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Ten big trends in solar, wind and storage to watch out for in 2016

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It’s that time of year again. Time to consider what the big trends of the next 12 months might be. And for Australia, in the energy space, there is no prizes for guessing the big mover in 2016: battery storage.

This will not be the only thing of importance, however. There will be ambitious plans for decarbonisation pushed by states, regional and local governments. The push against wind and solar will become the new denialism, arguments will rage about consumer tariffs as networks seek to protect their revenues, and there will be new technologies in the market such as large scale solar and wave energy. And, of course, there will be an election.

So here are our top 10 trends. Feedback welcomed. See you in 2016!

Battery Storage:

Battery storage will be the big thing of 2016, as Australia becomes the first mass market for the technology in the world, thanks to its soaring network costs, excellent sun, and the high penetration of rooftop solar. The Tesla Powerwall continues to attract most casual interest (judging by the response to our articles), and has already signed up some high profile partners.

But many other brands are competing in the same market, and its prices are being more than matched by its rivals, including LG and others, who have brought their prices down significantly. Some customers are reporting quote reductions of 50 per cent in the last six months. And with demand likely to be boosted as 230,000 households move off premium feed in tariffs later this year, the market will be interesting to watch.

And if anyone tries to tell you that battery storage won’t take off because the payback time is too high, ask them what their payback time for their car, or their lounge suite was. Many people are simply not going to care.

A new form of denialism – against wind and solar

South Australia will pass through the 50 per cent mark for wind energy and solar power in 2016, quite possibly becoming the first large scale grid in the developed world to reach such a level of penetration for variable renewable energy sources. That’s a fantastic feat and one that is creating a lot of excitement in Australia, and a lot of interest around the world, particularly as South Australia is now aiming to go as close to 100 per cent as it can.

But it is also creating a lot of foreboding. If South Australia can manage such high levels of wind and solar in a relatively isolated grid, then why can’t the rest of the world? So expect the fossil fuel industry – coal and nuclear – and their puppets and muppets in the mainstream media – to look for flaws at every occasion, and seek to blame wind and solar for every outage and price hike that is experienced.

Naomi Klein this week wrote about the new form of denialism, focused on renewables, and we noted the new war on wind and solar from the right wing media. The clean energy industry will need to be on its toes to respond to the predictable. Perhaps they should do what the incumbents do, and take the mainstream reporters to nice lunches, or even the footy.

Network charges

Call it the battle between pro-sumers (those producing their own energy) and the incumbent utilities, or the cost of the democratisation of energy. One key and contentious issue this year will be the structure of network charges, already the highest in the world, thanks to largely unchecked growth due to over-ambitious demand forecasts. Networks don’t want to take write-downs on those assets, so they want the customer to pay for it. The problem is that the increasing use of solar is cutting conventional sources of revenues, based around how much people use, and battery storage will accelerate that.

So the networks want to slice and dice tariff arrangements so their revenues are protected. Under the veil of “cost reflective” pricing, they are proposing changes that they admit will see the rollout of rooftop solar cut by half. But critics say the tariffs are anything but cost reflective, and are simply a revenue grab. Expect this issue to figure large in the coming 12 months.

Grid level storage:

Households and businesses are not the only ones interested in battery storage and other forms of storage. Networks are also finding that storage is helping address some significant problems on their elongated grids, avoiding the need for upgrades and expansion, and reducing the cost of maintenance as well as allowing for even more renewable energy on their networks.

Ergon Energy has introduced a bunch of 100kWh battery installations on its network, an initiative it says will cut costs by one third in those areas. Other networks are also trialling the technology – including in Victoria with the first mobile 1MWh battery storage installation, but installations may be slower than otherwise because the regulators got too lazy and punted a proposal to reset the rules to encourage battery storage down to the next regulatory reset that begins in 2019.

Micro-grids

The arrival of battery storage is creating new interest in micro-grids – be it off-grid locations like mines and remote towns, taking regional centres off the grid (to minimise the huge cost of grid connection), or building new suburbs without any grid connection at all, as proposed by US giant Brookfield and developer LFW near Newcastle, or the Ross Garnaut-chaired Zen Energy in South Australia.

Siemens and Brookfield are putting a proposal to the Byron Bay shire to create a renewables-focused micro-grid for that region in northern NSW, while smaller towns such as Tyalgum are considering similar proposals. Even the utilities think it a good idea, or at least inevitable, because it will relieve them of big charges to service remote towns.

Push to 100 per cent renewable energy

South Australia and the ACT are not the only areas to lead the way towards 100 per cent renewable energy. Plenty of towns have a similar ambition. Uralla has outlined a detailed plan, and numerous other towns are considering the same path – Newstead and Yackandanda in Victoria, Lismore in NSW and countless smaller towns.

Indeed, the push for 100 per cent renewable energy will be a “bottom up” phenomenon. But the whole world could go that way, and save money doing so, if it could overcome the cultural and political resistance.

