Published on May 27th, 2015 | by Sponsored Content


The Past, Present, & Future Of Electricity In Australia

May 27th, 2015 by  

By Darryn Van Hout

Let’s be honest, the cost of electricity has made a huge contribution to the high cost of living and the difficulties Australian families experience in balancing their family budgets. According to a survey carried out by Ernst & Young in October 2014, a third of all Australians missed a payment for their electricity usage in the last 12 months.

The fact of the matter is that Australians are hurting and power bills should no longer be a political opportunity for politicians to win votes but a serious concern necessitating realistically lasting solutions. In essence, not even the compensation for households that are least able to afford the rising power prices can have a long-term impact.

In the past five years, electricity prices have skyrocketed by as much as 40 per cent in some states of Australia. When you compare these statistics with other countries like Canada, the United States, the European Union, and Japan, Australian electricity bills are way too high as reported by the Energy Users Association of Australia (EUAA), something the Federal Government blatantly acknowledged but has failed to address.


Electricity prices in Australia.

The significantly high power prices are generally considered to be fueled by three key factors: deregulation, infrastructure costs/network charges, and introduction of the carbon tax. Despite government efforts to mitigate the high cost of living pressures, electricity bills keep increasing. The good news is that the most sustainable solution to lowering power bills in Australia ultimately lies on the 1.3 million Australian household rooftops. One of Australia’s leading consumer care websites, Australian Solar Quotes*, reports that despite the withdrawal of political support, the uptake of rooftop solar panels is continuing to rise, even in the current economic climate. Is the trend a result of Australia’s earlier solar boom or do the good folks of Australia have little choice but to resort to solar power as an alternative?

According to the Australian Bureau of Statistics, one in five Australian households uses solar energy to power their electrical appliances. Even though the cost savings for investment in solar power are clear, this figure is still surprisingly low considering that the installation of a solar power system is a sure way to reduce a householder’s dependence on the grid with a zero power bill as a real possibility with the latest technological advances.

As mentioned, there are three main factors that result in high electricity prices in Australia. The first is network charges, which in fact account for up to 51% of the total cost of electricity. Next is the cost of transporting the high-priced, premium electricity across poles and wires. Lastly, let’s not forget the subsidies paid by Australians to support renewable energy also contribute to the high power costs. The introduction of the now scrapped carbon tax also had a significant impact on power prices, coming in at 9%.

Fierce competition among energy suppliers forms a vital part of the answer. Many of these companies are global, operating in export markets, and if their electricity prices are forced up, the consequences would be far reaching in terms of loss of jobs, investment, etc.

The federal government acknowledges that power bills are likely to keep rising due to the huge investments needed to maintain network infrastructure. This means that ever-rising electricity prices will still hurt Australian households and impact negatively on businesses.

How Solar Storage Next-Gen Technology is Revolutionizing the Energy Market

As the debate about the factors driving up power prices wages on, renewable energy product manufacturers are busy developing new technologies to drive down electricity prices. With the emergence of innovative solar energy solutions such as lithium-ion batteries, solar storage batteries are poised to dramatically reshape the energy industry in Australia.

A study commissioned by UBS, a world-leading investment bank, reveals that solar plus storage is an economically sustainable and low-risk solution for Australian households. For instance, if one million Australian households invest $20 billion in solar storage systems today, this would translate to enough capital for setting up a new LNG export plant.

The emergence of cost-competitive solar storage batteries such as Tesla’s new storage battery is a real revolution for the Australian electricity industry. This advanced battery storage system is poised to have a great impact on utilities, depending upon on how they react. If they embrace it as an opportunity to reduce high power prices, they can provide zero-down solar and battery storage installations to their consumers, thus pushing down costs for Australian households. On the other hand, they can view it as a threat and actively oppose this being launched in the Australian market.

The Tesla Powerwall has the potential to make a huge impact in the global energy industry and is indeed a timely innovation. The lithium-ion battery is one-of-a-kind. It’s designed to enable rechargeable energy storage at residential levels that can be used for load shifting, backing up power for use during an outage, and enabling self-consumption at peak times.

The solar storage battery by Tesla is a step forward for the Australian energy market. As the storage battery is a cheaper (inclusive of the foreign exchange and shipping) and highly efficient option compared to the existing solar power systems in the domestic market, it’s likely to significantly reduce dependence on the grid with a relatively quick payback period.

The new Powerwall from Tesla’s leading US-based energy technology company is an easy-to-handle wall-mounted solar storage unit which can hold a maximum of 10 kWh, delivered at an average of 2 kWh each day. The solution to the high power prices to Australian consumers lies in this innovative solar battery technology.

