The Albanese government’s $2.3 billion solar battery subsidy has come under scrutiny from energy analysts and the federal opposition, with warnings it will drive up electricity bills for most Australians.
Senior Policy Analyst at the Centre for Independent Studies (CIS) Zoe Hilton told Sky News the proposed subsidy will shift costs onto consumers who are unable to afford solar and battery systems.
Prime Minister Anthony Albanese and Energy Minister Chris Bowen revealed the policy on Sunday, which they say will make batteries cheaper by about 30 per cent, or $4,000.
While the taxpayer funded policy will bring the average cost down from about $12,000 to about $8,000, critics have warned this will disproportionately benefit wealthier households.
“Battery subsidies will lower power bills for a lucky few while pushing up bills for everyone else,” Ms Hilton said.
Unlike previous subsidies, the scheme will not be paid for through the federal budget but instead added to power bills via the Small-scale Renewable Energy Scheme.
“This will simply increase bills for everyone who doesn’t get the subsidy, and will exacerbate the cross-subsidies from those without rooftop solar to those with solar that already exist in the network tariff system,” Ms Hilton said.
She added that battery owners avoid paying their fair share of network costs by self-consuming electricity, leaving traditional consumers to pick up the tab.
“Most of network companies’ costs are fixed, but charges are mainly based on consumption,” Ms Hilton said.
This allows solar and battery owners to avoid paying most of their network charges by self-consuming electricity, leaving those without solar to pay for the lost revenue.
“Rooftop solar never made sense as an investment for the grid and home battery subsidies merely represent another attempt to throw good money after bad.”
Battery subsidies have previously been tried by state government as a solution to the grid problems caused by rooftop solar but these have largely failed to encourage widespread uptake.
“For example, the South Australian government scrapped its battery subsidy scheme after its own online calculator showed that many customers would lose money by purchasing a battery, even with a $2,000 subsidy,” Ms Hilton said.
“Victoria’s $4,000 battery subsidy and $9,000 battery loan scheme has helped increase the number of customers with a battery to only three per cent of exporting solar customers.
“Meanwhile, rooftop solar subsidies and indirect network cross-subsidies paid by those without solar have meant rooftop solar uptake has outpaced home battery uptake 16 to 1, driving up bills for those without solar.”
Opposition Leader Peter Dutton also criticised the policy, accusing the government of unfairly using taxpayer money to subsidise wealthier households.
“The point I’d make is that, for $10,000 for a battery… I think you’re talking about higher-income families being in a position to pay for that,” Mr Dutton said.
“I just don’t know that the next-door neighbour, who can’t afford to pay for that battery, is going to subsidise the battery for me or for you on higher incomes.”
He also claimed the announcement was evidence electricity prices would continue to rise under Labor.
“The government’s announcement today is confirmation that electricity prices are certain to go up higher under a Labor government,” Mr Dutton said.
“And (on top of) the Prime Minister’s broken promise of $275—the Labor lies are racking up and stacking up under this government.”
Meanwhile, the government estimates the scheme will support one million solar battery installations by 2030, up from about 300,000 at the moment.
“At current battery prices, a 30 per cent subsidy will cover no more than 60 per cent of the expected four-fold growth in home battery units that the government’s renewables plan relies on being available to support the grid by 2030,” Ms Hilton said.
“And that’s not even the hardest part—AEMO’s Integrated System Plan assumes home battery uptake will grow 30-fold by 2050.”
Despite this, the Smart Energy Council endorsed the plan, describing it as the most significant consumer energy policy since subsidised rooftop solar.
“This Albanese government program will literally help millions of Australians permanently reduce their energy bills,” CEO John Grimes said.
“Four million Australian homes have solar, and this policy will help them store that energy for later when it will be at its cheapest.”
However, Ms Hilton argued the scheme was based on unrealistic assumptions about future battery prices and was unlikely to deliver the promised target without further funding.
In order to achieve the one million unit target, subsidies would have to go even further, or battery prices would have to fall significantly.
“If the subsidy remains at 30 per cent, the government would have to rely on a greater than 50 per cent fall in battery prices by 2030 in order to achieve the one million unit target,” Ms Hilton said.
“But home battery prices have remained relatively flat for the last 6 years, with no signs of the dramatic price falls promised.”
According to the CIS Energy Team’s recent paper, Rooftop Solar: Paradise Lost, battery prices have remained largely flat over the past six years.
The $2.3 billion subsidy comes on top of the Albanese government’s multiple energy bill subsidies for every household.
Mr Albanese recently committed to delivering $150 in further energy bill relief at a cost of $1.8 billion, taking the total power bill relief provided by the government to $6.8 billion.
“We know this makes a difference here and now,” he said on Sunday.
