Australians are no longer able to count on revenue generated from excess solar energy feeding into the grid, so they are turning to energy storage solutions to keep excess energy for themselves. Falling by the wayside, Australia’s household solar feed-in tariff (FIT) schemes have entered their first wave of drastic reductions as around 63,000 households in South Australia feel the first pinch.
By the end of 2016, over 275,000 solar homeowners in South Australia, Victoria, and New South Wales will see their solar feed-in tariffs dropping by as much as 90 percent.
Declining FITs are Promoting Demand for Energy Storage
In September, South Australia’s FIT fell from AU$0.16/kWh to a minimum required payment of AU$0.068/kWh. Also by the new year, 67,000 solar homes in Victoria will see tariffs and net metering programs falling from AU$0.25/kWh to AU$0.05/kWh.
The biggest drop will hit around 146,000 solar customers in New South Wales. On 1 January 2017, current FITs from AU$0.60 to AU$0.20/kWh in New South Wales will fall to between AU$0.055 and AU$0.072.
Australian Solar Quotes (ASQ) CEO Darryn Van Hout notes that the previously generous FITs enabled many solar consumers to learn the basics of solar energy and PV technology. Scrapping the tariffs, says Darryn, has further promoted demand for energy storage systems.
“It’s definitely a trigger point for most consumers to look at this new technology,” says Van Hout. ASQ reports that it has seen “an increase in demand for quotes for storage batteries from buyers looking to save thousands of dollars on their bills, with the Australian market seeing around 300 homes come together to buy storage batteries at discounted rates.”
Van Hout adds, “many of the customers approaching ASQ have been solar customers coming off the New South Wales solar bonus scheme.”
Australia’s Greens Push Energy Storage Incentives
Although FIT policies are in broad decline, government support for energy storage systems are rapidly becoming popular around the globe.
California is offering consumer rebates for energy storage installations, and the state’s three largest investor-owned utilities are complying with a new policy requiring 1.3GW of battery storage to be installed by 2020. New York also has a generous energy storage rebate scheme.
In Japan, two-thirds of the cost of an energy storage system may be covered, and Germany is providing low or fixed-rate financing for 30 percent of an initial investment in battery storage.
In Australia, the Adelaide City Council offers energy storage system rebates of AU$5,000 to homeowners, and an AU$25 million program was recently announced to support energy storage for 5,000 homes.
Taking a new legislative lead in Australia, the Australian Greens Party has announced an initiative to introduce a 50 percent refundable tax credit to assist individuals with the cost of home solar energy storage systems. Available regardless of income, the credit will be capped at AU$5,000 in the 2016-17 financial, declining to AU$1,500 by 1 July 2020.
The Greens’ “Powering Up Battery Storage” policy will also offer a Low Income Solar Storage (LISS) grant administered by Australia’s Renewable Energy Agency (ARENA). Available to an annual maximum of 20,000 households with an adjusted taxable income below AU$80,000, the LISS grant is expected to cover half of the total cost of an energy system. However, the grant will be capped at AU$5,000 in the 2016-17 financial year, gradually declining to AU$1,000 by 1 July 2020.
Up to 30,000 businesses also stand to benefit from the Greens’ policy, as depreciation terms for commercial battery system assets will be reduced from 15 years to 3 years.
Paid for by “redirecting money from some fossil fuel tax breaks,” the Greens estimate that their incentive will support an estimated 1.2 million energy storage installations, with an average capacity of 10 kWh each.
“Increased take up of battery storage,” states the Greens, “will help drive down pollution and support the Greens goal of shifting Australia to 90% renewables by 2030.”
Optimising Solar Self-Sufficiency
While homeowners are transitioning to energy storage systems, a few other immediate cost-savings measures are advised to help offset lost FIT revenue. These include switching to a smart meter and optimising the solar electricity produced by home solar installations. Australians are optimising their solar use by replacing gas-burning appliances with electric models, especially hot water heaters and space heaters.
However, adding a battery to an existing solar system can significantly enhance solar self-sufficiency, says Van Hout. Self-sufficiency is a measure of how much solar a homeowner is using, as opposed to drawing power from the grid. Van Hout notes, “With the right battery size you can improve it from 20% to nearly 60 or 70% self-sufficiency.”
By reducing electricity drawn from the grid, battery storage gives energy consumers more independence, allowing them to use more of the energy they produce from their solar installations. Energy storage also helps significantly stabilize network variability by reducing electricity peaks and troughs. Storing power during off-peak times allows discharging during peaks, which in turn helps drive down electricity prices because ramp rates are better regulated.
Developed by the Clean Energy Council, the Australian Energy Storage Roadmap offers help for homeowners learning about this exciting new technology.
The Clean Energy Council expects battery storage to create sweeping changes as it becomes a mainstream consumer technology. It envisions, “New and innovative business models similar to mobile phone plans will help to put storage technology in more households, in some cases without the need to fund the upfront purchase cost.”
FIT Reductions in the Bigger Picture of the Renewable Energy Revolution
Teaming up with solar panel installers and retailers throughout the country, Australian Solar Quotes offers in-depth, up-to-date research on renewable energy industry news, as well as a national solar directory filled with independent reviews, products, services, and locations of solar providers throughout Australia.
“Our dedicated team,” states ASQ, “strives to make the process of buying a solar power system as smooth sailing as possible whilst offering assistance and advice every step of the way.”
As a company who is closely monitoring the transition to solar installations with energy storage solutions, ASQ is excited about the booming solar PV revolution in Australia.
Seeing challenges ahead for Australian homeowners and businesses adopting energy storage strategies, ASQ CEO Darryn Van Hout is optimistic.
“Despite consumer concern around FIT reductions, the bigger picture of the renewable energy revolution promises a lot for the Australian energy industry,” says Darryn. “As technology becomes increasingly efficient, the more renewables will begin to dominate the market.”
