Poor to subsidise rich on household battery scheme

Anthony Albanese’s pitch to voters that his “No.1 priority is delivering cost-of-living relief’’ is starkly at odds with the economics of his $2.3bn household battery installation plan. The Prime Minister unveiled the plan in Kevin Rudd’s former seat, Griffith, on Brisbane’s southside, currently held by the Greens. Under the policy, taxpayers would contribute $4000 for an average household battery, to subsidise households with the money to pay about $9300 to cover the full cost. Taking $4000 from lower-income households to pay for their richer neighbours or cashed-up businesses to go green is an interesting twist on Labor’s traditional concern for working-class battlers. As Peter Dutton said on Sunday: “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.”

After shelling out almost $10,000 to install a battery, a household with existing solar panels could save up to $1100 off their power bills every year, according to analysis by the Department of Climate Change, Energy, the Environment and Water. On that basis, such an investment for households or small businesses buying batteries would pay for itself over nine years – depending on how long the batteries last.

The object of the scheme is to take pressure off the power grid at peak times. And as Energy Minister Chris Bowen said: “The sun doesn’t always shine but households and businesses having batteries means we can keep solar energy on tap and keep energy bills down consistently.”

It remains to be seen how efficiently it would operate on a large scale. Mr Albanese has promised to “make sure Australians have access to cheaper, cleaner energy” regardless of whether they can afford to pay almost $10,000 for a battery to complement solar panels. Most of these, too, were also installed with the help of federal and state taxpayer subsidies. About one-third of Australian households have solar panels but only one in 40 has a battery. Labor is expecting one million new batteries to be installed by 2030.

Many companies in the sector that sell green energy equipment and infrastructure will welcome the $2.3bn taxpayer subsidy plan, but opinion is divided. MST Marquee senior energy analyst Saul Kavonic said the proposal was a mechanism that would make taxpayers subsidise wealthy, high-energy users. Labor was satisfying green elements of the party, he said, rather than what would result in a lower system cost and pricing for everybody. Victorian Energy Policy Centre director Bruce Mountain said the policy was “sensible” and could multiply battery storage capacity in the east coast grid, despite benefiting wealthy households. “I really think the Coalition should be seeking to either copy this or better it,” he said. Labor’s announcement widens the gap with the Coalition, which has promised to reduce gas prices through a reservation scheme. The Opposition Leader is also committed to building seven nuclear power plants to replace ageing coal-fired power stations.

Struggling households unable to find $10,000 for a battery, and those unwilling to pay up, such as self-funded retirees whose super balances have melted during Donald Trump’s tariff war, are mainly concerned about power bills. The Australian Energy Regulator declared recently that electricity bills would rise from July 1, by up to 9 per cent in NSW and by 3-6 per cent in Queensland and South Australia. Small-business customers face prices hikes of between 4.2 per cent and 8.2 per cent. Last June, more than 130,000 households were on energy hardship plans, compared with 96,000 households 12 months earlier. Small businesses regularly cite energy costs as a major problem in staying afloat.

But government subsidies, funded by taxpayers at the expense of the national balance sheet, without corresponding savings, cannot be the solution to every policy challenge.