Chapter 6Conclusion and recommendations

6.1Australia faces a dual challenge of using its abundant energy resources sustainably while ensuring all people can access affordable energy. Significant progress has been made to decarbonise Australia’s energy system, however much work still needs to be done to improve overall energy efficiency.

6.2As considered in this report, residential electrification is a significant measure for achieving better energy outcomes in Australia. With leadership and coordination, residential electrification can improve household energy efficiency and support Australia to meet its nation emission reduction targets.

Promoting electrification

6.3Many Australian households that have installed energy efficient electric appliances and consumer energy resources are already experiencing the economic and health benefits of the improved energy efficiency in their homes.

6.4However, many households face structural barriers to accessing the benefits of residential electrification. Such barriers can affect people who on low incomes, who rent, who live in apartments (or strata properties), or who do not have enough information to enable them to make a decision to electrify.

6.5The committee recognises that well-designed and tailored supports are needed to help households overcome the barriers to electrification. Indeed, such supports are fundamental to addressing social equity issues in Australia’s transition to residential electrification.

6.6In particular, the committee considers that households should be supported to install consumer energy resources in their properties, including rooftop solar, home batteries, bi-direction electric vehicle chargers and home energy management systems.

6.7The committee recommends that the Australian Government, in coordination with state and territory governments, should promote households to uptake consumer energy resources, including rooftop solar, home batteries, bi-direction electric vehicle chargers and home energy management systems. In conjunction with those efforts, households should be promoted to participate with aggregators which can operate distributed assets in a coordinated fashion in response to grid and market conditions.

Leveraging rooftop solar

6.8Managing Australia’s residential electrification transition will require significant collaboration across the Australian community, with governments, industry bodies, financiers and energy consumers all having a significant role.

6.9In the committee’s view, there is significant scope for the Commonwealth Government to coordinate Australia’s residential electrification transition, particularly given the difficulty of balancing the pace of the transition to meet emission reduction targets while managing pressures on our energy grid.

6.10In particular, national coordination is needed to manage the rapid uptake of rooftop solar in Australia. As incentives have significantly reduced the cost of installing rooftop solar in recent years, the rate of solar energy in the electricity grid has increased significantly. Indeed, there are now some four million solar systems have been on Australians’ roofs with a collective energy generation capacity which exceeds that of coal-fired power stations.

6.11While rooftop solar has undoubtedly helped to decarbonise the electricity grid and reduce households’ energy costs, the amount of energy generated by rooftop solar poses significant challenges for grid integration and stability. Today, Australia faces a situation where the energy generation potential of rooftop solar is constrained by capacity limitations of the electricity grid. To maintain grid stability, some electricity network operators are already curtailing the output of rooftop solar and rejecting new supply.

6.12Australia’s electricity grid was not designed to support the decentralised and bi-directional energy requirements of rooftop solar. The level of energy production from rooftop solar, particularly during daytime hours when energy generation is highest and energy consumption is generally lowest, has led Australia’s energy market regulator to warn of the serious risk of grid instability from excess solar generation. Such instability compounds the already complex challenge of managing variable demand pressures in Australia’s electricity grid.

6.13The committee agrees with the evidence from many inquiry participants that battery energy storage systems (BESS) have a significant role in leveraging the benefits of rooftop solar and in addressing issues of grid instability. At the household level, BESS can store excess electricity generated by rooftop solar during the day and enable households to efficiently use that energy during peak evening hours. At the suburb level, community batteries can perform a similar function without each household needing to maintain their own individual BESS.

6.14The committee recommends that the Australian Government, in coordination with state and territory governments, should prioritise investment in technologies that extend and improve the system value of rooftop solar, such as home batteries and home energy management systems.

6.15The committee recommends that the Australian Government, in coordination with state and territory governments, should prioritise how community batteries can spread the benefits of rooftop solar to consumers who are unable to install their own systems, such as renters, apartment dwellers or low-income earners.

6.16However, in supporting increased incentives for electrification, the committee notes that consumers must be given genuine choice about the electrification upgrades they may wish to make. This is particularly important for maintaining social license in Australia’s transition to Net Zero by 2050.

6.17Further, the committee notes that for many households the most affordable option in the short term will be to maintain their gas appliances. Federal and state governments should be mindful of this when implementing electrification policies and consumers should not be unduly prevented from maintaining gas appliances.

6.18As such, the committee is concerned that approaches of some state and territory governments to ban residential gas connections may be an ideological approach that is not supported by a sound evidence base.

Avoiding labour shortfalls

6.19The success of any efforts to step up the pace and scale of residential electrification in Australia will depend, among other things, on the availability of an appropriately sized skilled workforce to deliver the necessary upgrades to homes and grid infrastructure. The committee heard from multiple witnesses that the significance of the workforce challenge Australia faces, in terms of its impact on larger electrification efforts, should not be underestimated. Australia will need, in particular, more qualified electricians, along with other skilled workers in the renewable and related manufacturing sectors.

6.20The committee believes that the Australian government needs to consider, as a matter of priority and in coordination with states and territories, how to deliver more cost-effective local tuition for apprentices, including electrical apprentices.

6.21The committee recommends that the Australian Government and state and territory governments consider cost-effective local tuition for apprentices, such as electrical apprentices.

Senator Andrew Bragg

Chair

Liberal Senator for New South Wales