Exclusive Rebate Update - with David McElrea, CEO Smart Energy Council

in a very long time. So it's just how they build the grid for Christmas Day, mate. Yeah, that's right, exactly. So it's, it's. And the other thing, you know, people talk about the duck curve, which is. Is the fact that, you know, when you. Those of us that work 9 to 5, most of the time we get home, it's a hot day, you turn the air con on, you turn your oven on,

you might put the dishwasher washing machine or something. Cause your kids school uniforms are dirty and you haven't washed them for the week, you know what it's like. So all of a sudden your energy usage goes through the roof. Well, what is already happening is the flattening of that famous duck curve. So people are going home and instead of drawing from the grid, they're drawing from their battery that they've charged during the day. So that is also flattening out. And what does all this mean

for people? Well, for people that have gone out and bought solar and gone out and bought batteries, they are saving money on their power bills. But you just said power prices are going down. So people that don't have solar and batteries are also benefiting. All of Australia is benefiting from the work that the people that are listening to this have done. They've brought down everyone's power bills. So it means that

the whole country has benefited. What we are doing, what we are doing in this industry is bringing down power prices for all Australians, whether they have solar and a battery or not. And that's just a terrific outcome. And again it's. I know how hard people have worked, like people have been working weekends and you know, long hours to meet the demand. But the impact has been

extraordinary and you know, long may it continue. And it's awesome to hear that it's actually reducing costs for people because cost of living pressures are really hard at the moment, mate. Huge. The fact that it is supporting people that don't have solar and batteries by actual retail prices coming down, it just shows this scheme is good expenditure of federal budget and I think, you know, it's been a success so far and will

continue to be so. Yeah. And I think one of the things that, that shows and gives me comfort as the CEO, you know, I've worked in politics, I sort of know how politics works. This is really popular because cost of living, as you said in politics, number one issue and what's the best thing that's addressing cost of living at the moment, this scheme cause bring down power bills for all Australians. So that means for the Australian government, the Federal

government, the labor government, it's very popular. People love it. It makes me really confident about the future of the scheme. But I'll talk a bit more about that later. I think I am still concerned though about it, about the scheme. It doesn't necessarily have support from all sides of politics. So you know, just to name it like the Federal Opposition Liberal Party are still a little bit unclear. One Nation Party. I'm worried

about their support for it. So you know, it's my job to get out to them and explain why it's doing such a good job and the numbers speak for themselves. But there is a little bit of, unfortunately there is a little bit of still, it's still a bit of a political football and it shouldn't be because it's been so successful, it's bringing down power prices for everyone. And for those that have gone out and bought a system, you know they are

saving huge amounts of money. So it should, it couldn't have been more successful. But you know, you can never stop. As your industry representative, we have to be out there in Canberra pounding the pavement to try and make sure that this is as safe as possible. Cause there's always a little bit of risk, unfortunately with this stuff, mate. Nothing like some healthy debate. But the thing is, the figures, as you said,

don't lie. And the thing is, if we continue to see electricity prices come down, then that means the scheme's achieving great outcomes for all Australians. So yeah, let's keep an eye on that. And I hope you guys keep advocating. Well for the industry. I might just. There's one more thing too that people, I want people to understand because you've got a live debate in this country in politics about coal and you might think, well, I do solar, that doesn't

affect me. I do batteries in households or small businesses or commercial. That doesn't affect me. Well it does. It's something we have to care about. It's not just wind farms or large scale. When you run a coal fired power plant, you have to run it at a minimum of 25%. It's different to gas. Gas you can turn all the way, you can turn off when it's too. Coal always has to run because of the engineering nature of it. So when you have, particularly in summer, you have a hot day and you have

too much in the system coming through. Household solar, they have to go in and turn down everyone's solar. So it means households are having their solar turned off and they're not charging the system they've paid for. So that affects the financial benefit that our customers get from it, that households get from it and the attractiveness of it because it's being turned off. Because

we're funding a coal fired power plant which we no longer need. So there is still a debate in this country that needs to be had about that stuff. It affects all of us in this sector and again that's my job. That's why we've got people like you as members and hopefully some of the people listening. We have to be in these debates. We have to, with state governments, with federal governments to really push our sector because we're the ones solving the problem. We're doing it.

