As the world comes to terms with the realities of its power usage, entrepreneur Charles Walker is betting Australia’s power grid has passed its heyday.
The Brisbane-based founder of RedEarth Energy Storage has reason to be optimistic — earlier this week, his company’s Sunrise home battery system became one of the first Australian-made and -owned products to be approved by the Clean Energy Council (CEC), allowing it access to government subsidy programs.
For Walker and co-founder Chris Winter, the approval couldn’t come at a better time. Their company has been growing at 30% quarter-on-quarter this year as the price of battery systems continues to fall, making them more accessible to Australian households.
“It’s really taken off in the last 12-18 months, we feel like we’re really getting traction,” Walker tells SmartCompany.
“Everyone is talking about this great opportunity in the market for storage — there’s a disruption in the market and battery is part of the solution.”
Walker, not dissimilarly to many other business owners working in his industry, is predicting Australia’s relationship with electricity is about to change — drastically.
“The energy grid is getting outmoded,” Walker says.
“Governments can either spend a heap of money on it, or they can incentivise us to buy our own.”
Walker’s big prediction is as renewables proliferate further through the economy there will be a “mass decentralisation” of Australia’s electricity market, changing the face of the sector.
“Every single place that uses electricity will have a battery in the future and we will be making electricity where it’s needed,” he says.
While governments aren’t quite as bullish about home battery storage, there has been significant taxpayer support for Australia’s renewable energy industries as lawmakers attempt to turn the dials to meet carbon reduction targets.
RedEarth Energy, recently listed on the CEC’s approved list, will now benefit from consumer-side support, particularly in South Australia, where the Home Battery Scheme offers solar households a $6,000 subsidy on approved battery storage.
State governments are also boosting companies directly. RedEarth raised $4.75 million in a Series A round earlier this year, supported by Queensland government’s Business Development Fund and private investors.
Investment in hand, the company, founded in 2013, hopes to manufacture $70 million worth of battery systems out of its Brisbane factory before the end of 2023, which would be a ten-fold increase on current volume.
What’s driving the home battery market forward?
Aussies have emerged as some of the most enthusiastic solar power consumers in the world over the last decade as the renewable energy industry has found its feet, with about one-in-five households installing rooftop solar, according to figures put together by the government-backed PV Institute.
Six solar panels were being installed per minute in Australia last year, with the residential solar sector growing by 43% throughout the year, according to CEC figures.
As the market for solar panels expands, so too does demand for home battery systems, which enable households with solar power to store energy they generate, rather than immediately selling it back to the grid.
Industry consultancy Sunwiz estimates about 12% of new solar systems installed in 2017 included a battery, up from 6% in 2016. An estimated 60,000 or so dedicated battery storage systems had been installed in Australia by the end of last year.
But the home battery market still faces some limitations, says Liam Harrison, a senior industry analyst for IBISWorld who has been watching the market.
“The home battery market has grown, but probably not as fast as one would expect,” Harrison tells SmartCompany.
Harrison explains the prospects of the home storage industry waxes and wanes with conditions in the broader electricity market, with reliability remaining a key draw for customers.
“As summer starts to roll out and the grid really starts coming under pressure again, if you get issues like rolling blackouts you could see a big spike,” he says.
Pushing the limits
Multinational companies are investing billions in battery technologies for use in electric cars and households, but such are the economics of the latest innovations that it could be years before the cutting edge is ready for mass adoption.
“Battery technology is a bit problematic in the sense that batteries really have a finite limit in terms of their chemistry,” Harrison says.
“It’s been very difficult for battery producers to push the limits.”
Tesla’s high-profile founder Elon Musk, who makes headlines seemingly without effort, made a splash in the battery market in September, claiming Tesla had worked out the science on a battery that could last for a million miles before needing to be replaced.
Walker, whose ambition is to take on Tesla in Australia, says he recognises the company as a disruptor but is betting on larger companies to move technology forward.
“We’re relying on companies to innovate in batteries themselves … it will come from the LGs, Samsungs and Panasonics,” Walker says.
As research into battery technology continues internationally, local companies are also investing in their own research and development, looking at ways to tailor home energy systems to Australia’s climate.
A market in flux
But Harrison explains inconsistencies in government priorities and policies across states, as well as persistent uncertainty about the federal government’s energy policies, is holding back the industry.
“The market is in a bit of flux — we’re not sure what direction it will go,” Harrison says.
“We’re not really sure how governments will respond.”
Such is the fragile state of the market that new safety standards for home battery installations, proposed by Standards Australia earlier this month, caused controversy in the industry.
The regulation, brought about in response to concerns the home battery installation market might be turning into a bit of a ‘Wild West’, has some companies worried they won’t be able to install some systems in Australia.
Walker says the battery storage market is 10 or so years behind Australia’s rooftop solar market, noting that household solutions have only been viable for 24 months from a price perspective.
Prices and return on investment for battery systems vary by location, individual use cases and time, but Walker says the typical price of RedEarth’s Sunrise system, which runs at capacity between 3-26kWh, is about $10,000.
This aligns with Tesla’s current Powerwall pricing, as listed on their website, for a 13.5kWh system.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.