Is regulation the last refuge of the fossil fuel industry?

Sydney’s bid to become the first major city in Australia to provide for all of its electricity, heating and cooling needs by 2030 has highlighted a seemingly intractable problem.

The greatest difficulty does not lie in the technical or the economic challenges – although those are not trivial – but in removing the regulatory protection that surrounds the assets they seek to replace, owned by the incumbent fossil fuel industry and the infrastructure that supports it.

This was the overriding theme of two presentations made by the City of Sydney on Monday –firstly to a group of 100 or so industry professionals in a VIP room at Town Hall, and then to a civic meeting of more than 1,000 people in the evening.

Allan Jones, who has led the Sydney City plan, took the simple example of trigeneration and precinct solar. The city’s hopes for an installation at Green Square were dashed by regulations preventing it from selling excess electricity to neighbouring buildings.

A similar rule has prevented the newly opened green-star building at 1 Bligh St in central Sydney from operating its trigeneration plant, because of rules that make it prohibitively expensive to sell to adjacent buildings.

This, however, was just scratching the surface. The solar industry is full of such stories about the impossibility and cost of connection. As Chris Dunstan, from the NSW Institute of Sustainable Futures, notes in his piece about impending “electricity wars”, the network reaction to solar has been to turned to regulatory protection. He says the government and its regulators need to act decisively to protect the interests of consumers.

These comments come in the context that solar is delivering a cheaper source of energy than the grid for consumers, and as the cost of wind and solar on a large scale begin to challenge that of fossil fuels.

Oliver Yates, the CEO of the Clean Energy Finance Corporation, says the ability to connect is crucial for new projects, but many were being frustrated by the process. “If you want to withdraw (consume) energy, you get a connection in a nano-second,” he said. But it could take years to get a connection to put electricity back into the grid.

Yates says the grid needs to change into a sort of trading platform where the “gatherers of energy” – a range of localised production, such as solar or trigen – can export their output to the grid. “A fundamental change in thought process needs to happen,” he said.

Jones also noted that it had taken three years to obtain connections that would allow the city to put energy back into the grid. But even if the city wanted to export electricity from the Town Hall to the neighbouring Queen Victoria Building, it would be charged as if the electrons were coming from a coal station in Newcastle.

In effect, this is the same rule that applies to solar exports from domestic rooftops. “Australia is a long way behind the rest of the world,” Jones said, “because of its inefficient networks and because of regulatory barriers.” He said it was time to stop using networks as a “backdoor” taxation. “This is not a technical issue,” said Jones. “It is about regulations and mindset.”

Danny Kennedy, the Australian founder of US-based solar leasing firm Sungevity, talked about the “democratisation” of energy as a result of the plunging cost of solar, and the anticipated repeat of that price fall in battery technology.

“We can change more quickly, but we need to use citizen power to change the rules. The industry is stuck in the domain of geeky language. We have to expose it to popular will,” he said.

To which Yates added: “If you want to connect rooftop solar, you will be charged. If you want to connect an air-conditioning unit, you get a discount from Harvey Norman.”

He said the regulator makes it difficult to contribute to the grid, and the economic incentives encourage networks to expand and spend more money and get a return regardless of demand and use is inefficient.

“That is a bizarre scenario. There has to be another way – instead of spending money to upgrade the grid, allow me to be off it for three hours. Don’t continue to keep spending (on networks) just for the sake of it.”

Most speakers pointed to the need of greater community ownership. This can come down to the levels of community groups, as the Community Energy Fund is trying to achieve, or even to council level – which the City of Sydney is trying to do through its initiative, and which the Sunshine Coast is seeking to do by building its own 10MW solar plant.

City of Sydney mayor Clover Moore said deregulation was the key. The amount of self-generation in the UK had doubled in two years since regulation was changed. “Community ownership is the key,” she said. And, added Ivor Frischneckt, the head of the Australian Renewable Energy Agency, “there are people going off the grid today. I know someone in North Bondi who has installed solar and storage and has disconnected.”

Comments

4 responses to “Is regulation the last refuge of the fossil fuel industry?”

  1. Lachlan Ridge Avatar
    Lachlan Ridge

    Parts of this article are unintelligible, which is a shame as I think it could be interesting. Your sub editor is off today I take it :/

  2. Chris Fraser Avatar
    Chris Fraser

    Is it me or is there ar fear of the old system losing control ? In the sense that once all these panels and batteries are installed the grid will be left alone and underfunded ? Maybe we could come to some arrangement with all parties where we give limited access to those who would benefit by utilising distributed generation in an efficient manner. Of course those who could speak for PV generators would never permit that until generators concede the centralised model of generation and distribution is dead.

  3. derekbolton Avatar
    derekbolton

    It helps to have a pithy and pejorative term for things that need changing. I propose ‘black tape’

  4. Martin Nicholson Avatar

    If a city or community wishes to generate their own electricity, then they should be allowed to do that freely.

    However, no mayor in his or her right mind would want run the risk of relying solely on their own network just so they could set their own rules. This would take them back to the 1920’s when cities were islanded and electricity blackouts were common. But because they didn’t rely solely on electricity for energy and rely on technologies like traffic lights, CCTV, electric street lighting, trains and trams, they accepted blackouts as a fact of life. Try doing that in Sydney today! You wouldn’t last long as mayor.

    If you are going to connect your own generator network to the grid to ensure continuity of supply, the grid operators need some control over what you do and when you do it. Just like they control any power plant on the grid. This would mean restrictions on how much surplus
    power you generate at any time.

    It is one thing to allow a few PV panels on roof tops to export what they want as they represent a tiny part of total demand. For Sydney City to generate all its own power might be the equivalent of a major power plant like Bayswater or even larger. There will be times when the network needs to curtail power.

    This isn’t just about trading platforms. It’s about grid integrity which is definitely a technical not financial issue.

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