Battery arrays are among the most promising upgrades for commercial solar power systems, allowing a constant energy supply even during nighttime or cloudy days. However, batteries have also faced skepticism due to their high upfront cost – they are often more expensive than the solar power systems they complement.
However, Australia seems headed towards a global leadership role in battery deployment. Electricity prices are unlikely to go down anytime soon, driving more Australian homeowners and businesses to invest in their own energy generation systems. At the same time, more government institutions are becoming aware of the benefits offered by renewable generation and energy storage, and they have shifted their policies accordingly. Finally, leading battery suppliers have seen the potential of the Australian markets and are planning to start manufacturing operations within the country to better serve potential customers.
Even if a homeowner in Australia is on a market rate for their electricity, on average they will end up paying more than 40 cents per kilowatt-hour for peak and shoulder on a time of use tariff structure. As a result, an electricity generation system that produces electricity for less than this price is attractive from the financial standpoint.
Solar power seems like the obvious option considering its ease of installation and maintenance. However, the economic benefit of solar power is not fully achieved unless you can consume the energy as it is generated – if you export electricity to the grid you get a feed-in tariff that is around 3 times lower than the retail kWh price.
If you are paying 46 cents/kWh and only getting 16 cents/kWh for exports, consumed electricity is more valuable by 30 cents/kWh. In this case, any battery system with an ownership cost below 30 cents/kWh reduces your net electricity costs. The Australian Climate Council estimate around 20,000 home battery installations during 2017, up from 6,750 in 2016. In states like South Australia and Queensland, a solar power system with batteries now offers a payback period below 7 years. Consider that solar panels last over 20 years and most batteries now come with a service life of 10 years.
According to CME, a prestigious economics consulting firm, the combination of solar power and battery storage had the same electricity cost as the power grid in November 2016, and it is now cheaper. This is reflected by the virtual power plant project announced for South Australia, where combined solar PV systems and battery arrays will produce electricity for homeowners at a price 30% below retail tariffs.
As the business cases for solar PV systems with batteries improves, the South Australia government have announced a 75% renewable energy target by 2025, coupled with 750 MW of energy storage capacity. South Australia has taken a leadership role in renewable energy adoption, and around 50% of the state’s energy now comes from clean sources. This is remarkable considering that Australia still gets more than 70% of its power from coal.