Extract from ABC News
Analysis
More than one-third of Australian households generate power via rooftop solar, (ABC News: Rhiannon Shine)
Change may be one of life's only constants, but it is far from the only contradiction.
Few of us embrace change and, for the most part, we actively attempt to resist it.
Those tendencies spill over into politics in what is often an epic battle between those attempting to maintain the status quo and their opponents pushing to overthrow previously accepted norms.
Occasionally, the conflict becomes so entrenched, and the protagonists so wedded to their positions, that logic is thrown out the window, particularly when the clash involves money.
In the past 30 years there's been no better example than the war over climate change.
Once the domain of academics and scientists measuring minute atmospheric shifts, it has moved mainstream, and in recent years has narrowed into an ideological fight over, of all things, how to best generate electricity.
Gas was always seen as the intermediate fuel in Australia's transition from coal generation to renewables. (Supplied: Woodside)
For years, every major global investment bank found that renewables were the cheapest way to generate electricity. So too did the CSIRO. But that didn't stop the debate.
But in the past six months there has been a seismic shift in opinion.
Fossil fuels, which have powered the global economy for centuries, are under threat.
And it just so happens that Australia has become ground zero in this global battle.
Against all odds, households have transformed from mere energy consumers to being a serious force in its production.
Households have become a serious force in energy production as more install home batteries. (ABC News: Courtney Withers)
In the past year they've taken on a new role in energy storage and distribution.
More than one-third of Australian households generate power via rooftop solar, while a revolution in home battery installations has dramatically changed the dynamics and economics of electricity generation.
It is a shift that could help solve a decades-long energy crisis that has sent inflation soaring in recent years and contributed to higher interest rates.
Power without politics
For all the infighting in Canberra, Australians have embraced renewable energy with gusto.
The nation is the undisputed world leader in rooftop solar with more than 4 million households generating and feeding power into the grid.
As recently as a year ago, however, fewer than 8 per cent of solar-connected homes incorporated batteries.
That created problems.
Every day, close to midday, an enormous surge in electricity supply back into the grid would crash wholesale power prices as coal-fired generators, unable to adjust their output, operated at a loss.
The rise of home batteries has had a dramatic impact on the wholesale cost of electricity. (ABC News: Liz Pickering)
Last July, however, the federal government introduced a 30 per cent rebate on home batteries, a program so wildly successful that it has been recalibrated and upgraded to ensure it doesn't run out of cash.
More than 400,000 households have since taken up the scheme, reducing the amount of solar power flooding the system all at once.
Many now sell excess power into the system at night from their batteries when prices are higher, evening out the energy flow.
And that's had a dramatic impact on our grid and on the wholesale cost of electricity.
Last month, the Australian Energy Market Operator reported a fundamental shift in our power supply.
For the first time, batteries — both grid-scale and home systems — determined the price of electricity. Gas was suddenly knocked off its perch.
Gas prices had been soaring for more than a decade. (ABC News: Brendan Esposito)
Gas was always seen as the intermediate fuel as the nation switched from coal generation to renewables.
Fired up within seconds, gas generators can fill the breach, keeping the lights on during periods of high electricity demand.
Fuelcast: Gas plans on (and off) the table
The only problem is that it was horrendously expensive. And given it was the swing factor, the marginal supplier, it was the price of gas that determined the ultimate cost of electricity.
Gas prices had been soaring for a decade, ever since the three east coast exporters constricted supplies.
It now appears those very same gas exporters who profited handsomely from exorbitant prices have inadvertently encouraged households to take control of their own power.
That, in turn, has contributed to last week's announcement of a 10 per cent drop in some benchmark electricity prices.
A global battery boom is underway and Australia is charging ahead. (ABC News)
Battery price plunge
The numbers are extraordinary.
Outside of China, Australia dominates the global demand for household batteries, accounting for almost 60 per cent of the market.
Despite the enthusiasm for solar power in the past 15 years, most Australian households couldn't make the numbers stack up when it came to batteries.
Until now.
Just as with solar panels a decade ago, the price of batteries has plummeted.
Both grid-scale and home battery systems are determining the price of electricity. (ABC News: Glyn Jones)
As most auto manufacturers switch to electric models, the huge upscale of battery production has seen greater efficiency in inputs and lower production costs.
Between 1991 and 2024 the price of lithium-ion batteries dropped 99 per cent.
In the past two years, price falls have accelerated even as batteries have extended their range and durability.
That was partly a function of a slowdown in EV sales, a trend that is now reversing in spectacular style as global demand explodes following the latest oil crisis.
But continued improvements in technology and production efficiency are expected to see further reductions in prices.
China now dominates battery production, accounting for up to 85 per cent of global supply with the remainder sourced from other Asian countries, North America and Europe.
Just as in Australia, the ongoing climate wars in the US and in various parts of Europe discouraged manufacturers from investing in battery production, effectively ceding control of the market to Beijing.
What does this mean for interest rates?
Soaring power prices have had a huge impact on Australian inflation in the past four years, which has fed directly into higher interest rates.
Despite being a global energy supply giant, Australian fossil fuel exports are subject to market whims.
Russia's invasion of Ukraine kick-started the trend as supplies to Europe were cut and global energy prices soared.
With almost 20 per cent of oil and gas supply now trapped in the Persian Gulf, energy prices are destined to remain elevated for at least the remainder of this year.
Even in the latest inflation data, annual electricity prices rose 22.5 per cent as government energy rebates were wound back.
But the rapid shift in electricity production and storage may alter that dynamic.
According to the AEMO report, renewables in the March quarter, which have no fuel costs, provided a record 46 per cent of the nation's electricity.
Unsurprisingly, given the continued shutdowns of Australian coal-fired generators, coal, which once provided more than 80 per cent of our electricity, has seen its contribution drop to a new record low.
But the biggest shock was the gas contribution.
"Gas-fired generation recorded its lowest average for any quarter since the fourth quarter of 1999,"the report said.
Even more startling, it dropped 24 per cent from the same period last year, suggesting its role as the stepping stone between coal and renewables was rapidly unwinding.
But its role may be revived by the business investment boom in data centres.
The power-hungry AI infrastructure centres are being built at a frenetic pace across the country at a rate that could rival the mining boom of the early part of this century.
Unless grid-scale batteries are added at the same pace, we may end up back at square one.
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