It's the cheapest form of energy, it's the most reliable form of energy and it's bringing down everyone's power bills. So even though it's, you know, it's pretty contested politics, it's a job that we have to do and we can't ignore it. Yeah, no, very good point, mate. And curtailment's the last thing we want to see. The last thing you want to do is put in. Sometimes you're

going to need to see it. Right. We all know that. Right. Curtailment. But what we don't want to do is drive additional curtailment because we're running a coal fired power plant that no one actually needs or wants and is there for. Because someone's made a dumb political promise. Yeah, for sure. So David, the residential and really small scale commercial space is going really hard because of the cheaper home battery scheme.

But the CNI space, the commercial industrial, solar, that kind of 30 KVA to multi megawatt rooftop systems, we've seen that part of the market become a little bit soft recently. We've got engineers and technical staff here that help people do their network applications. One example we see is the DNSPs out there take forever to review the network application, sometimes don't approve them even though there is robust network there. That's one of many challenges.

What do you think about the CNI sector and what is the Smart Energy Council doing to help CNI see the growth again? It was seeing well as the new CEO but before that I spent 12 months heading the policy and advocacy work. So I've had a good chance to think about this. And consumer energy, household energy is our number one focus as an industry body. But the second highest focus for me is this commercial and industrial space because

we call it the missing middle. So we've got our small business, small commercial households, large scale, which is not going very well to be honest. But this is the bit that we need to solve. But there's a number of reasons why when you really dig into it, it's complicated policy reasons. You've just named one a big problem that if you talk to the guys doing it, the installers in the space, it's really hard to quote. It's so

complicated and they don't know how long it'll take. Like it could take years to get a system in like literally two years. You know you hear from go to woe and the different networks have different rules and they might have 50 different. So it makes it really hard for them to accurately provide a quote to a customer. So. And then there's connection delays with the network. So that's a real Problem. You know, you and I were talking earlier, we had a

look at your warehouse that we're in now. You've got solar on the roof, but you lease this, you don't own it and very few people own their warehouse. Right. So that's a big problem. So even us leasing the facility, even though we run a solar business, we had a lot of challenges with the landlords to. Even though we leased the property and we're putting it up at our cost, there were challenges there. So definitely been so much commercial property in the country is

probably owned by Property Trust and is leased properties. We need to see better mechanisms in place to allow that to happen easier. That's right. And so you've got to incentivise the landlord, who's ultimately probably like a listed company property trust on the asx. They don't care. You know, they're not. They don't, you know, they're renewable, non renewable. None of that matters to them.

They're just interested in financial returns. So you've got to think about how do we incentivise them to spend the money or encourage their tenants as well, to work with their tenants to do it. And you're a special case because you're in the sector, but most tenants are going to say, well, I'm not going to bother because, you know, I can't take it with me.

So. And my lease isn't worth it. So there's a real issue there with landlord and tenants in, in the commercial that I think that that's a hard nut to crack. So that's, that's, that's another big policy challenge. So it's, it's, it's complicated, but we're really, we got some smart people really working on it. We're engaging with the federal government and, you know, I think there's goodwill from federal and state governments to try and solve this missing middle.

But then there's other issues as well that probably. Yeah, well, CNI at the moment, like, he's still very strong up to that hundred KBA applications and now growing even more like. We've been known as a commercial specialist for rooftop pv, but now we're supporting so many companies doing larger and larger commercial energy storage. We're known as a technical distributor

and one of the leading commercial energy storage businesses. But one thing that we're hearing from a fair few customers and I've actually heard some chatter, there's some debate around potentially changing the threshold for STCs from 100 kilowatts to. I've heard noises of 250 kilowatts or even greater that you could potentially under the srest, get stcs for putting in. Wouldn't it be great if you could get STCs for getting a half a meg system opposed to

having to go into the lret? What are your thoughts around that? What have you heard in regards to the potential of the 100 kilowatt threshold getting increased? Look, I haven't heard anything from government necessarily, but it's certainly something we're looking at as something to give it a shot in the arm. Victorian government did something last year to try and do a little bit of work with the VEX scheme.