The price of a 10kWh weekly cycling backup storage system will be $US3,500 and $US3,000 is the price for a 7kWh daily cycling Powerwall. This excludes the cost of inverter (which typically comes with the solar panel system) and installation costs. Everything together is approximately US$500 per kWh, which is way below the existing industry cost which ranges between $US1,000 and $US1,250/kWh. Clearly, there’s great potential for dramatic storage battery cost reduction in coming years, just as the cost of solar panels has plunged in recent years.

The Tesla storage battery’s cost will ultimately deliver power for about $6-8 cents per kWh to any solar system for every Australian household. The combined cost of the rooftop solar and Tesla’s lithium-ion storage will therefore be much cheaper when compared to the coal-fired power delivered via the national grid.

With the new technology, eliminating grid dependence will become a reality for Australian households and high electricity costs will be a thing of the past. Solar + batteries have already been embraced in areas with high electricity prices like Hawaii. Although at the crossroads with incumbent utility companies, Tesla’s solar storage battery has a bright future in the Australian market.

The lithium-ion batteries will see more Australian households maximizing the amount of self-consumption.  At the traditional end of power generation, the existing business models based on coal-fired power stations and huge networks of wires and poles will be seriously challenged.

Why Australian Households Should Invest in Tesla’s Solar Storage Battery

Solar + storage is particularly attractive in Australia due to its climate. The idea of generating one’s own electricity and storing it for use at a later time is attractive to Australian households. Solar, compared to other forms of power generation, is cost-effective and convenient with the only big constraint being the availability of adequate space for the panels.

The disadvantage of solar energy is that the sun reaches the panels for only a limited number of hours each day and solar power generation is inconsistent. The storage battery enables the power requirements and pattern of usage of the household to better match power generation.

Before the invention of Tesla’s lithium-ion storage battery, storage was relatively expensive and consumer unfriendly, mostly involving less efficient, heavy, lead-acid batteries requiring more space. However, lithium-ion batteries including Tesla’s PowerWall are changing that. With their costs likely to fall sharply in the near future, more and more Australian households will enjoy the unique features of these batteries:

  • Much lighter
  • Occupy less space
  • Discharged virtually at a constant voltage
  • Hold charge for extended periods of time

It’s worth noting that Australian households are likely to enjoy reduced power prices through Tesla’s new technology only if the federal government and other stakeholders in the energy industry scale up production of lithium-ion battery housings, energy monitoring, storage battery management systems, and integrated manufacturing of solar energy components including inverters. Whether they take up that challenge, only time will tell.

*This article was kindly sponsored by Australian Solar Quotes.

Check out our new 93-page EV report, based on over 2,000 surveys collected from EV drivers in 49 of 50 US states, 26 European countries, and 9 Canadian provinces.

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  • Sonofswift

    In Western Australia we are lucky as we get a lot more sun than in the Eastern States. It is rarely cloudy all day or for days on end. On the negative side, our state government is trying to raise the base price of electricity so that even if you are on solar you will still have to pay more. Also if you are off grid you still will have to pay if there is electricity going past your place. All this is working against solar uptake. I also heard that if there is a power outage your solar panels still stop feeding back to the grid and into your home – some sort of “safety” reason. With almost no government subsidies for solar, EVs or clean energy companies, it is a struggle to expand on clean energy solutions. Our governments are too busy subsidizing dirty fuel like coal and fracking.

    • Ronald Brakels

      The anti-islanding feature of standard on-grid solar inverters isn’t really a safety feature, it is more of a convenience feature. But it is something that is “fair enough”. It that other bizarre things, some of which you mention, that end up favouring killing people by burning coal over not killing them by accepting clean green solar electricity from rooftop solar systems, which are ethically wrong from the viewpoint of anyone who isn’t feeding from the coal slurry trough. When even dead objectivists with golf clubs sticking out of their skulls lying at the bottom of a drowning underwater city would agree with me that something is unethical you know that Coalocracy is straying into cartoon evil territory..

    • Calamity_Jean

      “I also heard that if there is a power outage your solar panels still stop feeding back to the grid and into your home – some sort of “safety” reason. “

      Yes, to keep from electrocuting the crew working to repair the line.

      • Sonofswift

        Sounds reasonable although doesn’t that defeat the purpose should there be a power outage and you’ve spent so much money on your own solar? Can you in some way disconnect from the grid at that time? Also, won’t there still be power being generated which means the panels will still be live? Will they still charge your batteries?

        • Calamity_Jean

          Up until now batteries have been so expensive that nearly everyone with grid-connected solar doesn’t have them. Any power not used immediately by the house is sold to the grid via net metering and resold by the grid operator to someone else. People who have batteries now are generally people who don’t have and never have had a grid connection.

          This is obviously about to change. Grid-connected people who add batteries will also add a disconnect switch to prevent power from going out to the grid in the event of a general power failure. Yes, even during a power failure, with or without batteries and a disconnect switch, the solar panels are still live. If you have batteries, your solar panels will charge your batteries if your house is using less power than the panels are producing.

