Calls for cheaper home batteries and a push to fast track renewables | Close of Business

Key Concepts

• Household energy subsidy vs. battery storage subsidy
• Solar feed-in tariffs and their impact on battery adoption
• Payback time for solar and battery systems
• Renewables vs. Nuclear energy debate
• Supermarket profitability and competition
• Fair Entitlements Guarantee (FEG) scheme and its limitations
• Airport revenue and profit margins
• Unemployment rate and potential for interest rate cuts
• Impact of Trump's tariffs on global markets

Energy Prices and Subsidies

• Government Energy Subsidy: The government is considering extending the $300 household energy subsidy.
• Rooftop Solar Proponents' Argument: Instead of direct subsidies, the government should invest in a federal subsidy program for household battery storage systems.
• Solar Feed-in Tariffs: Massive cuts to solar feed-in tariffs are driving a battery boom. Some households receive only 1-2 cents per kilowatt hour exported, or even pay to export power.
• Example: Kevin Wi: He used to get 15 cents per kilowatt hour, now only gets 3 cents, prompting him to install a battery.
• Battery Adoption:
  • 4 million households and businesses have rooftop solar.
  • Only about 1 in 12 (320,000) have a battery.
  • 75,000 units were installed in 2024, a 47% increase.
• Inquiries Surge: Installation companies report a surge in inquiries due to regulated power price rises.
• Payback Time: The average payback time for a rooftop solar system with a battery is about 8 years, but can be over a decade without subsidies.
• Savings: Households can save around $1,500 a year with rooftop solar and another $1,000 with battery storage.
• National Savings Forecast: If Australia reaches 1 million solar batteries by 2030, households are forecast to save over $19 billion.
• Battery Function: Solar batteries time-shift energy from midday (cheap) to nighttime (expensive).
• Cost Barrier: Battery systems cost around $10,000 on average.
• Limited Subsidies: Only NSW and NT offer subsidies, prompting calls for a national scheme.
• Community Benefit: Battery storage reduces pressure on the grid during peak demand.
• Former RBA Governor's Warning: Against power bill rebates as a temporary solution.
• Alternative Solution: Cheaper solar batteries provide a permanent, low-cost energy source immune to geopolitics.
• Renewables vs. Fossil Fuels: Renewable energy sources like solar are not subject to geopolitical instability like fossil fuels.

Renewable Energy and Nuclear Debate

• Investment Banks' Stance: Australia needs more, not less, renewables.
• Coalition vs. Labor:
  • Coalition: Caps renewables at 54% and pursues nuclear.
  • Labor: Targets 82% renewables.
• Clean Energy Investor Group: Without renewables, household electricity bills would be $400 higher annually.
• Richie Meryan (Clean Energy Investor Group CEO):
  • Report uses real data to show renewables put downward pressure on power prices.
  • Members are keen to invest in the clean energy transition.
  • Capital is available, but policy settings are lacking.
  • Reforms needed for planning, transmission, etc.
• Nuclear Investment: Not a single member of the Clean Energy Investor Group is interested in investing in nuclear energy in Australia.
• Renewables vs. Nuclear Cost: Renewables are the cheapest new generation; nuclear will require public investment and potentially higher power bills.
• Coal Retirement: Most Coal Fired power stations will retire in the next decade.
• Nuclear Legality: Nuclear energy is currently illegal in Australia; no frameworks for insurance, water, etc.
• Renewables Cost Assessment: The Australian Energy Market Operator (AEMO) and CSIRO find that Renewables Plus Storage like batteries is providing the cheapest new generation.
• Market Obstacles: Reforms are needed to the EPBC, environmental assessments, and market design to incentivize new builds.