I think some of the other state governments are also looking at it. But you know, ideally you'd have something done at a federal level through the, through the STC scheme, you know, which is a really well operating scheme with buyers and stuff, liquid schemes. So it's certainly something that we're looking hard at to try and see. Will it be. Would it solve all the problems? No, because I've just named some other ones that I think will get in the

way. But it's a sort of thing that might give it a shot in the arm. I think the commercial and industrial sector would feel they have suffered a little bit being a bit of the poorer cousin in the last as they've watched the household sector go crazy. So it'd be nice to give it a shot in the arm and to really start doing that as we. Cause it's also a simple thing to do as we

then work through some of those tougher things. So it's certainly something we're looking at and we'll look to engage with governments, state and federal governments. Yeah mate, that'd be awesome. The landlord thing's one, as you said, there's a whole myriad of challenges but you know that, that up to 100 kilowatt space, that space actually getting a bit hotter. Right now we're seeing businesses understand that they can get solar and

batteries and reduce their costs. And some of the businesses we sell the larger format commercial panels to and the commercial energy storage batteries, we're doing more and more sales in that space. But there's other limiting factors and if you want to see, I think you said to me when we were doing a bit of a tour of our headquarters, wouldn't it be great to see solar on every single warehouse and commercial roof?

It's not going to happen unless some new changes occur. Yeah, yeah. And then ultimately I think too what you'd like to see part of the other reason that could do is then drive more of an EV and you know, lighter commercial vehicles. Charging at the very least. Right. You know, your vans and your utes or something like that that you're using, or even your forklifts. Right. Like we've got all electric forklifts and I have seven EV charges here at our

Brisbane offices. So seven EV charges. And I think we have four electric forklifts. Yeah. So sometimes we're charging. Yeah, you'd be charging a lot of items. Yeah. And that should be like, we know that we have to do that in this country. And so making it easier for businesses to sort of charge their fleets is going to be really important, like from light passenger vehicles through to those. And trucking in due course as well is harder in some senses. But that's what we're gonna need to see.

So having that being able to power at the site will be really important and it'll also build network stability which is gonna be important in a distributed system as well. Yeah. David, there's a real skills shortage in this country to achieve the renewable energy revolution, mate. And we're doing our bit with new energy training, educating electricians. But one thing I speak to about people out there is go get a trade, go become an electrician. Because we have the electrification journey coming

into every house and building out there. But in regards to the skills shortage, you know, what are your thoughts about how we can help that along? Yeah, I mean, it's just, it's a really long term issue too that governments again at all levels I think have a role to play in and that is to encourage people into trades, to support apprentices through those tough years as well and to support RTOs like yours. So I think there's a role for government in that. But

you know, I have the same. I've had that conversation with heaps of kids who are sort of at that age looking around what to do. So if you like become a sparky, like if you're an apprentice listening to this, you walk into a job like I've got kids in high school and you know, you start to think, well, what are they going to do with AI coming? I don't know what the jobs will be. My son just started high school. Same thing. Yeah. So you're like, oh, what do these kids do with AI coming? What will

jobs will be around 10 years? Well, we'll need sparkies, we'll need spark. Like we'll be electrifying everything. Those jobs will be there. So it makes sense I think for people to do it, you know, someone's got to run those data centers that'll be everywhere. But someone, you know, all this electrification, that's going to need to be done by humans. We're going to need oversight of that in our homes and in our businesses.

So it's a great job. It's a job with some certainty in where you can make a great living. But in terms of the shortage, I think there just needs to be. I think we need focus on it from governments and I would say too

probably particularly the large scale companies as well. But also, you know, it's also the industry's responsibility to hire apprentices and to like it is your responsibility to the next generation, to your, you know, someone gave you an apprenticeship so it is your responsibility to the next generation, to the next, to the future of the industry to bring those apprentices on, to sort of look after them so that we are still sort of building that pipeline

of skilled workers into the future and then ideally I think get them skilled up at places like new energy training as well. Yeah, man. If there's one career that kids should be choosing out there is getting into a trade, like an electrical trade for the electrification journey. Because AI is not going to be taking your job when it comes to wiring up a renewable energy. Unfortunately they could do my job and the next CEO of the Smart Energy Council might just be a chatbot. Just might be an