Battle over the RET

The renewable energy target is still not functioning. The Coalition government’s attempt to kill the RET, and then to slash it, has raised expectations from utilities that they could do it again. So the utilities are not signing any contracts, despite the fact that the price of certificates has soared to around $77/MWh. That should be more than enough to get renewables built, but the financiers are coy – given the ongoing uncertainty about energy market rules.

So, the RET has become a massive game of bluff. Some projects will go ahead in the near term, financed by deep-pocketed equipment suppliers who can afford to take the risk. This will be one of the key business and political issues of the year.

Growth of Big Solar

Almost all of Australia’s large scale renewable energy development to date has been wind farms, much to the chagrin of coal fired generators such as Alinta in South Australia, and a whole bunch of conservative politicians who don’t like the look of them.

But the future may be dominated by big solar, with several gigawatts of proposals already approved by councils, and a massive land grab from competing developers, particularly in Queensland.

ACT to continue to lead the way

With the national target stalled, the ACT government will continue to lead the path to new developments, thanks to its commitment to 100 per cent renewable energy by 2025, and its successful reverse auction program. Already, it has signed agreements for 50MW of solar PV, nearly half of which is completed, and 200MW of wind farms have also been contracted, and are now being built.

Another 200MW of wind capacity will be awarded early in the new year, to be followed by another 109MW of large scale renewables, which in turn will help fund the deployment of 36MW of battery storage in households and businesses in Canberra. At least someone has a plan.

Wave energy strikes a blow

Wave energy is attracting  lot of interest, a combination perhaps of Australians’ love of the ocean, and the fact that the technologies are edging closer to maturity. Carnegie Wave Energy has installed the world’s first multi-machine wave energy array off the coast of Fremantle, and has also used the machines to supply desalinated water to the Garden Island naval base.

Another technology trial has been installed near Port Fairy in Victoria. But Carnegie is leading the way, and in 2016 will work on its full sized, 1MW wave energy machines, and roll out its plans for renewable based micro grids that could use wave power to meet the needs of island, remote communities and edge of grid towns.

That was ten. But there is one other big factor to play a role in 2016, and that is the federal election. Carbon price anyone?

Sometime in 2016, the Coalition government needs to go to an election. Prime Minister Turnbull has already dumped Abbott-era rhetoric, but will be go to the polls with Abbott-era policies? Or will he wait to do his about face until after the 2017 review of Australia’s climate policies.

Labor has a 50 per cent renewable energy target and a 45 per cent emissions reduction target for 2030, but only the Greens have a policy suite that actually matches the 2C target that the Australian government signed up for in Paris. But thanks to Bill Shorten’s disastrous performance in the opinion polls, a change of government does not look likely, and as long as there is no carbon price, no emissions standard or other mechanism to force out brown coal generators, then progress will be slow.  

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  • MikeH

    Oreskes not Klein

  • Keith

    Hi Giles,

    I’m not sure why you don’t use the language of the Paris agreement when talking about temperature rise.

    You continue to talk about a 2C target, when the Paris agreement was much more aggressive :

    “Governments agreed a long-term goal of keeping the increase in global average temperature to well below 2C above pre-industrial levels and to aim to limit the increase to 1.5C.”

    I suggest that this goal is dramatically different (more aggressive) than a 2C target, and even if there is little chance of actually limiting the temperature rise to 1.5C, the intention is crucial as it will dictate the pace of change.

    Or perhaps I have missed something here? i.e. is there a reason you stay with limiting the temperature rise to 2C?

    • david_fta

      Maybe Giles is under-stating?

    • DogzOwn

      Wasn’t 2C a 10% outside chance in the first place, not the target at all, appropriated by protectors of fossil economy?

      • Keith

        Hi DogzOwn,

        The temperature goals are all just estimates, with substantial uncertainty. However, once a number is designated, people have run the numbers for how much fossil fuel can be consumed.

        My take on it is that Paris led to an outcome that nobody expected ie that the goal has changed from 2C to “well below 2C and aim to limit the increase to 1.5C”. If you run the numbers this means a much more dramatic decline in fossil fuel consumption.

        You get a sense as to how important this is by the fossil fuel industry trying to avoid any mention of this new goal. I think it is worth being clear whenever this is discussed.

  • Professor Ray Wills

    As always a all-singing, all-dancing summary from Giles!

    Some other things in 2016?

    Integrating – bringing all the separate pieces — solar + efficient appliances and lighting + smart energy management + storage — together and finally showing the power of the microgrid. New projects will be everywhere in 2016: for villages in India and Africa, for the resource sector and mines in Australia, and remote communities and towns as well as fringe of grid homes in Australia.

    And ironically while Australia starts to catch up on utility scale solar, big chunks of the rest of the developed world will go rooftop as Australia already has, with the US finally having more solar rooftops than Australia. Places like New Zealand will also starting to see more solar rooftops too – they’ve been disdavantaged by the ever weak kiwi $, but things are getting cheap enough to overcome currency shortfalls.

    And with energy security offered by storage bringing a chunk of people who otherwise wouldn’t be involved to think about solar at the same time.