Supermarket Competition and Pricing

• ACCC Report Findings: Coles and Woolworths are among the world's most profitable supermarkets with significant market power.
• Profit Margins: Grocery chains' margins are sharply higher in recent years.
• No Price Gouging Conclusion: The ACCC stopped short of concluding price gouging.
• Recommendations: The ACCC recommended 20 things to get competition more intense in Australia between the great supermarkets.
• Loyalty Programs: ACCC recommends a review of loyalty programs, which it says is confusing customers.
• Supplier Treatment: Concerns raised about the treatment of suppliers.
• ACCC Deputy Chair: "We think a better way to go is to enhance competition because that means allowing consumers to better understand pricing to look at True Value and understand where the best um bang for their bucks is and get some of that confusion that exists at the moment out of the system"
• Government Response: $3 million in the budget over three years to help suppliers.
• Supplier Perspective: A milk supplier to Coles and Woolworths said $3 million is not enough.
• Opposition Response: Tabled a members bill to look into the supermarket sector.

Fair Entitlements Guarantee (FEG) Scheme

• FEG Review: The FEG scheme is under review after claims it's being roted by dodgy companies.
• FEG Purpose: A government scheme of Last Resort that pays out missing entitlements.
• Rogue Companies: Almost half of the $200 million paid out last financial year came from company collapses with question marks over them.
• Superannuation Exclusion: FEG doesn't cover superannuation.
• Migrant Worker Exclusion: FEG doesn't cover migrant workers who are not permanent residents or Australian citizens.
• Example: Jan: Owed nearly $7,000, received nothing because he's not a permanent resident.
• Migrant Workers Rights Legal Center: The fair entitlements guarantee is neither Fair nor a guarantee for the more than one and a half million workers on temporary visas in this country.
• Labor's Stance: Hearing calls about adding superannuation to Fig, but migrants aren't a current Focus.
• Coalition's Stance: Will wait for the outcome of the review.
• Greens' Stance: Both super and migrants should be added to the scheme.

Airport Revenue and Profit Margins

• Record Revenue: Australia's four biggest airports landed record Revenue last year, up nearly 25% to $2.6 billion.
• Parking Profit Margins: Airports had 60% profit margins on their parking.
• Professor Graeme Samuel (Former ACCC Chairman): "I'll use the Expression price gouging see these airports are monopolists uh in every city and therefore they can charge whatever they like as monopolists they can provide what level of level of service that they um deem appropriate as monopolists"
• Retail vs. Passenger Areas: Retail areas are "glittery," while passenger waiting areas are "shabby."
• Lack of Regulatory Oversight: Airports face very little regulatory discipline.

Unemployment and Interest Rates

• Job Losses: Loss of more than 50,000 jobs in February came as a shock.
• Unemployment Rate: Held steady at 4.1% due to people leaving the workforce (retiring).
• Participation Rate: Pushed down by retirements.
• Underemployment Rate: Falling to the equal lowest level since the global financial crisis.
• Interest Rate Cut: Three of the big four banks are forecasting a cut in May, dependent on inflation figures.
• RBA Concern: The RBA won't be too concerned about the February result unless there's further weakness in March.
• Global Uncertainty: A big risk to the forecast is around Global uncertainty.

Market Performance and Trump's Tariffs

• Share Market Bounce: The share market bounced back from four weeks of losses.
• ASX 200 and All Ords: Ended the trading week up 1.8% each.
• Supermarket Performance: Supermarkets were among the best performers, escaping the ACCC inquiry without penalty.
• Evan Lucas (Independent Economic Futurist): The report was rather scathing about how much profit they're making overall from a market perspective there wasn't there anything there that would really suggest they need to change their overall ways.
• Trump's Tariffs: Uncertainty remains regarding Trump's tariffs and reciprocal tariffs.
• May Rate Cut Probability: Market expectations rose to about a 74% chance of a cut in May.
• July Rate Cut: Most would forecast that if they are going to do it after what was said at the February RBA meeting July still looks more the likely time to see it.
• Losers: Apparel companies exposed to high-cost manufacturing and low-cost turnovers (e.g., Nike).
• Winners: Gold miners.

Conclusion

The report covers a range of business and economic topics, from energy policy and renewable energy investments to supermarket competition, worker entitlements, and market reactions to global events. Key takeaways include the debate over energy subsidies, the potential of renewable energy with battery storage, the scrutiny of supermarket profits, the limitations of the FEG scheme, and the ongoing uncertainty in global markets due to factors like trade tariffs. The discussion highlights the complex interplay between government policy, market forces, and consumer welfare in various sectors of the Australian economy.