avatar. Yeah, just might be. Next time I'm going to be talking to an avatar. Yeah, yeah, yeah. Probably better looking too. So yeah, so my job's probably not safe but so you might find me on the tools doing my apprenticeship in a few years time as well. We'll help you borrow if your batteries mate. Don't you worry. David. This has been a really

interesting conversation and some really great topics. We're shortly going to talk about the exclusive insights and updates to what you're hearing from the Minister Bowen's office regarding the cheaper home battery scheme and give that update to the industry. Before we jump into that final part, I want to talk about one more threat that our industry's under at the moment,

which is from the aemc. I know that they're looking at changing tariffs and just completely changing the way people pay for electricity, which is a. Can you tell me a little bit about what's happening there and what you're doing to help that not come to the fore, mate?

Yeah. And so for those that don't know the AMC stands for Australian Energy Market Commission and there's all these weird bodies that operate in the sector, but they set the rules for electricity prices and how the network, electricity networks function and so forth. Now that sounds pretty boring on the button, but for our industry it's actually incredibly important.

So they set the rules around how the network set wholesale prices, which then influences how the electricity retailers set retail prices and ultimately then how you're going to pitch if you're selling a product to a business or to a household. What they have been looking at is reforming those tariffs and what has been on the table from them is to move electricity tariffs to 100% fixed. In other words, you would not have any reduction in your power bill,

depending if your usage change. So if they implement that, a household that installed solar and. Or a battery would have no real reduction in their power bill from that investment. So if that occurs, that's the end of the industry. Cause no one's going to do it anymore. People will just stop overnight. So the two out of five households that have already made an investment on solar on their home would have their. The rules would change. Their investment would be torn up.

Yeah, yeah. And they've made an investment based on the rules and the rules would change. So it's an existential threat to our industry. If it was to occur, it would be the end and, you know, end of the. Frankly, probably you guys and most of the people listening to this. Cause there'd be no one buying the products anymore. So we take it incredibly seriously. We've already fought back on it really hard.

This is the sort of stuff we do at the Smart Energy Council. Behind the scenes, people don't realise and there's probably a whole lot of people who are not members of ours who don't know that we're doing all this stuff on their behalf. So they should be pretty grateful we're here. It's why we're so grateful to have members like you who, you know, the only reason I can do this is because I have members like you who pay me money. So if we go away, these guys will roll over the top. So it's

really important that we have that support. But we are fighting back on that. I think we've pushed back on it pretty successfully. But you never stop. Right? Like, there are financial interests at play here from very powerful actors who would make a lot of money if they move to a fixed tariff. They'd be big, big, big companies with huge lobbying power, big corporate affairs departments, and we have to push back on them.

And again, that's my job and I love It, I love doing it but it is a fight that it's not over and it will never stop. And it's why we need to be, you know, in that case you've got to pound the halls of Canberra of the state parliaments and get into the regulators as well, which is what I do on a day to day basis. But it is a real threat to people and it's something people should keep an eye on. Through the Smart Energy Council. We'll keep

you updated. Keep fighting the good fight on behalf of the industry. We will even reflect back on when the federal government did the Warburton report and tried to can the renewable energy target. You guys were advocating for the industry and helped that basically get thrown in the bin. We stopped that back then over 10 years ago and we'll stop this. We won't let it happen. We will stop it. But, but you can never just, you can never relax. You gotta always be

vigilant. Basically that's why we continue to support you as a premium member. And I definitely encourage people listening to this. I know there'll be a lot of installers and installers, retailers and whole suppliers and manufacturers that are members of you guys. But you know, I genuinely do think it's a good thing to support you guys. Cause you guys support us making sure the

industry is still viable. And look at that AMC thing. We just gave the example of if you guys weren't there to advocate for and they got that through to just basically end big game over and then you'd be, how do we stop it? So yeah, we really do. We're only as strong as the members as well that we have. And if we don't have members we don't know what's going on. If I go into a minister, they need to know that I've got this industry behind me. So we need to have members.

