NSW Government’s Empowering Homes Program Market Feedback Submission

The Empowering Homes Program will support the installation of up to 300,000 solar-battery systems across the state over the next 10 years. The program will provide interest-free loans to eligible NSW residents to install battery and solar-battery systems.

It is planned that loans of up to $9,000 for a battery system or up to $14,000 for a solar-battery system will be available to owner-occupiers with an annual household income of up to $180,000. All applications will be subject to normal loan assessment criteria as part of the program requirements.

The program aims to unlock up to $3.2 billion in clean energy investment, adding up to 3,000 megawatt hours of storage into the NSW energy system when complete. It will help create jobs, reduce emissions, increase system security and reliability, and place downward pressure on energy costs.

Market Feedback Questions

About Solaray Energy

Solaray Energy Clean Energy Council Award 2017

Solaray Energy is a solar and solar-battery provider based in NSW. We have been trading for 10 years and are one of the largest and most respected independent installers in Sydney.

We have won CEC Design and Installation Awards, are the LG Solar installer of the Year for the last 3 years running (LG Solar panels being the highest quality panel available in Australia), are one of Tesla’s largest Powerwall installers, and provide solar and storage products at the quality end of the market.

We employ around 50 people directly and indirectly in NSW, are an NSW Payroll Taxpayer and are passionate advocates for the adoption and promotion of renewable energy.

We are a CEC Approved Solar Retailer, and are members of both the Clean Energy Council and the Smart Energy Council.

How might this model be improved to best achieve the program objectives, bearing in mind the program delivery requirements?

The below response refers to the loan amount cap of $9,000 for battery systems and $14,000 for solar-battery systems.

The solar PV and battery industry in NSW is plagued by low-cost suppliers, with products that do not meet the promoted longevity, output or provide the promised customer returns. This, combined with low-quality installation practices, leads to poor consumer returns, products that are often sent to landfill well before they have achieved environmental neutrality, and in many cases unsafe and dangerous installations.

We strongly recommend that the program is targeted at the high-quality end of the market, where the products and installation will meet their expected lifespans and the returns for the NSW Govt will be achieved.

A high-quality battery system in NSW (including Tesla Powerwalls, sonnenbatterie etc) starts at around $13,000. The danger of providing interest-free loans capped at $9,000 is that it drives customers to the cheap end of the market where the long-term results of the program will be lowest.

A high-quality solar battery system similarly starts at around $18,000 so the same applies.

There is ample information in the public domain to support these arguments.

If the program is unable to support loan amounts of greater than $9,000 and $14,000, it is imperative (to avoid low quality and low-cost products and outcomes) that the loan process allows for seamless application and approval of larger amounts with any excess above the current cap subject to interest.

Do you have any comments on how delivery partners might recover their costs for setting-up and delivering the program?

This response refers to the Program Administrators’ role.

It is important that the Program Administrator is a body that does not, in any other form, earn commissions from any industry participant, or charge a fee for services (especially for the provision of leads or other information generated from marketing activities) as our experience has shown that this results in major conflicts of interest and preferential treatment based on revenue opportunities.

In our opinion, the Program Administrator must be an impartial and independent administrator with no financial links to the industry in order to provide a level playing field.

How might the program be designed to address specific issues that arise in rural and regional areas (for example, higher costs or installer availability)?

Whilst there is no doubt that the provision of solar and battery products has increased costs in regional and rural areas – as is to be expected – this should have little impact on the delivery costs of all but the final service provider.

Are the annual caps outlined in the Market Sounding document suitable to support the market and meet the program objectives?

It is impossible to know the correct annual cap prior to installation.

However, we believe that an initial cap of 8,000 in the first year is likely to be significantly below demand.  As a comparison, we are just one supplier and will install a significant percentage of this initial cap in the Sydney area in 2019. Around 1/3rd of these are supplied with new solar systems.

It is important to analyse the impact of the annual and monthly cap implemented by the Victorian Govt as part of their Solar Victoria program. The cap is currently set at around 3,300 PV Systems per month which has had the impact of slowing the PV market down from a pre-cap level of around 6,000 installations a month to around 3,500 per month (Source: Green Energy Trading).

