It’s taken years to get here, but Labor’s election pledge to make household batteries cheaper is a significant step forward that should cut climate pollution and limit power price rises. While it has been criticised by some as a subsidy for the wealthy, it could drive a change that benefits everyone who uses the power grid, and not just those who can afford to put an energy storage unit in their garage.
Labor’s promise is that from July it will cut the cost of a typical household battery by about $4,000, or 30%. The discount will be delivered through a long-running small-scale renewable energy scheme that has helped make rooftop solar panels and hot water systems affordable for more people.
This is obviously great for those well-off enough to cover the rest of the cost of installing a battery. The energy department has estimated it could lower annual power bills for those with an average-sized solar system on their roof by about $1,100 a year. This subsidy will significantly reduce the time it takes to pay off the battery through cheaper quarterly bills.
In simple terms, it means less of the rooftop solar energy generated when the sun is at its most potent in the middle of the day will be lost or fed into the grid for little financial benefit. Instead, the energy will be stored and used to power these people’s homes in the evening.
If this was all it did it may be hard to justify. But, crucially, the policy should help shift how the electricity system operates. As the number of batteries in the system reaches a critical mass, it should ease the demand on the grid at peak times – late in the day on particularly hot and cold days when people are arriving home from work and school and turning either their air conditioners or heaters on full bore.
At the moment, electricity from the grid on these days is incredibly expensive. A lot of it comes from “gas peakers” – fast-start gas-fired generators that are in the system as backup and only used when needed. Gas is the most expensive fuel in the grid, and the owners of gas peakers charge an astronomical price when they are turned on. Other, usually cheaper, generators then match this price, and we all pay through the nose to make sure the lights don’t go out at the grid’s busiest times.
The less we have to rely on gas peakers, the better it will be for consumers – and the planet. Well implemented, Labor’s policy could help the transition to a cleaner grid and shrink our dependence on a fossil fuel industry. This perhaps explains some of the teeth-gnashing in response from pro-fossil fuel analysts who believe the answer to every energy question is more gas.
Labor says its policy would cost $2.3bn and could lead to a million more households, small businesses and community facilities installing batteries by 2030. About 4 million, or one in three homes, already have solar systems.
The federal small-scale renewable scheme – along with some state schemes – has helped trigger a sharp fall in the cost of solar through abundance. Increased demand has meant increased volume of panels and increased competition – and solar has become widely accessible. Batteries are miles behind on this curve, but logic suggests a similar drop should follow.
There is one notable difference in how Labor would apply the federal scheme to batteries and how it operates with photovoltaic panels. With solar, the cost of the subsidy is paid for by all electricity consumers through an extra charge on their bills. That charge has been smaller than other imposts, but it hasn’t been nothing.
With batteries, the proposal is to pay for the scheme through the federal budget. There is a strong case that this is a fairer way to spread the load of a shift toward zero emissions that both major parties say they support, especially given current cost-of-living challenges.
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The policy, of course, does not address all electrification questions. The loudest criticism since it was announced on Sunday is that more should be done for those who cannot directly benefit from it – that is, people in social housing, apartments, private renters and low-income homeowners, who mostly can’t afford or don’t have the option to install solar panels, let alone batteries.
Labor has made some steps to address these shortfalls, but could go further. It initially committed $300m to upgrade social housing with better insulation, electric appliances and solar, and last year lifted it to $800m in a deal with the Greens. It is expected to be enough to improve a quarter of Australia’s social housing stock.
The rental market is technically a state responsibility, but advocates including the Australian Council of Social Service have argued national leadership is needed to introduce mandatory energy performance standards for existing rented homes. Earlier this year, 120 organisations called on the federal parliament to ease the way by offering conditional support for landlords to undertake upgrades and prevent costs being passed on to tenants who can least afford it.
None of this is rocket science. Experts have argued for decades that boosting energy efficiency is a cheap and straightforward way to cut emissions and bills and to improve public health. It’s not the sexiest policy ever proposed but – given the risks faced by people who cannot heat or cool their home – it could literally save lives.
These proposals deserve more attention in the public debate. But Labor’s batteries policy should be welcomed. Besides its specific merits, it is the first commitment in the campaign from a major party that could do anything new to address the climate crisis. Will it be the last?
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