Otherwise I'm just a guy with an opinion. So it's important for us to be powerful and we are powerful, but the more members we have, the more powerful we are. So it's great to have you as members but that's why we want people as our members. Cause that is in the interest of everybody. Well, I hope you picked up plenty more mate because we've got the battery rebate because we've got. Well you hope so. I

hope you've picked up many more. Look David, we've had a really good discussion today, but let's get onto what's a real hot topic which is this exclusive insight into what's been happening under the cheaper home battery scheme. And I know that you're talking to

Minister Bowen's office nearly every day. And just before you came in to do this podcast episode with us, you spoke to the Minister's office to get us some data points and give us the industry, the installers and retailers and us suppliers that are all investing so much in this. On what's happened in the scheme so far and the budget up to the end of April, what's happened since the 1st of May forward, and what do you see happening with this rebate scheme leading it to 2030 and its

security mate? Yeah, yeah, look, I talk to, you know, my job, I get a bit of a bird's eye view, so I talk to government and regulators and the industry. So, you know, I think I got a pretty good sense of what's happened over the last few weeks, as I think you do, particularly in the wholesale market

as well. But at the peak there, right, like that March, April period, when people working seven days a week and, you know, really, really hard just trying to get really race the clock, we were doing around 20,000 installations a week and there were big systems and it kept going up all the way to the first of May, just that line kept going up. But you know, you were by the end there at that peak, averaging about 35 systems at 35 kilowatt hours. Yeah,

system. So that's the average, right? So 20,000 per week at the peak, averaging average of about 30 plus 35 years, 35 kilowatt hours per second. And as I say, it really kept. It just went up all the way to the end. So, you know, it went up between March and April. Huge, huge, huge amount of

installation. So then what's happened 1 May, as we knew it was designed to drop off, we now think it's back down to about 10,000 a week, which to be fair, is what it was probably December last year, you know, back to actually that level earlier in the program, but a really dramatic drop off in size to more like 20 kilowatt hours as an average. So a pretty significant reduction in size. So from the first of May, the data you got was we're now seeing around 10,000 installations per week now at a

20 kilowatt hour average. So halved from that peak in terms of numbers and then down to. I just, I would say this, these are sort of breaking numbers, as it were, but it is going to take a little bit of time for us to work all this out. It is a bit murky at the moment because you know, a whole lot of installers who are listening to this might have taken some time off because they were knackered because they've been working so hard.

So they might have taken some time off. I think maybe, probably people were, again, installers who are listening this probably installed their larger batteries to beat the first of May and maybe might have held back some of their smaller ones. So there might be. The data's a bit choppy, but there's clearly, there's a very clear trend. When I had a bit of a high level look at that data set you've just shared out there with the industry, I looked at 20,000

installations a week. At a 35 kilowatt hour average, it's about 700 megawatt hours per week, which is well over 2 gigawatt hours. Now we saw in the data that April there was over 2 gigawatt hours installed. So that aligns there. And now if we look at the new numbers that you've just got out of the Minister's office of around 10,000 per week at 20 kilowatt hours, that's going to get up to circa 400 megawatt hours per week. So we, we could still see up around one and a half

gigawatt hours going in per month. That's pretty good, I reckon, but we could see softer than that. And the reason I want to, like you're saying the numbers are chopping around a bit at the moment. The one thing that I've seen so often on the Solar Coaster, and this is called the Solar Coaster podcast, mate, but maybe we should have called it the Battery coaster at the moment. This is a battery coaster today is people need to be responsible on what they're doing in the market at all levels

for sustainability of their businesses in the industry. Now we see people in my section of the market being the wholesale distributor, people taking a position on stock too high as demand comes off like this, and then being in financial stress and pressure, we see that at

the installer level, we see that across the market. So it's one thing that sharing this information with the industry is to make sure that you are looking at your business and being sustainable through potentially a slightly softer market. But this is really what needed to be done with the scheme, with how it was running. I think so, yeah, David, Yeah, yeah.

And look, the government looked at it and you might remember, you know, we talked about this in November and, you know, I was heavily involved talking at the highest levels of the government, the very highest levels possible on this and it was Clearly a bit. It had gotten away from them for where they thought it was. And we don't want to have a battery coaster, you know, we don't want to end up in the boom bust cycle that we've had in solar panels.

