The impact of the Cheaper Home Batteries scheme has been explosive. Just in March alone, Australia installed the equivalent to 9 per cent of the total battery capacity across the entire globe, which is half of what Europe has managed.
In many ways the vigorous take up of batteries has left government policy making in the dust. Overseas it’s worse.
Regulations can’t keep up and this is seen even with solar panels where DIYers take to TikTok to work out installation.
In the same way there’s a slew of missed opportunities from fast developing technologies. Virtual power plants (VPP) are one example.
These systems allow solar or other forms of renewable energy harvested in one location to be shared with dwellings or businesses in another location that don’t have the ability to connect. Retailers access the solar panels, batteries and other energy storage devices of participating customers and share energy with others during peak periods, in return for incentives.
Dr Gabrielle Kuiper, a distributed energy resources expert, describes VPPs as a software that can aggregate energy supply, allow flexibility with demands in people’s homes and businesses, and therefore participate in a variety of energy markets.
Retailers such as Origin, AGL and Amber also work with third party providers such as virtual power plant business Reposit Power or Plico Energy to manage demand, she says.
The state of virtual power plants
But in Australia, virtual power plants have had a bad run.
Kuiper says it’s a missed opportunity.
In the UK, she says, a household can earn £331 ($A624.48) for a 10 kilowatt battery in benefits from joining a VPP.
Under optimal conditions, bigger battery owners can be paid more than £1000 ($A1886.65).
But Australia, she says, is missing out.
In Australia though, VPP customers are lucky to get paid a mere $100 a year for taking part.
In research Kuiper carried out for the Institute for Energy Economics and Financial Analysis in 2022, she found just 20 commercially available VPPs in Australia.
Late last year, Climate Change and Environment Minister Chris Bowen told an energy summit that VPP uptake wasn’t all it was cracked up to be. There was “a lot of distrust around the programs”, and quite frankly, the government would leave the issue to the market to sort out. It certainly did not intend to mandate them.
Kuiper says that the service provided by VPPs is now offered by most retailers.
But there’s not a lot of that either.
Origin Energy, which operates one of the nation’s largest VPPs, estimates that by late last year, only 15 per cent of household battery purchasers signed up to power sharing.
Kuiper puts it down to a lack of education around the benefits of the system, along with a general dearth of benefits that in no way mirror those offered in the UK.
It’s a big shame, she says.
“The challenge with Australia is we are only really participating in the frequency control and ancillary services market, which is the balancing market or the wholesale market.
“There’s a whole lot of value left on the table; batteries can ease congestion on local networks.”
Australia is 15 years behind when it comes to VPPs, Kuiper says.
By contrast, the UK started to develop the concept in 2010 and brought it to market in 2015, with enormous growth since.
In Australia, network businesses are paid to build more energy grids and to upgrade substations, instead of focusing on how households can ease congestion.
“The way we reward our poles and wires companies is through complicated revenue regulation, whereas we would need to change the rules about how the network businesses are rewarded. And no one, particularly the rule makers in Australia, has had the courage to do that yet.”
The networks have a CapEx (capital expenditure) bias, Kuiper says, which means the distributed networks earn a regulated rate of return on the value of all their infrastructure, or VPPs, “so the more infrastructure they build, the better it is for their investors or owners.”
Community batteries – the future or a sham?
To be fair, there’s a bit of confusion around community batteries, Kuiper says. But the reality is, they are what she calls “distribution network batteries”.
“There are only about half a dozen actual batteries across the country owned by community organisations.”
Organisations operating community-owned batteries include Totally Renewable Yackandandah, Yarra Energy Foundation and City of Melbourne.
Kuiper says more are coming as grants have been set aside from the wider community batteries scheme funded by the federal Department of Climate Change, Energy, the Environment and Water and Australian Renewable Energy Agency specifically for community organisations.
The Community Batteries for Household Solar program is funded as part of an election promise from the Albanese government.
