Given Peter Dutton’s repeated concern for the size of your energy bill, it is intriguing that he doesn’t seem to realise how much households save on their energy bills by switching to solar, converting their gas appliances to electric and switching to an electric vehicle.
Source: Australian Energy Market Commission – Residential Electricity Price Trends – November 2024
In releasing the modelling which supposedly costed their vision for our electricity system, Dutton and shadow energy minister Ted O’Brien stated they had assumed electricity demand based on AEMO’s Progressive Change scenario.
They declared they preferred this scenario over the Step Change scenario’s vision of households switching almost completely to electric cars, dumping gas appliances and embracing rooftop solar and batteries.
One wonders whether these two people are up to date with some of the remarkable developments that have unfolded in these technologies recently:
– The price of solar modules has absolutely plummeted in the past 24 months, and fallen below 10 cents per watt for large-scale buyers and less than 25 cents per watt for your average Australian sparky to buy from their electrical wholesaler.
– After a brief rise in 2022, batteries for large-scale buyers have also plummeted in price in the past 2 years, with battery packs falling by a staggering 20% in just the last 12 months. According to Bloomberg New Energy Finance battery pack prices for vehicle manufacturers have now fallen below the pivotal $100/kWh mark that is considered the threshold for when fully electric cars out-compete petrol-fuelled cars.
This is perhaps best symbolised by two vehicle models on the Australian market. In the MG4 we now have an all electric car selling for less than a Toyota Corolla, except it is vastly better to drive and doesn’t need its first service until the 40,000km mark (and has a ten-year warranty).
In the BYD Shark plug-in hybrid we have a serious 4WD, dual cab ute priced for less than Toyota Hilux or Ford Ranger which can easily cover the daily commute on pure electric drive, while being a close match to the last Holden Commodore V8 SS in acceleration.
– This year Germany surpassed the milestone of installing half a million semi-portable solar systems which owners simply plug-in to their power point and can easily remove whenever they happen to move house (commonly known as Balcony Solar Systems which are limited to 800 watts). While such systems are not certified for use in Australia at present, a technical pathway exists to safely exploit this opportunity for both solar and batteries.
– Heat pumps (reverse-cycle air conditioners) have surpassed 90% market share of new heaters installed across Norway, Finland, and Sweden. Gas heating is far more expensive and is now just living off people’s out of date historical experience and habits.
To help put this into perspective, here’s one way to think of it. Your average sparky can pick up four good quality solar panels for less than $500. These will produce an amount of power equal to what an electric vehicle needs to cover an Australian’s typical car travel. Those solar panels will still work well in 20 years’ time.
$500 to fuel a car for the next 20 years? That’s how you tackle inflation!
Yes, I know, things are a bit more complicated than this. You’ve got to have an inverter, you need someone to install it, the car won’t always be at home, etc. etc. But you’re missing the point here. This isn’t intended to be a how to guide for the average homeowner.
Instead, what I’m trying to convey is the incredible opportunity if we as a society can set up the systems, infrastructure and regulatory regime to effectively exploit dirt cheap solar panels, in combination with accessing what will become a vast amount of low cost energy storage in vehicles. This is no longer something that might be available to us in the future, the technology is staring us in the face today.
But what about the poor who can’t afford an EV and rent? Don’t be fooled by this cry by energy suppliers and their proxies.
EVs are no longer the preserve of the rich and will filter down into the second-hand market just like normal cars.
Also landlords receive generous tax deductions which politicians seem to have little appetite to unwind. In return for their tax deductions why can’t we ask that they provide homes that meet reasonable standards for thermal comfort which are affordable to power? If cash flow is an issue, the Clean Energy Finance Corporation can lend them the money for the upgrades.
The Chicken Little real estate lobby will no doubt claim an exodus of investors leading to skyrocketing rents. This makes no sense at all. New homes and apartments already have to meet energy efficiency standards, so such a policy will have no effect on the addition of new housing.
For the existing older stock, the typical house or apartment in Australia’s cities costs several hundreds of thousands of dollars. By comparison the energy efficiency upgrades that are required should cost around $10,000 to $15,000 on average if we roll them out at scale, requiring between 1% to 4% extra rent to recover the cost. This would be significantly outweighed by reductions in energy bills.
If a landlord can’t cope with that small capital investment, do we think that the house will then suddenly blow-up and disappear?
Instead, another investor will take their place who can afford the upgrades; or even better – someone might finally get to own their own home.
In addition, we need to examine how to develop a technical pathway for renters to easily exploit the potential for portable, easy to install solar and battery systems, similar to Germany’s balcony solar systems.
Ubiquitous and convenient vehicle AC charging infrastructure where cars tend to be parked during the day will also be pivotal to exploiting cheap solar and storage.
To get the cost down this infrastructure needs to be rolled-out at scale and via a competitive process. If we hand it to the electricity network monopolies on the other hand it will be horribly expensive.
The pathway to lower household energy bills is there for us to seize. But we need to think less about great big power stations and more about technologies used directly by the householders themselves.
Tristan Edis is director of analysis and advisory at Green Energy Markets. Green Energy Markets provides analysis and advice to assist clients make better informed investment, trading and policy decisions in energy and carbon abatement markets.
