Typical Bowen.
Rushed, poorly thought out schemes.
Battery subsidy scheme set for 'urgent' overhaul as costs run out of control
By energy reporter Daniel Mercer
Federal Energy Minister Chris Bowen has announced big changes to the government's battery subsidy scheme amid claims most of its $2.3 billion budget has been spent in just six months.
The minister unveiled the $5 billion shake-up today while addressing
the solar and battery industries, which are increasingly worried about the risks of a boom-bust cycle fuelled by the scheme.
Under the program, announced in the run-up to the election in April and which came into effect in July, households and small businesses can claim rebates on the upfront cost of batteries.
Mr Bowen said on Saturday morning that the mid-year budget update, to be released next week, would include an additional $5 billion for the scheme.
The policy was supposed to slash the purchase price of a battery by about 30 per cent, saving consumers roughly $4,000 when buying a typical system with 10 kilowatt hours of storage.
But
industry insiders say poor design has fuelled a rush towards much bigger systems up to the maximum eligible size of 50 kilowatt hours, and drained the available budget much sooner than the government was anticipating.
While the government stated the money would last until 2030, analysts say much of the budget has already been spent and will be exhausted by mid-next year.
Hurried policy 'flawed'
Finn Peacock, the founder of comparison website SolarQuotes, said the government rushed the design of the policy and was now paying the price.
"It does seem like it was designed in a hurry," Mr Peacock said.
He said this meant installers had every incentive to sell consumers the biggest possible batteries that were eligible for the scheme.
For example, he said a battery with 10 kilowatt hours of storage would attract a rebate of about $4,000.
A system with 50 kilowatt hours of storage, by contrast, would collect about $18,000 in taxpayer subsidies.
The Australian Energy Regulator says a typical home uses between 15 and 20 kilowatt hours of electricity a day.
Crucially, however, Mr Peacock said the consumer would end up paying about the same amount for both systems.
As a result, he said fewer people were vacuuming up a greater share of the money than was expected — or budgeted — by the Commonwealth.
"So if there's X kilowatt hours' worth of cash in the pot and people are getting bigger systems, then fewer people can benefit from it," he said.
"They're like, 'oh $373 a kilowatt hour, oh a maximum 50 kilowatt hours, if I could deliver a battery for $373 a kilowatt hour everyone will buy 50 kilowatt hours'."
'Upsold and under-used'
Other industry participants, who were not authorised to comment because of their work advising the government, said the scheme had created significant waste.
They pointed out that most households were only using about 10 kilowatt hours of power overnight and would struggle to fill a system with five times as much storage.
One critic said:
"You end up with a lot of batteries that will never fill up, just sitting there empty forever, paid for by the Australian taxpayer."
It was an argument echoed by Mr Peacock.
"They anticipated an average battery size," Mr Peacock said.
"I think the average is over 20(kW/h) last time I looked. It may well be over 25(kW/h) by now and I think they were expecting the average to be closer to 10(kW/h)."
Anthony Albanese and Chris Bowen are set to make major changes to the battery scheme. (ABC News: Matt Roberts)
Mr Bowen's office was contacted for comment on Friday.
But the ABC understands solar and battery installers were asked yesterday to join an urgent briefing by the minister today outlining major changes to the policy.
These were expected to include expanded funding and an overhaul of eligibility criteria to put the program on a more sustainable footing.
Since announcing the policy earlier this year, the government has touted it as a major success for Australia's energy transition and adoption of renewable energy.
The minister has repeatedly referred to the boom in demand it has created, with almost 160,000 batteries installed since July.
"This is a remarkably strong take-up and it is the outer suburbs of regions which have led the way," Mr Bowen said yesterday as he toured Wagga Wagga in New South Wales.
Boom turns to bust?
Mr Peacock said the scheme had been a roaring success in some ways.
For starters, he said it had obviously highlighted underlying demand for batteries in Australia, where one in three householders had solar panels.
He said it would also help deliver benefits to the householders lucky enough to take advantage of the subsidies, as well as the system more broadly.
But he worried that its design flaws were serious and could last much longer than the scheme itself.
One of his biggest concerns was the flight by consumers to the cheapest batteries on the market — a trend that was being fuelled by the incentive to maximise size rather than quality.
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