Big Solar + Battery Push For New Home Builds In SA

Solar and battery subsidy - South Australia

South Australia’s Minister for Energy and Mining Dan van Holst Pellekaan is spruiking a new solar + battery deal for South Australians building homes. But is the “battery bonus” a good deal?

South Australia’s $100 million Home Battery Scheme kicked off in October 2018 with the ambitious goal of  supporting 40,000 home energy storage installations through subsidies of up to $6,000 for batteries and low interest loans for the balance of solar + storage systems.

15 months or so on and “more than 6,000” subsidies have been approved. As for actual installations, that’s not clear. The scheme obviously needs a bit of a push and it looks as though it’s just received that.

Minister van Holst Pellekaan announced yesterday developers are now able to receive the subsidy for the installation of solar + batteries on new homes. Previously, a rule of the scheme was that batteries would need to be installed within 6 months of subsidy approval. That’s now been changed to 12 months under the “battery bonus” when the “new build” classification is selected to take into account the time it may take to build a house.

Minister van Holst Pellekaan said the changes would “turbocharge” the uptake of home solar energy and battery systems.

Stoddart Virtual Power Plant

A major player in the building industry is already on board. Stoddart Group, which has been granted the ability to apply for the battery subsidy on behalf of developers, is to use the scheme to install 2,000 6.5kW solar systems with 11.6kWh SolaX Power batteries on new homes constructed in South Australia in 2020 – and aims to see more than 10,000 installations over four years. These systems will form what’s been called the Stoddart Virtual Power Plant.

“As well as helping to stabilise the grid, Stoddart’s battery Virtual Power Plant will offer new home buyers discounted power and will provide protection during an outage,” said Minister van Holst Pellekaan.

Details on the Stoddart Virtual Power Plant are still a little sketchy, but this is what I understand about the arrangement1:

  • The solar power + storage systems will be provided at no additional cost.
  • Home buyers can sign on to an electricity supply plan under the VPP for 5 years.
  • The plan will offer discounted electricity – around 30% off.
  • Every kilowatt-hour consumed will be charged – including solar self-consumption.
  • After the 5 year term, ownership of the system transfers to the home owner.
  • To exit the deal once signed up, it will cost $1,500 for every year remaining to buy out the system.
  • Home buyers won’t have to take up the plan, but can still have the system installed. They won’t benefit from it during the first 5 years, but will own it after that.
  • Home buyers can opt out of having the system installed (but I think there will be a significant amount of coaxing not to).
  • Stoddart Group has partnered with Powershop and Reposit to deliver the VPP.

There will be quite a few big builders involved with the Stoddart Virtual Power Plant program – Stoddart Group’s partners include Metricon Homes, Rivergum Homes, Sterling Homes, Hickinbotham, SA Housing Centre, Statesmen Homes, ABC Homes and Metro Homes.

Once further details are available, we’ll add the Stoddart Virtual Power Plant to SQ’s shiny new VPP comparison table.

What’s In It For Stoddart Group?

Stoddart Group have pointed out that only 5% of new builds in SA have solar installed during the construction process as home buyers usually have other priorities – so this is a way to see more solar (and batteries) installed at that point. This is a fine thing. But of course, Stoddart aren’t doing this just for warm and fuzzies. They have to be making something from it.

In addition to whatever margin on electricity purchased by households under the plan, having full control over battery systems via the VPP means stored energy can be discharged when market prices are high. There’s also the feed-in tariff, the payment made for surplus solar electricity exported to the grid. It’s assumed Stoddart have crunched the numbers, including taking into account feed-in tariffs may drop, and discovered they will come out ahead.

As for builders, they are banking on getting more bums on seats.

Is This “Battery Bonus” A Good Deal For Home Buyers?