The reason for this is that in consumer’s minds, the availability of a government incentive leads customers to believe that the product or service is only of reasonable value if the incentive is received and is therefore not worth it without the incentive, thereby slowing demand if the incentive is not obtainable.

Do you have any other comments on how best to avoid the cyclical nature of programs that can result from annual caps? 

Our suggestion is therefore either there are no initial caps, or that the caps are flexible and adjusted upward if demand in the market requires it

Are there better ways to ensure the performance of installers, including a high quality of customer engagement and installation, is maintained, beyond traditional auditing regimes?

The Clean Energy Council already operates the Approved Solar Retailer program.

Whilst this program has its limitations (including the qualification criteria being too easy), it is by any measure the best program or scheme of its type in the industry.

Therefore, we would strongly recommend that a better way to ensure the performance of installers is maintained is to engage the CEC to add a NSW Empowering Homes Extension to the existing program and allow the CEC to manage compliance.

The CEC could recover their costs for this by charging participating installers

How can the NSW Government best ensure applicants are making an informed choice, and to manage customer expectations about their potential return on investment?

In addition to the NSW Govt calculator tools, participating installers and service providers can be mandated (under the CEC ASR extension) to provide standard savings estimates that comply with published guidelines.

What information should prospective applicants be provided with to enable them to make an informed choice, and what are the main issues with providing this information?

Applicants should be provided with:

  • Product specifications
  • Storage capacity
  • Warranty lengths
  • Estimated savings based on standard or customer-specific information
  • Clear guidance about the operation of a solar battery, specifically that it will (usually) not eliminate bills, that it only charges when excess solar power is available, that it has charge/discharge inverter limitations and so on.
  • Clear specifications about any backup capabilities (whole of house, circuits, overloading etc).

Should the program mandate basic system requirements, and return on investment thresholds, to ensure that customers install appropriately sized systems (for example, a set of upper and lower bounds on the relative sizes of different system components)?

There should be basic system requirements implemented. A solar system of at least 5kW or more should be installed to maximise value from the battery.

The standard battery offering has currently around 13.5kWh of capacity and requires a PV system of at least 5kW or more capacity to achieve daily charge and discharge.

Return on Investments thresholds are not appropriate (except where needed to ensure consumers are not misled by high-pressure sales tactics).

Many customers purchase solar storage today for one or more of the below reasons:

  1. To reduce their energy bills;
  2. To minimise their dependence on their energy retailer;
  3. To reduce the amount of coal and gas-fired electricity they use;
  4. To have power available in a blackout; and/or
  5. To take advantage of the advanced software that is provided with most batteries

As the objectives of Empowering Homes program include utilising the VPP capability of DER, this can be achieved regardless of the ROI that individual customers receive.

Therefore, whilst we believe it is imperative that customers are informed of potential ROI to prevent misleading sales tactics, there should not be specific minimum thresholds as much of the benefit to the NSW Govt will be achieved through other measures. Also, a 12% pa return, for example, may be unacceptable to one customer, but highly attractive to another.

What should the Department consider when designing the business systems for the program in terms of data, data structures, and integration with delivery partner platforms and systems?

All participants should use APIs or similar to reduce costs and streamline processes.

Are these business rules adequate to support delivery of quality systems, protect consumers, minimise risks and ensure that the program objectives are achieved?

We believe the income threshold of $180,000 is too high.

Experience with the Solar Victoria rebate has shown that because the income threshold is met by almost all the population, it implies that the installation of solar batteries is only of value if the incentive/loan is received.

As a significant proportion of solar batteries are currently being installed by households whose income exceeds the threshold (but usually not by a significant amount), we believe a threshold at this level will dramatically slow this section of the market.

Further, households with an income of close to the threshold are able to obtain and service standard ‘green loans.

Our suggestion for the income level is that it should be capped initially at $120,000 per annum or less.

Should the Department require anything additional from system suppliers or installers for them to be approved and for them to maintain their approved status under the program? 

As per above:

The Clean Energy Council already operates the Approved Solar Retailer program.

Whilst this program has its limitations (including the qualification criteria being too low), it is by any measure the best program or scheme of its type in the industry.

Therefore, we would strongly recommend that a better way to ensure the performance of system suppliers and installers is maintained is to engage the CEC to add a NSW Empowering Homes Extension to the existing program and allow the CEC to manage compliance.

