Social Energy launches solar and battery VPP-based retail offer in Australia

UK-based green power retailer Social Energy has officially launched in Australia with the promise of a market-leading residential solar feed-in tariff and “cutting-edge” virtual power plant technology that will optimise PV-connected battery storage and power bill savings.

After a soft launch just over a year ago in Melbourne, the company got the green light from the Australian Energy Regulator earlier this month to retail electricity in all of the National Electricity Market states and territories except Victoria (which should follow in 2021), and opened for business on Tuesday.

Social Energy comes out of the blocks with with a “super competitive” grid electricity tariff and an impressive-sounding solar feed-in tariff of 40c/kWh, which is double the current highest offers in Victoria, but – as is so often the case – this comes with a number of caveats and conditions.

The main caveat is that the 40c FiT is offered for only the first 300kWh of solar exported per household, per quarter – a total of 1,200kWh each year – which is a very small portion of the average output of an average 6.6kW Australian rooftop PV system. After that, a “competitive” lower tariff is offered.

That said, considering all of Social Energy’s customers will have a battery to store excess solar generation, it guarantees that what little solar they are sending to the grid will get a good return.

Which brings us to the real centrepiece of the offering, the battery storage, which customers must install through Social Energy, and pair with Social Energy’s AI platform Social Energy Hub, whether or not they already have solar.

This is because Social Energy wants access to the solar stored in these batteries for its virtual power plant – to trade on the grid at times of peak demand when power prices are at their highest as well as on the FCAS (frequency control ancillary services) market.

As part of the spoils of trading rooftop solar on the NEM, Social Energy will offer customers a minimum annual payment – or “top up” – which will vary depending on the battery’s size. A 9.6kWh unit or larger, for example, would get a minimum payment of around $450 a year.

Social Energy will start by offering customers a choice between either Duracell or SolaX – the lithium-ion Duracell Energy Bank 2 batteries are scalable between 7.2kWh and 14.4kWh, while the SolaX Triple Power LFP is scalable between around 5kWh up to 17.4kWh. The company says more batteries from different manufacturers will follow in early 2021.

The retailer said on Tuesday that the cost of installing the whole kit – solar, battery, smart energy management platform – would come in somewhere around $12,000 for a 6.6kWp tier 1 solar system and an 11.6kWh SolaX battery system, connected with the Social Energy Hub.

But with Social Energy’s tariffs and battery payments, alongside finance packages and various government grants, it claims this cost could be significantly reduced.

Add to the equation Social Energy’s virtual power plant benefits – including constant data-informed decisions about how to store, manage and distribute a household’s solar energy to maximise the value of its investment – and, in certain scenarios, electricity bills could be slashed by up to 100 per cent, the company says.

Chris Parratt, whose CV includes heading up the Australian operations for German battery giant, Sonnen, before it was bought up by Shell, says one the main aims of the game is to get the payback for residential battery storage down to around six years, making it more in line with rooftop solar.

“The main competition for batteries at the moment is solar, in that the returns on solar are very good at the moment,” Parratt told One Step Off The Grid on Tuesday.

Speaking from his experience rolling out the sonnenFlat hoome battery offer in Australia just a few years ago, Parratt reckons the residential battery market in Australia is still eight to 10 years behind solar at the moment, and well behind some other global markets, like Germany and Japan.

“We don’t have widespread battery benefit (in Australia), aside from various different subsidies and trials across the states and territories.

“I’d really love to see batteries brought in under the REC scheme or something similar, because at the moment we’re driving solar a lot, when we should be driving batteries as a sort of ‘solar controller’,” he said.

But then this is part of what Social Energy hopes to do. Based on NSW prices and electricity usage, the company claims an average household can achieve a payback of around six years for a $9,000 11.6kWh SolaX battery – “about the best I’ve seen it in Australia,” Parratt says.

And while Social Energy is certainly not the only VPP in town, Parratt reckons the retailer’s ability to offer all elements of the package from the one company allows them to be very competitive.

“We are one company, and we have all those elements – energy retailer, battery provider, VPP operator – rather than having different parties taking a piece of the pie. This makes our offer very competitive, on the battery cost side,” he said.

“Having been involved in some major steps forward in the Australian energy market, I’m extremely excited to be pioneering the next big leap – with an energy plan that finally makes batteries a sensible investment for Australian families.”

Just how Australian families will take to Social Energy’s retail offering remains to be seen. The company has been a reasonable hit in the UK – notching up roughly 6,000 customers over the past 12 months – and won the financial backing of international cricketers Michael Vaughn and Australia’s own Shane Warne, who serves as a brand ambassador Down Under.

That said, some of the early learnings shared by the Australian Energy Market Operator on consumer uptake of VPPs in various trials and projects around the country suggests the idea of ceding control of your solar battery to a third party is not always an easy sell.

Still, Parratt believes Australian customers are well placed – particularly after Covid and ahead of another summer of extremes – to embrace the advantages of being part of a solar and battery storage VPP, with a bit of targeted education.

“The education is about the customer understanding there’s actually more savings, or more revenue, for them in a VPP, than in just having solar and a battery,” he told One Step.

“There’s different ways you can cut and dice an offer for a customer, but in the end it’s about what their annual bill looks like against the cost of buying the system.”