“The way we reward our poles and wires companies is through complicated revenue regulation, whereas we would need to change the rules about how the network businesses are rewarded. And no one, particularly the rule makers in Australia, has had the courage to do that yet.”
According to Tim Lamacraft, general manager of communications and media for the Smart Energy Council, VPPs are absolutely the future of energy storage systems.
For NSW, there is the extra incentive of a rebate that consumers can take advantage of when joining VPPs, he says.
In Western Australia, customers can access the state’s battery rebate scheme, in addition to the federal battery subsidy.
Kuiper says community batteries or “distribution batteries” are useful in alleviating network constraints. Port Macquarie, for instance, now has one of these for a new town under construction, to provide power until the poles and wires are built.
Some community batteries are government owned, such as by Energy Queensland, NSW state-owned Essential Energy, but most are privately owned, in which case there is rarely any community benefits flowing from them.
“There’s nothing community about a community battery.”
In fact, some providers are charging customers a monthly fee to use a community battery even though taxpayers and consumers cover the cost of installation.
The batteries are generally installed at substations or transformers. However, a lot of providers in Queensland and Victoria are now fitting them to poles, meaning no development applications are needed, and minimise the potential for energy theft.
Kuiper says that with lower priced solar and batteries, it’s now more efficient for government to invest in consumer rather than community batteries.
How to take part in the energy sharing and wholesale market
Most people are selling renewable energy back to the grid through the wholesale market by using apps on their phones, and some are leaving it to the retailer to act in their best interest, Kuiper says.
But the instances of people paid $20 a kilowatt hour are rare.
Retailers such as Origin and AGL offer a “peak reward scheme”, which offers monetary rewards to decrease energy consumption from the grid during peak hours. AGL offers a $5 to $10 credit on electricity bills when joining a “peak event”, where consumers can reach a target by avoiding the use of large appliances for 1-3 hours.
Social housing is also included through the Social Housing Energy?Performance Initiative. The scheme will increase energy efficiency for social housing tenants through thermal shell upgrade, installation of efficient electric appliances and solar systems.
Meanwhile, Tim Lamacraft says the economics for gas peakers is “rapidly vanishing”.
Batteries are faster and cheaper to deploy, storing low cost sun and wind energy that’s available 24/7,” he says.
More gadgets and tech on the horizon, but are the regulations ready?
Balcony solar, known as Balkonkraftwerk in Germany, could be the next innovation that changes the game for Australia, and a bunch of US states are now changing regulations to allow for these “plug and play” systems to be installed.
According to Wattblock one apartment building in NSW passed a by-law to allow balcony solar on its apartments.
In Germany, where balcony solar is in full swing, residents pay about $700 for a DIY kit that can reduce electricity costs by 30 per cent, for a six-year payback. But in Australia, the payback is less than three years with the same upfront cost.
This balcony sourced power is now on 1.5 million apartment dwellers in Europe.
But there are no regulations in Australia for these kits. In fact, no one’s even looked at what regulations need to change, Kuiper says.
“It’s something that the federal government really needs to change, and I have been encouraging them in that direction.”
Kuiper says the technology would pair well with battery technology startups such as Windfall Energy, which has been developing small batteries “on legs” for renters and flats.
There is also a student startup at UNSW looking into stick on solar panels for windows.
“As the efficiency of panels is increasing all the time, you’ll need fewer and fewer panels as time goes by.”
Other key essentials for consumers include a smart meter and, for certain VPPs, a Reposit box or energy management system. The one Kuiper is the most excited about is vehicle to home and vehicle to grid technology.
The role of AI
Tim Lamacraft adds that most players in the industry expect AI to drive smart energy systems, with features that enable them to talk to each other and keep pace with the energy market, which refreshes every five minutes. It can also manage grid traffic during peak and low demand periods.
It’s also increasing transparency for consumers and optimising energy sales enabling them to identify the best times to resell their renewable energy.