Finance Finance News Politicians finally recognise Australia’s ‘battery boom’

Politicians finally recognise Australia’s ‘battery boom’

tesla battery launch
Tesla's range of batteries extends from small home units to larger business systems. Photo: Getty
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When a revolution is already underway, the smart thing to do politically is to claim it as your own.

That’s what the Greens were doing on Thursday, when they announced they were establishing a Senate select committee to look at the “resilience of electricity infrastructure in a warming world”.

What they’re really asking is how electricity supply needs to evolve in light of three things: Australia’s commitment to lower carbon emissions; the growing role of renewable energy sources; and arrival of new-generation batteries and storage systems.

As the Greens put it, the committee will examine the “potential for an Australian battery boom”, and “how the government can help make it happen”.

The revolution is here

That’s not as groundbreaking as it sounds. As reported last year, and again more recently, rapid changes in technology – particularly cheaper solar panels and lithium-ion batteries – have changed the economics of decentralised power generation and storage.

The business community is all over these developments, and large-scale energy companies such as Energy AustraliaAGLOrigin, and Powercor are vying for market share with a host of smaller providers such as Energy MattersSelectronicSolar Heroes, and Solar Storage.

But has anyone in the federal government noticed these developments?

When South Australia’s power grid fell over in September, deputy PM Barnaby Joyce and former environment minister Greg Hunt were keen to ask whether it was renewable energy itself that was to blame.

What they should have been asking is how the grid needs to be improved to handle even their own stated renewable energy target – 23.5 per cent nationally just over three years from now.

The answer lies in smart grids trading power between numerous energy sources, and involving large amounts of storage – whether it’s installed at the household and business level, or in large-scale systems built into the grid.

Powercor, for instance, has installed the nation’s biggest battery south of Ballarat to protect 3000 homes from blackout.

Powercor ballarat
Powercor is testing Australia’s largest battery in its grid near Ballarat.

It hopes the system will “reduce stress on the network, improve reliability of supply, reduce maintenance costs and ultimately lower costs for our customers” by saving millions of dollars on network upgrades that would otherwise be required to achieve the same outcome.

The select committee, although chaired by the Greens, will include three Labor senators, two Coalition senators, and one crossbencher. So it won’t be just one big love-in for renewable energy.

What it will do, however, is raise awareness that the new technologies aren’t just on their way – they’re already being deployed.

Batteries are coming home

At a household level, the Tesla Powerwall system has been rolling out in select trial houses since January this year.

While the cost of such a system is still higher than the energy bill savings for all but the most frugal power users, the cost of batteries and solar panels continues to fall.

Moreover, the financial returns on such systems are currently limited by the fact that surplus power has to be sold back into the grid at fairly desultory feed-in tariffs.

rooftop solar installation
Big power companies are vying with smaller start-ups for solar-storage market share.

More sophisticated peer-to-peer trading of power, and smaller scale micro-grids or ‘virtual grids’ is expected to lead to better prices for consumers who want to sell rooftop solar power.

But to turn power consumers into producer-consumer-traders, federal and state governments will have to wrest some monopoly power away from big power companies.

The committee will no doubt receive plenty of suggestions from startups on what regulatory framework could achieve that – and suggestions from the bigger players as to why it’ll never work.

In that way it will be reminiscent of the strop Telstra threw when the Rudd government was setting up the NBN in 2009 – regulating to allow small firms to compete with giants never goes smoothly.

Labor in hot pursuit

It’s not only the Greens who want to own the renewables-storage debate. Labor has committed to a 50 per cent renewables target nationally by 2030, so will presumably use the committee process to talk up its plans on the storage side of the equation.

Interestingly, Bloomberg New Energy Finance predicted recently that solar power alone will be 44 per cent of Australia’s energy supply by 2040 – a figure that, when added to 15 per cent wind power, is quite consistent with the Labor target.

If the new committee achieves anything, it will be to reinforce the real lesson from the South Australian crisis – that the grid needs to adapt to renewable energy rather than the other way around.

To read more columns by Rob Burgess click here.

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