that household batteries will become the next big thing in residential energy, after in-house economists said late last year they expect batteries to become economic for many households by 2025.
It all comes down to payback periods versus warranted lifetimes. The average 8 kWh battery with a 10 year warranty should deliver a payback period in 7.47 years by 2025 , but proud owners of a 13.2 kWh Tesla Powerwall however will still be waiting another three years after that warranty is up, the AEMC analysis said.
Market prices for batteries are around $1000/kWh and that needs to fall to $200-300/kWh to make them achievable for everyday Australians, according to Solar Choice data.
It means for the household battery market to take off, either prices need to start dropping fast, or more consumers need to absorb the messaging of energy instability and be priced out of the export market.