What is driving the uptake in home batteries in Australia?

The installation of home batteries has taken off in Australia. According to Sunwiz figures, around 180,000 Australian households now have a home battery system.

As ABC News reports, more than 47,000 residential batteries were installed nationwide in 2022. This was driven by spiralling energy prices, and soaring rates of solar panel adoption.

One battery was installed for every seven solar installations in 2022. This compares to one for every 12 new solar panel systems in 2021.

Yet domestic energy storage still has a perception problem. Much of this is driven by the media and sections of the solar industry itself. Home batteries are seen as too expensive. Payback is too long. They may be unsafe, especially given the current LG recall. Many installers caution customers against them, choosing the easier option of selling extra solar panels instead.

So, what’s driving the uptake in the home battery market? Is it desire for energy independence, certainty of supply, a greener alternative or pure money saving?

In practice, it appears to be a combination of all these factors, with various government incentives woven in.

Reasons for growing popularity of home batteries

1. Rising gas and electricity prices

The Ukrainian war and domestic supply shortages have escalated gas prices. Inflation and ageing coal-fired power station are pushing up electricity costs. Despite lower daytime costs, due to solar production, evening electricity prices can be up to ten times higher. Lower solar feed-in tariffs are also encouraging people to install battery storage rather than feed excess energy back to the grid.

2. More households with solar

Households are looking to store the daytime energy they produce for evening use, or overnight EV charging. As 2023 drew to a close, Australian households were more than three times as likely to have a solar installation than a backyard swimming pool, Sunwiz figures show. Quarterly installation of new solar panel systems also reached record levels, the Guardian reports.

3. Energy independence

Batteries allow people to keep lights on and fridges running during blackouts. They can draw stored energy from their battery, making them less reliant on the grid.

4. Certainty of supply

People see electricity as an essential service. Batteries give them control over their power, as well as certainty of supply. This means they can run their aircon and charge the car without worrying about it.

5. More extreme weather events

Climate change is driving more extreme and frequent storms, causing power outages. As a result, more people are choosing home batteries to weather-proof their homes.

6. Reduced carbon footprint

While economics are seen as the primary driver of home battery take-up, emissions saving is a bonus for most householders.

7. Improved battery technology

People have been spooked by press reports of battery fires in the older nickel manganese cobalt (NMC) batteries. As we move to more stable lithium iron phosphate (LFP) batteries – now the predominant type – safety concerns should ease. They have greater resistance to high temperatures and don’t contain toxic metals. The ongoing recall of LG batteries relates to the older NMC batteries.

8. Battery rebates

*A range of solar battery rebates differ according to state or territory. They have been a major factor in helping people install a home battery.

9. Money-earning VPPs

While Australian battery owners can earn money by sharing their energy in Virtual Power Plants (VPPs), participation is still very low. According to a Science Direct paper published in October 2023, it can conflict with householders’ desire to be independent from the grid. Green lender Brighte is offering zero interest finance to encourage households to buy a battery and join Origin Energy’s Loop VPP. Participation should increase as similar schemes take off.

Initiatives like Project Edith and Project Symphony are also having an impact.

Project Edith putting consumers in control

Project Edith is an ambitious scheme, rewarding customers who allow their batteries or EV chargers to be used to support the network.

Winner of Energy Network Australia's 2023 Industry Innovation Award, the project is a joint enterprise run by Reposit Power and Ausgrid.

As Reposit Power CEO Dean Spaccavento explains, it’s a prime example of dynamic network pricing. Every five minutes, Ausgrid sends the current import and export price to participants, so they can choose to feed in or draw down.

“The price signal manages demand, encouraging people to use power in cheaper off-peak times. This allows Ausgrid to run a more efficient network, knowing people won’t hurt the network when it’s already hurting.”

Rob Amphlett Lewis, Group Executive Distributed Services at Ausgrid, says the project allows consumers to use their energy assets in a more effective way.

“They can discharge when the energy system needs it and be paid to do so. This improves the economics of distributed energy resources, as the value they create by operating in a way that supports the community is shared with them.”

The power of community batteries

Amphlett Lewis views community batteries rather than home batteries as key to the future of energy storage.

“One of the concerns about home batteries is the high cost, so they generally appeal to the older, more financially secure customer. They are not accessible really in a financial sense to the broader customer base,” he says.

“If you get together and you’re sharing a bigger battery, you get a bigger bang for buck, the economies of scale are better and therefore it’s a cheaper outcome. If you’re looking at decarbonisation of the energy system, it’s a far more efficient way of addressing that issue.”

He says a mid-sized 5Mw shared battery is 2.5 times cheaper than an individual battery, making it a more equitable and cost-effective option.

“We expect that those medium-sized batteries will be able to provide storage as a service to customers, so they can sign up to a virtual share of that battery rather than having to buy a battery themselves. And that gives some equity and allows people who aren’t in the financial position to purchase their own battery to benefit from some of the financial savings.”

In the future, he expects utility-scale batteries will effectively firm wind farms or allow for coal plants to close. The smaller community-sized 5mw batteries within the distribution network will support the electricity network itself as well as doing the same thing as the bigger batteries.

Spaccavento says customers want to take control of costs, while improving and maintaining their quality of life. Home batteries allow them to use the air conditioner, washing machine and car charger without panicking about bills.

“Reposit operates people’s batteries in the grid, but rewards customers with guaranteed supply instead of money. Rather than VPPs, we believe customers want a reliable source of power they can understand and pay for.

“We deal with the variables, so customers know they can use all their household appliances without worrying.”

As battery technology continues to improve, the choices for consumers also look set to expand.