The Australian Energy Market Commission (AEMC) designs and sets the rules for the Energy Market. It assumes that consumers are passive and “providers” supply services. The approach can work well when there are a few large providers with economies of scale, and there are controls over monopoly pricing and returns on Capital. However, in a distributed energy market, prosumers produce, consume, and offer an alternative where prosumers become providers.
Prosumers can invest in community battery storage, buy electricity, and sell to other prosumers. Such a market will halve the Capital cost because prosumers remove the price of a separate provider.
Provider versus Prosumer Battery Provider
Community Battery Providers purchase a battery and buy and sell electricity. Assuming the battery cost is $100,000 to provide 100kWhs of storage, the Provider wants a 10% return on investment, and the Battery will last for 5,000 cycles. For a consumer to use the service, they will buy from the Provider if the price is lower by 5 cents. Assume the difference between the buying and selling prices is 25 cents and assume the Provider wants their money back within ten years.
Alternatively, a group of prosumers work together to buy and sell electricity to themselves. When they do this, they do not need a market but agree on prices and returns on investment. The table below shows the difference between a provider and a prosumer-owned Community Battery.
Local prosumers owning and operating community batteries means the Australian Electricity Market can economically include batteries to supply local short-term storage and reduce the need for spare and extra peak capacity.
Click here for another explanation of why prosumer funding is superior to Provider funding.
Public Capital is a form of Capital suitable for prosumers and financing community assets.