Every household will go on a journey of electrification. We can make that easier, or harder

The same pattern applies to all the natural gas imported into the community, and much of the electricity that is piped in. Collectively, our households are spending $14m a year on vehicle fuels and a further $6m on fossil natural gas and fossil-generated electricity. In other words, we spend $20m annually without generating any real local jobs. More than half that money leaves Australia.

Let me be very clear about the opportunity of an all-electric future. Our community could easily generate one-third, one-half or, very ambitiously, two-thirds of all the energy it needs. We could be using our own sunshine to power our vehicles. We could be using that same sunshine to power our water heaters, space heaters and cooktops. We could be keeping the majority of the $20m a year that currently leaves the community and spending a lot of it here locally instead.

In addition, we’d be spending even more money in the community on the contractors and tradies installing and maintaining the equipment to enable electrification. I estimate that in an all-electric future where we generate half of our own energy, we’d be keeping $12-15m in the community. We know that most households would spend those savings, and about 55% would be spent in the local government area, since that is the typical pattern of Australian household spending. That is pretty extraordinary: in a small coastal community with 4,000 homes and 11,000 people, half a dozen public schools, a couple of RSLs and two surf clubs, we could have $7-9m a year of extra economic activity. That translates to 50 to 100 new jobs, a bunch of cafes, new classrooms, and new and upgraded public facilities. Those investments in communities are annual, recurring every year, and amount to the biggest economic boon for Australian communities we have ever seen. It could amount to a fundamental shift in the economy, with much more money being spent locally.

Electrification will support what we already do best: literally connecting communities

We know that the cheapest electricity in the future will be that on the rooftop, because it doesn’t require moving electricity over great distances. The second-cheapest could be that of your neighbour, who is generating more electricity than they need, and it only has to travel a short distance down the street to you. We also know that with increased electrification we will utilise our distribution systems better and these costs will go down, which – assuming effective regulation – should lower overall costs. Additionally we know that we can build community generation assets, such as solar on our schools and public buildings, and solar over our parking spaces, and again, because that electricity is local, we know that it could be cheaper than what we have today. We also know that batteries are getting cheaper and batteries on four wheels (electric vehicles that do vehicle-to-grid or vehicle-to-home charging) are coming fast. It’s an important conceptual shift to think about things such as cars and hot water tanks as batteries. We know, finally, that we will use modern control systems and home energy management systems to shift a bunch of those loads to the right times of day, and incentives such as cheaper car charging around noon to shift our behaviour. We also know we will generate more than we need and have giant national batteries in our pumped hydro systems.

With all of that, we can envisage a situation where one-third, and maybe even one-half, of our electricity comes from our roofs and is much cheaper than it is today. Another quarter or third might come from the local community, or more if you are in a rural location. The remainder will come from the existing and expanded national network. Even if the price of the electricity from the larger network goes up a little (but this isn’t certain; it should go down), the electricity will be abundant and cheap. In fact, it will be free or close to free some hours of the day and during the summer months.

But that outcome isn’t certain, and the existing regulatory environment and rate structures don’t support it, and there is some cause for pessimism as we start to restrict feed-in tariffs for rooftop solar. If we designed the system and the tariffs so that households and communities are incentivised to electrify, to play as nicely as possible with the grid, to generate the maximum amount of rooftop solar, and to soak up as much sun as they can in batteries, energy will get cheaper. This would come about by a set of policies we might call “grid neutrality”, or the treatment of all generators and batteries equally and fairly, and by creating incentives that align the interests of households with the interests of the community and the city, and with the interests of the Distributed Network Service Provider. This is in the national interest. It would necessarily involve the retailers and also require their help. (It should go without saying that if we want them to play nicely, it needs to benefit them too.)

A community energy feed-in tariff would promote the use of local resources, local charging and locally built infrastructure, effectively keeping more money in a community while also minimising the costs of energy for the community.

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Australia is at a bit of a crossroads. We can head down America’s path of internal division or we can decide to dig even deeper into the egalitarian ideals that are really what have made us “the luckiest country”.

Electrification will support what we already do best: literally connecting communities, requiring conversations and compromise and openness at every level, as communities decide where to put the community battery, which municipal buildings and local businesses will put solar panels on their roofs, where the public bike and car chargers will go. We already know how to do this because our rural communities have always had connection and compromise at their heart, because kids are raised learning life-saving skills so they can help others. We can choose to let the oligarchs keep all the spoils in the upcoming new energy economy, or we can choose to let neighbours in on the win.

Australia has always been at its best when it keeps the collective in sight; we have shown the world that it’s possible to play on the world stage while also having a surf or a camping trip. The way we move forward with electrification will set in motion the next century of wiring ourselves together, or spark deepening isolation.

• This is an edited extract of Saul Griffith’s Quarterly Essay The Wires That Bind: Electrification and Community Renewal, published this week