So we want, I think, an industry that is predictable, Lliam, so that people aren't, you know, making those mistakes in the ordering the supply chains or over committing and finding themselves caught out with product that might end up being obsolete or something like that. We want this to be a predictable industry that's going at a sustainable level that's still, I think, you know, if we can do 10,000, like,

that's still really good, right? And that's a great, you know, that would be a fantastic sustainable pace for the sector. We always knew though, that in the redesign of it, you know, which we were heavily, that there would be a drop off that we knew this was coming, but the idea was going to have to be a step down, but hopefully the scheme does ratchet down, but

hopefully prices might come down through innovation. But we want that to be a predictable, steady process as the sort of level of subsidy drops, as it has been now for a while in solar panels as well. So that's what we want to see. Do you feel there's stronger investment certainty for solar retailers and installers and suppliers like us? Do you think we've got better certainty than

over coming years leading out to 2030? I do, I do, I am and I know and I talk to all sorts of people who go, oh, no, the government's gonna run out of money and stuff like that. They're gonna end it and they're worried about it. Nothing certain in life, nothing certain in politics. So I can't give you a guarantee, but I am as certain as I can be that this scheme will run. The government is strongly committed to it. I saw that firsthand talking the very highest levels

of their commitment to it. It is incredibly popular in the general public. There's not a day goes by where a politician doesn't contact us and say, I want to go out and be photographed next to a battery in my electric. And as we've talked about earlier in the podcast, it is bringing down power prices at a time where cost of living is the number one issue in politics. It is bringing. So it is working. So it is, it is, it is a. It has been such a success and the

government recognises that. I think now we've got it on a sustainable path. The funding is there, but they have also committed to. They've committed to a scheme, not a funding envelope. So, you know, in the event that we end up exceeding it because it's so popular, don't worry. The Smart Energy Council will be in there, as we were in November, September last year, arguing hard at the highest levels for additional funding if that should be necessary. They have committed to a five year scheme

and I have every confidence that it will remain. And I think as the industry representative, I'm saying that, and I think, you know, our members and your listeners should make plans on that basis. But that means being sensible as well in how you order stock. And let's get off the boom bust cycle and that battery coaster, mate, that's exciting news and it's actually good

for investment certainty. As I said, we've increased staff count, we've increased our stock holdings at the right level in line with what our customers are selling. And investment certainty is so important for business. I know the installers and retailers out there will be happy to hear that the new tuned down rebate is giving more certainty within the current additional $5 billion funding

envelope. But you're very positive about being able to lobby for more to get it out to 2030, because that's the intention of the policy, if it ever came to that, and hopefully it might not. But yeah, I would. Knowing our industry, mate, we'll probably even get through it as it's tuned 2030, mate, so we're gonna need you there. Lobbying for more. That would be another sign of how successful it was. Right? Like if that's what

happens. I guess the point about it all is, like, we're here to stay now. We are part of the system. We are an integral part of the system. We have changed the electricity system in a way that has never been done anywhere else in the world. In like 11 months. We've changed the whole electricity system. We're integral to it, right? We are a hugely important part of it. Governments recognise that. It's our job to remind them of that, though. But we're here to stay. We're just gonna see

more and more electrification. That means more and more need for electricity in households, in small businesses, for EVs and for electrifying appliances. So the future is really bright for our sector. I'm really excited about the next few years and what it'll bring. And you know, as I say, it's my job to, to pound those halls of Canberra and make sure that they're sticking to their word and delivering for our sector, mate. David McElroy,

SEC CEO. In here, mate. On the Solar Coaster. Or maybe you should have been Battery coaster for this special edition. Battery coaster special edition. We'll have to rebrand Battery coaster special edition. I want to say thank you so much for coming. What a great day it's been as well, mate. Yeah, it's been a great day. I've really enjoyed seeing it and seeing what you guys do and all the things

you've shown me. It's been terrific. It's great for me to get out, you know, out of the office and in and seeing things on the ground. So thank you so much for hosting me. Thank you, David. Thanks, mate.