The CEC could recover their costs for this by charging participating companies for this accreditation.

How can the Department ensure installations are fully compliant with specified standards, codes and best practice guides, in the most efficient and effective way? 

The most efficient AND effective compliance regime would be one where random inspections are carried out, with a best practice and continuous improvement methodology combined with penalty and accreditation removal for non-conformance.

Again, this could be managed by the CEC with cost recovery via the NSW ASR Extension.

Are there any other matters relating to the customer’s loan application process that the Department should consider?

In our experience, it is important that the loan application process is as simple and quick as possible. The more complex and onerous the process, the greater the non-completion rate.

Online applications and approvals are standard in today’s market.

What are some of the common issues that arise when retrofitting batteries to an existing solar system, and how can the program best address these issues?

NSW has, unfortunately, had many thousands of underperforming solar systems installed – and in many cases, the output of these systems does not meet what the CEC and the majority of the industry would view as the minimum acceptable standard.

Applicants should be required to guarantee that their existing solar system will achieve minimum output requirements set at, say, 75% of the CEC guidelines unless subject to shade or other site issues.

Applicants should also be required to guarantee the continued operation and performance of their solar system (or a replacement) to ensure the program benefits are maintained.

At the very least, applicants should be required to show that a) their system is performing as specified and b) that the system is covered by a valid warranty from Australian based entities covering the panels, inverter, mounting hardware and installation. The original installer of the solar system should be required to provide a certificate stating the system is operational and likely to continue to perform for the life of the loan.

What evidence needs to be collected from installers to ensure the installation is safe, compliant and meets the program requirements?

As per the CEC Approved Solar Retailer program, DNSP requirements, and any extensions requested by the Department.

What other aspects should be considered when establishing technical specifications for the solar-battery systems supported by the program? 

Solaray Energy has been installing solar-battery systems for over 4 years and is one of the largest solar-battery installers in Australia.

In our experience, there are major functional, operational and performance issues with batteries that rely on a third-party inverter to operate (referred to as DC Coupled batteries).

We strongly recommend that the only batteries that should be supported by this program are AC Coupled – meaning the inverter and battery are combined in the one unit and, most importantly, supported by the one manufacturer. Examples of these include Tesla Powerwall, sonnenbatteries, and Senec batteries

How can the program best support the battery and PV industry development in NSW, and the transition to the future grid?

The solar PV and battery industry in NSW is plagued by low-cost suppliers, with products that do not meet the promoted longevity, output or provide the promised customer returns. This, combined with low-quality installation practices, leads to poor consumer returns, products that are often sent to landfill well before they have achieved environmental neutrality, and in many cases unsafe and dangerous installations.

We strongly recommend (as per Q1 above) that the program is targeted at the high-quality end of the market, where the products and installation will meet their expected lifespans and the returns for the NSW Govt will be achieved.

A high-quality battery system in NSW (including Tesla Powerwalls, sonnenbatteries etc) starts at around $13,000. The danger of providing interest-free loans capped at $9,000 is that it drives customers to the cheap end of the market where the long results of the program will be lowest.

A high-quality solar battery system again starts at around $18,000 so the same applies.

There is ample information in the public domain to support these arguments.

How should the Department determine that supported systems will meet program requirements? What testing and documentation should be required? 

The testing and documentation should be stringent and again, the requirement for battery systems to be supported in its entirety by the one manufacturer is critical.

Please outline any anticipated issues or concerns with establishing warranty and guarantee requirements for the program as outlined here.

Battery manufacturers should have full, entire system, Level 3 and up support infrastructure in place in Australia. Level 1 and 2 support should be provided by the Installer at a minimum.

What other minimum warranty or guarantee requirements should the Department consider establishing for the program?

For the PV System component, installers should provide a ‘whole of system’ warranty of at least 5 years in addition to any manufacturer or workmanship warranty.

How can the Department ensure the program supports appropriate product stewardship and sustainability outcomes?

Product stewardship standards should be legislated for PV panels, inverters and batteries as soon as possible.

 

For more information about this program and to receive more information when it becomes available, please call the Solaray Team on 1300 221 586.

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