Corporations and shareholder-owned cooperatives are likely to own Community Batteries in Australia. However, Community Collective Ownership will reduce the price of electricity, while Shareholder Ownership will not reduce the electricity price and will require financial support from consumers or the government.
The Australian Energy Market is a Corporate Investment market in energy assets. For consumers, its performance over the past few years has been dismal as prices have risen, while its performance for investors has been excellent. However, the advent of distributed energy sources of solar and wind energy allowed communities to reduce the cost of electricity by bypassing the energy market.
Despite the Australian success in rooftop solar, all governments have provided incentives to the corporate sector. Governments have given fossil fuel energy assets away to international corporations, and the thanks from the corporations have been to want more profits and to blackmail governments into giving them more.
Rooftop solar is an economic success that leads the world. The cost in Australia is lower than in most other countries. It has come about by government support in investment but more importantly in support of standards, building up the workforce and developing research capabilities.
Australia can learn from its success. It can stop incentives to overseas corporations and incentivise consumers to Rewire Australia by encouraging consumer investments in energy technologies like Community Batteries.
Corporate Providers of Community Batteries
Governments are planning to introduce community batteries into the grid and intend to do it with Corporate Providers of Community Batteries. The Providers will install batteries, purchase electricity when the price is low and sell it to retailers when the price is high. The Australian Energy Regulator is likely to guarantee Commercial Providers a 6.78% return on their investment over the life of the Battery, and governments will supply further investment incentives. The high return is guaranteed as the investment is deemed high risk. Corporate Providers may also require a subsidy from the government.
The Batteries will become profitable as Battery prices drop and electricity prices increase. The Providers will extract the profits as a return of Capital and a return on investment, which will stagnate in the Provider’s Battery business.
Community Ownership of Community Batteries
Instead of this approach, a community of users on the same low voltage line can use Capital from consumers and the government to fund Community Batteries and distribute the profits as lower prices or further electricity-saving investments. The consumer Capital providers will get a return on investment, and the Consumers will receive lower prices or other benefits.
Instead of this approach, a community of users on the same low voltage line can use Capital from consumers and the government to fund Community Batteries. The consumer Capital providers will get a return on investment of 5%, and the Consumers will receive Capital to reinvest to Rewire Australia. Rather than stagnating in the business, all the profits can move to consumers to invest in batteries or different ways to reduce energy consumption and cost.
The Numbers
Assuming a 1kWh battery costs $800, it earns 28 cents a day by buying electricity at a low price and selling when it is high.
A bank loan of 5% repaid in 10 years will earn enough to repay the loan. Alternatively, a Community Group provides the money to buy the battery, gives investors a fixed annuity of 10% indexed per year for 20 years, and invests 18 cents a day in new Batteries or other savings from reducing consumption. The new Batteries also pay a 10% indexed annuity.
In a fair democratic society, Consumers and the initial providers of Capital should share the savings created with Community Batteries.
