Energy Minister Chris Bowen opposes plan to increase costs for battery and solar households
Energy Minister Chris Bowen has fueled a row over charges to be charged to homeowners who install batteries, speaking out against the electricity market regulator’s controversial plan to increase the cost of connecting to the electricity grid.
The Australian Energy Market Commission’s proposal would change the way electricity companies cover the costs of maintaining and building the pole and cable network. Following a draft report in April, a final version was published on Thursday arguing that the current system of variable network charges benefits households with rooftop solar panels and batteries at the expense of those who cannot afford to invest in clean energy.
But clean energy advocates argue that the commission’s final proposal to switch from the current variable system to fixed grid charges would cost battery owners thousands of dollars and reduce the benefit of investing in home clean energy technology.
Bowen said the “premature changes” would have unintended consequences for the 430,000 households installing batteries and any reforms would need to reduce costs for all customers.
“Any changes must be in the interest of all consumers, including those investing in their own solar power and batteries, providing lower bills and better deals to households. We will only support changes that meet these criteria,” Bowen said.
“We have been clear with the industry and regulators – any reform must deliver cheaper bills.”
Grid costs can account for up to 50 percent of a typical home electricity bill. Fees are charged to reimburse private operators of the pole and cable network and fluctuate depending on how much power is used. This means that homes with batteries and solar panels that use less electricity from the grid pay less grid fees.
Under the commission’s new plan, which will come into effect from 2030, network charges will be fixed and the move will ensure that all customers pay a fair share for network maintenance, regardless of whether they reduce their use of the grid through solar and battery systems.
Commission chair Anna Collyer said the current regime was designed for a market where a few large coal plants provided most of the energy to energy users. But renewable energy had fundamentally changed the system, and the current regime was unfair to those who could not afford the thousands of dollars of battery installation costs.
“Inaction is not a neutral option. The longer we wait, the more costly and complex this system becomes, and the heaviest burden falls on those least able to carry it,” Collyer said.
Before the proposed electric bill changes can go into effect, the commission must complete a formal review, which could take months. While Bowen cannot veto the plans, the commission must consider his views as well as those of industry, other regulators, state and federal energy ministers.
Green Energy Markets advisory director Tristan Edis said fixed network charges would increase electricity costs for a home with rooftop solar and a 20-kilowatt-hour battery by about $6000 in Melbourne and $8500 in Sydney over its 15-year life.
Edis said the final report suggested network companies should influence how fees are charged.
“Why give foreign-owned monopoly networks the power to set pricing structures? Of course, they will aim to block batteries and solar power, the only real competitors that threaten their monopolies. You’d be an imbecile to think they’d do anything else.”
Tony Wood, senior fellow at the Grattan Institute, said the proposed reform was an attempt to solve a growing problem: Households with the means to afford solar power and batteries were no longer paying a fair share of the cost of a network built for everyone.
“AEMC is sticking to its stance that people using solar and batteries are avoiding paying for the network and this needs to be fixed,” he said. “Just because rooftop solar and batteries have less financial appeal doesn’t mean we shouldn’t do it.”
Smart Energy Council chief executive David McElrea said the changes proposed in the final report would still impose greater costs on battery owners.
The commission proposed a “grandfathering” provision to take the share of households purchasing batteries before fixed charges kick in, stressing that the changes would be implemented over ten years, starting in 2030.
“While our home solar and battery revolution is lowering electricity bills, stabilizing the grid, and reversing climate pollution, we would be mad to do anything to undermine it.”
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up for our weekly Inside Politics newsletter.
Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.
Nick Toscano is an economic correspondent for The Age and the Sydney Morning Herald.Connect with: X or email.
