Subsidies are not the answer to battery storage market

The Clean Energy Council has called for urgent energy urgent market reform – and not subsidies – to unlock Australia’s energy storage market, in a new report that joins the growing chorus for Australia’s policy makers to finally respond to the challenges and opportunities of new technologies.

The CEC has also thrown its support behind proposals of offering a “buy-out” of premium solar feed-in tariffs, and to use this to provide those households with battery storage systems, particularly in Queensland where generous tariffs are due to continue for another decade.

“Energy storage costs – especially battery storage – are falling,” CEC chief executive Kane Thornton said.

“There is huge potential for these technologies to change the way customers and retailers interact with the grid. However, a combination of market reform, incentives and regulatory change is needed to drive this transition, while ensuring a secure and affordable power system.”

The CEC says Australia’s energy market is outdated, fixed around rapidly ageing and redundant centralised fossil fuel technologies, and reform is needed to unlock the full benefits of energy storage as more wind and solar is built into the grid.

“There remains substantial work to do in modernising Australia’s energy rules and allowing energy storage to fully participate in the market, bringing the benefits of the technology to both the grid and consumers more broadly,” Thornton said.

“Australia currently lacks a strategic package of energy market reforms that will help to turbo-charge energy storage and tear down the barriers that stand in the way to its wider use around the country.”

Thornton says strategic reform and regulation is the most efficient way to encourage more widespread use of the energy storage over the long term, and subsidies are likely not needed. His views have been echoed by others such as ARENA boss Ivor Frischknecht, and private players in the industry.

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Giles Parkinson