  • JamesWimberley

    ¨The federal government acknowledges that power bills are likely to keep
    rising due to the huge investments needed to maintain network
    infrastructure.¨ I thought the problem was that the transmission and distyribution network ismassively overbuilt, on y]he basis of forecastsof rising demand that turned ouy to be quite wrong. These assets have to be paid fori.e.the debt serviced. The maintenance can´t be that high. US utities make a profit on electricity prices of 10c-15c per kwh, generation included.

    • Bob_Wallace

      “US utilities make a profit on electricity prices of 10c-15c per kwh, generation included.”

      Maintenance costs are also included. Plus, I would guess
      that maintenance costs are higher in the US. Australia, as far as I know doesn’t have the sorts of ice storms, hurricanes and tornadoes that can really mess up a grid and pile up some big repair costs.

  • Dag Johansen

    Wow . . . what massive corruption and/or incompetence. How did Australia end up with such an expensive AND dirty electricity system? No wonder people are eager to get off the grid.

  • Michael G

    If the build out and maintenance of the grid is a big part of the cost of electricity as mentioned, then the utilities are going to get that back from someone – probably PV owners if history is any guide. (I thought they were already doing that in Oz.) Going off-grid won’t help – they’ll just put in a tax to pay for it. The cost of this has to be factored in to the cost of storage and PV to get a real break-even point.

  • newnodm

    “Before the invention of Tesla’s lithium-ion storage battery, storage was relatively expensive and consumer unfriendly, mostly involving less efficient, heavy, lead-acid batteries requiring more space. ”

    Why the emphasis on Tesla? It’s unclear what it will cost installed. The version first shipped will be backup only. It is unclear how easy it will be to use the 7kwh version to reduce daily grid charges. The 2000 watt output limits its usefulness. No off grid version is announced for Australia.

    Australian household should evaluate if batteries are cost effective. Going all in Tesla fanboy is misleading.

    • Aku Ankka

      Not just that, but despite potential promise, the capacity is really small: even with high electricity price, monetary value of energy stored in 7kwh model is tiny (2 dollars?), especially compared to the cost and additional losses.
      But besides stored energy, maximum currency is limited as well, so it is not clear it could be used to power heating (space, water, ovens) or A/C.
      If Tesla was selling something similar to the battery in their cars it would be more compelling. Powerwall seems more useful for off-grid summer cabins, to provide electricity for lighting, radio, tv, laptops. But not for total household electricity.

      So as things are, one can either focus on positive (cheaper than competition) or negative (still very expensive investment considering amount of money potentially saved). But it is bit premature to declare it as a savior of any kind.

    • vensonata

      It is strange that people keep referring to 7kwh and 2kw of capacity. That is the minimum that one can buy. If you need more, buy more. Buy two and you can produce 4kw at will, and have 14 kwh of storage. By the way, two batteries don’t make the electricity cost twice as much. The electricity from two or three is the same as one. The batteries just last twice as long since they don’t cycle as deeply.
      I live completely off grid in a community of a dozen people. We completely power the place with 12kw of PV and 40kwh battery. If the tesla batteries had been available last November I would have bought three 7kwh and paid $9000 for them. They would have lasted me a theoretical 41 years (5000 cycles = 13.7years x 3 = 41 years) But instead I bought 40kwh of AGM maintenance free lead acid for $8000. They will last, at best, 8 years. They will give me a maximum of 20kwh of useable electricity (they can only be discharge to 50%)
      The 3 tesla would give me 21 kwh. So…the math.

      Tesla: 21 kwh, 41 years. $9000 = $200/year.

      Agm. 20 kwh, 8 years. $8000 = $1000/year
      Now the Tesla won’t actually last 45 years, because of lifespan issues other than cycling, but figure realistically half that…say 20 years
      So realistically: Tesla 21 kwh, 20 years $9000=$425/year

      • newnodm

        Why would a grid connected user in Australia buy more than one powerwall? Your off grid need is very far from typical.

        • Bob_Wallace

          They would buy more if they need more and the cost works out.

  • oakleighpark

    When are these articles going to move beyond just PV and battery to include the contribution building energy efficiency and DC, both inside the envelope and as the designated energy used by the microgrid linking these energy efficient buildings together, can make to mitigating the GHG, power prices, energy poverty, healthy living environment and vulnerability of the existing grid problems?

    • Offgridman

      Since these are usually rather short articles they tend to concentrate on a single subject, in this case the Australian electricity market and the influence consumer based storage could have on it.
      The other subjects you ask about have been covered and can be found with a simple search through the archives.

    • Politically, it’ll become easier to mandate efficiency and microgrid compatibility as the influence of centralized power companies is reduced. As more households produce their own power, interest in other parts of the energy puzzle will likely increase.

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