Assuming there’s no hidden nasties in the Stoddart VPP offer (update Thursday PM: see below), it could be a good way to knock ~30% off electricity costs for zero outlay for five years, followed by the bonus of ownership of the system and getting full benefits from then. Or just waiting for 5 years while the system does its thing and still winding up owning it – but being stuck with higher electricity bills during that period will really add up. Either way, I imagine the battery will be getting a good workout over that first 5 years and what impact that might have on batteries part of the VPP remains to be seen.

There will also be an option to avoid the VPP altogether and buy the full system outright from the outset for $7,500. But this could mean part of the system’s cost is built into the cost of the house as the builders involved are apparently also making an (unspecified) contribution to this arrangement.

However, solar + batteries as an included upgrade is certainly better than some of the crap offered by builders at times to coax home buyers into signing on the dotted line (which are also built into the cost). Stoddart says under the buyout option, the components are being supplied at wholesale cost. Still, I’m left wondering what the cost of a home without this package would be compared to with it as there are installation and other costs as well – but there are savings on the installation of solar if it’s performed during a home’s construction.

Perhaps Stoddart and participating builders are banking on most folks not choosing the buyout option, being instead attracted to the other system ownership pathways.

Before signing up for this offer with any participating builder, be sure to read (and understand) the fine print; which we are yet to take a look at.

Alternatively, and to get the most benefit from solar energy, home buyers can knock 100% off their annual electricity costs right away by instead buying a solar power system outright from and installer they choose and using the components they choose – and no batteries required; although this means forgoing having supply during a blackout.

Using the default settings on SQ’s new solar calculator, the simple payback period on a 6.6kW solar power system installed in Adelaide at a cost of $6,600 is now just 3 years. If ready cash isn’t available, it can be added to a mortgage; with the savings achieved used to pay down the mortgage more rapidly.

Over 10 years, a 6.6kW solar system installed in Adelaide would save an estimated $25,173; well above triple the initial outlay. Our solar calculator also enables you to add batteries so you can see how much energy storage could add to the cost and payback for a system purchased outright- just note the calculator doesn’t factor in the SA battery subsidy yet.

Update – A Few Devils In The Detail

Since publishing this article early this morning, Finn’s found several documents providing more detail – if you’re interested in this “battery bonus” deal, you should study them carefully. By the way, the systems being provided have been dubbed “SunYield”.

The old wisdom is the devil is in the detail, and there’s some here.

For example, the daily supply charge is 111.24 cents. Youch! That’s 20 – 30 cents higher than many other retailers offer. Over a year, that’s works out to be an additional $73 – $110.

Additionally, my impression from the discussion on ABC Radio yesterday was participants would be seeing around 30% off electricity rates overall. The Basic Plan Information Document linked to above indicates solar electricity consumption is priced at 26.91c per kilowatt hour. *But*, for any grid supplied electricity consumed such as during the night, it’s 35.75c per kilowatt hour.

However, the StoddartPay brochure states:

“By having access to the discounted solar rate at night time, you can expect lower power bills. Stoddart Group uses the energy stored in the battery, and as result, it is not available for your night time use, the power you draw from the grid instead of the battery, will still be charged at the discounted solar rate”.

..so, that’s a little confusing. And then it gets a little more so in that same document:

“If you are a Powershop customer, you will be able to use the power stored in the battery, at any time of day, for the discounted solar rate.”

Huh? Perhaps they mean the equivalent of the stored energy. Anyway, some clarifications are needed.

Also, while we know what battery will be used with these packages (Solax Power), the brand of solar panel and inverter still don’t seem to get a mention.

Worth noting is for the purposes of the StoddartPAY agreement, the SunYield system is the energy generation equipment including solar panels and inverter; not the battery.

The above are a few points that warrant further investigation if you’re considering this offer – there may be more.

Footnotes

  1. The information is from a discussion with Stoddart Group’s Adam Taylor on ABC Radio Adelaide’s Afternoons with Sonya Feldhoff yesterday. A recording of the segment (which also includes commentary from SolarQuotes Founder Finn Peacock) can be found here. The segment starts 10 minutes in and runs for approximately 25 minutes.

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