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INDUSTRY NEWS

9
Oct

Government Incentives In Australia — How Crucial Are They To Increasing Energy Storage Deployments?

Australia has ramped up its behind-the-meter energy storage capacity. Total household deployments surpassing the 1GWh mark for the first time last year. Government incentive schemes played a key role in driving this uptake, however, as the energy storage market matures, what else can be done to support the deployment of behind-the-meter storage around the country?

We invited 2 of our speakers, Anne Pellegrino (PELLEGREEN) and Barbara Albert (100% RENEWABLES), to share their views on the different financing schemes available and to discuss other ways of increasing the adoption of residential and commercial solar + storage systems across Australia.

Ms. Pellegrino noted that out of all the states, the Australian Capital Territory (ACT) is leading the way in supporting batteries through their Next Generation Energy Storage (NextGen) program. The NextGen program is responsible for one of the largest roll outs of household batteries in the world, deploying up to 36 megawatts of smart battery energy storage since 2016. Recent reviews of the program have also found that stakeholders had overwhelmingly positive feedback of the program and the noticeable bill savings enjoyed.

Ms. Albert, agreed that the ACT scheme is a leader, and highlighted that while the subsidies for South Australia’s Home Battery Scheme have dropped, this is in response to the growth in the scheme, which together with the State’s Virtual Power Plant has seen several thousand installed and committed battery systems. Also, the recently launched, Northern Territory Home and Business Battery Scheme provides a grant of up to $6,000 for battery installations to homeowners, businesses and not-for-profits.

Other than government rebates, there are a variety of other financing options available to help lower the initial capital costs required. Ms Albert highlighted examples including interest free loans for batteries for NSW Hunter region residents, and time-of-use feed-in tariffs for residents in Western Australia with solar PV systems or batteries. With the availability of such schemes, the possibility of funding an entire behind-the-meter system without any government aid is very real. 

The Chattel Mortgage was highlighted by Ms. Pellegrino as it “allows for commercial businesses to fully write off assets purchased up to $150,000 investment”. Also known as the “Equipment Loan”, this contract allows 100% of the invoice cost to be financed. In addition, customers can enjoy the benefit of owning the asset right from the beginning rather than renting or leasing the system. The main disadvantage of this scheme is that it does not cater for equipment upgrades. The only way to upgrade your system is to pay off the loan and take out a new chattel mortgage. In the energy storage industry, where constant technological advancements result in newer and updated products being released all the time, this can be a problem.

Figure 1: Illustration of Chattel Mortgage by Anne Pellegrino

An alternative financing option that allows for equipment upgrades, unlike the chattel mortgage, is the Hire Purchase option. A hire purchase is a contract in which a financier buys renewable equipment such as battery storage for a business to hire and use. At the end of the lease, the ownership of the asset is passed on to the business. The advantage of owning the asset at the end of the loan period is that businesses get to choose between continuing to use the asset or upgrading it. 

Figure 2: Illustration of Hire Purchase Contract by Anne Pellegrino

These are just some examples of the many financing schemes available today that Anne Pellegrino will be delving deeper into during her presentation at the 13th Energy Storage World Forum Virtual Conference. Such schemes allow end-users to improve their organisational energy efficiency without high upfront costs. However, there is still much to be done when it comes to increasing energy storage deployments in Australia.

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With almost a third of Australians living in rental properties, and an even higher proportion working in rented office spaces, a big hurdle that still needs to be overcome is the split incentive problem. Currently, landlords are expected to absorb the costs of installing solar + storage systems while tenants benefit from reduced electricity bills. This greatly disincentivises landlords from investing in these systems. Introducing a fairer scheme that mutually benefits both landlords and tenants would be a significant step forward in addressing this issue.

Both Ms. Pellegrino and Ms. Albert emphasized the growing need to educate customers, not only to understand what is available to them in the market, but to also recognise the full value that energy storage systems can provide. “I think people need to see options of battery storage in the market. Presently there are expensive options like a Tesla that retails around $13,000 AUD fully installed for a 13.5kW usable energy. But there are many other, less expensive options in the market. People may not be aware of this”, added Ms. Pellegrino. 

One big question that still eludes industry professionals is, how to go about educating end-users about the advantages of such new and continuously developing technologies?

According to Ms. Albert, consumers are informed and educated in a variety of ways, such as by word-of-mouth, suppliers, web and print articles, workshops, and many others. Information provided via local and state governments is often more highly trusted, so the role of these entities in building the market for energy storage can’t be understated. Ms. Albert pointed to the success of the existing state-based schemes at educating residential and business consumers, and says that local councils have similar opportunities in their areas. She highlighted that several local councils have initiated programs to provide solar and battery feasibility studies, provide information resources, run workshops and even technology expos to educate their communities. Some have also begun to tackle more challenging areas, such as solar and batteries for apartment buildings.

Barbara Albert will be elaborating on what else can be done to improve energy efficiency and accelerate Australia’s journey towards zero carbon emissions during her presentation at the virtual conference this November.

Join us at the 13th Energy Storage World Forum Virtual Conference, 25-27 November 2020 for more insights!

If you want to know more about this and other topics directly from end users of energy storage technologies join us at one of these annual events: The Energy Storage World Forum (Grid Scale Applications), or The Residential Energy Storage Forum, or one of our Training Courses.

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