    I was wr… wr… wro… wrong last year on expecting to see lots of news on increased efficiency of solar modules, so I’ll just repeat it for 2016: it’s time we had some new news on what Martin Green labels 3rd generation solar. We should also expect much more news in 2016 on production of building material with built in solar surfaces for both roof and window and whatever. And perhaps just maybe get to finally see some EVs with embedded solar.

    Also: a selection of 10 of my most retweeted of 2015 tells many stories and embellishes the above

    https://twitter.com/ProfRayWills/status/676641028384813056

    https://twitter.com/ProfRayWills/status/598413222354423808

    https://twitter.com/ProfRayWills/status/609177905487179776

    https://twitter.com/ProfRayWills/status/619122731506728961

    https://twitter.com/ProfRayWills/status/572637984320716802

    https://twitter.com/ProfRayWills/status/591145428214648832

    https://twitter.com/ProfRayWills/status/643250910433406976

    https://twitter.com/ProfRayWills/status/594320194085859328

    https://twitter.com/ProfRayWills/status/591145428214648832

    https://twitter.com/ProfRayWills/status/662073840936206336

  • You’ve confused Naomi Oreskes for Naomi Klein, but otherwise a great article. Thanks for a great year of news and I look forward to more RenewEconomy in 2016.

  • Ed

    Perovskite deserves a mention!

  • Doug Cutler

    “South Australia will pass through the 50 per cent mark for wind energy and solar power in 2016, quite possibly becoming the first large scale grid in the developed world to reach such a level of penetration for variable renewable energy sources.”

    I suppose then they are running neck and neck with north-east Germany for this particular honor. From another related RenewEconomy story:

    “Yet, Schucht says, in the region he is operating in, 42 per cent of the power supply (in output, not capacity), came from wind and solar – about the same as South Australia. This year it will be 46 per cent, and next year it will be more than 50 per cent.”

    http://reneweconomy.com.au/2015/german-grid-operator-sees-70-wind-solar-storage-needed-35731

    • Jens Stubbe

      I envy you south Australians and congratulate you at the same time of cause. In Denmark the infamous party that instated Lomborg is now in power again and has stopped approved offshore projects, taxes on NOx emissions and wowed to upkeep the laws that makes it mandatory for most Danes to use fossils for heating. The new climate and energy minister was prior to the election heading a fossil lobby group. It is amazing that now that coal can no longer make grid parity they just enforce their market position by bought of politicians.

      The Scandinavian spot market price for electricity is on average little less than US $0.03/kWh. Tariffs and taxation increase that price by 1000% for private households and the district heating market is off limit for heat pumps that turn electricity into 3-5 times the amount of kWh in hot water that can be stored for almost no cost – mainly because the politicians want to protect the central power plants that has hundreds of politicians enjoying well paid low effort board positions.

      Since our government has decided to make a mess out of it is very good that at least a part of Australia are rational about energy policy.

      • Nick Thiwerspoon

        It is amazing how blind the right have become to progress and science.

      • Jonathan Prendergast

        I would be surprised to hear what you are saying about District Heating. While some heat is supplied from waste heat from gas fired cogeneration, a lot of it is also provided from bio-energy, solar thermal, waste heat from industry (cement factories, waste water treatment). The Gothenburg system for example is over 50% renewable with the almost rest waste heat. Under 5% fossil fuels only to meet peak demands.

        While heat pumps could also use electricity to feed into district heating systems, i think they would be lucky to achieve much over a COP of 1 or 2 in the depths of winter.

        • Jens Stubbe

          The transition towards renewables if you define imported wood chips and imported municipal waste is also happening in Denmark. The big problem is however that the wind blows harder in the wintertime and you need more heat in winter time when the wind blows so the central power plants has to fire up and produce electricity exactly when the market is loaded with electricity from the wind turbines.

          The big problem for district heating is while the average spot market electricity price is less than US 3 cents in scandinavia the price for heating is far higher, so the system can only be maintained by laws that prevent competition. Some of the district heating plants are by law forced to use natural gas and any house in a district heating area or natural gas area is forced to use either.

          Your expectation of the cop for heat pumps is probably based upon air to water. This is not what I am talking about. I am talking about systems based upon seawater and possibly combined with district cooling that collect excess heat from data centers and industry. This will give three times the cop range you assume.

          • Jonathan Prendergast

            I find it hard to believe that individual households or businesses could cost effectively source heating from seawater or data centres but are not allowed because District Heating use is compulsory.

          • Jens Stubbe

            And right you are. The heat pumps I am talking about benefit from the fact that no Dane can live more than 60 km form the sea and most large central power plants have a coastal location. The wind turbines combined with imported electricity can ensure full energy security and also power district heating via large heat pumps in the few places district heating actually makes sense. For the about 250.000 homes that are forced to be heated by natural gas ground heat pumps perhaps with added solar thermal panels and hot water storage would comfortably be cheaper if only the taxation on electricity percentage wise was equal to the taxation on natural gas. As for the more than 200.000 homes heated by oil the situation is the same – not one of them would be heated by oil if fossils was not given a much lower taxation and law enforced preferential market position.

            Maersk used to be the largest Danish company for decades and they still rank in top three and they basically owns the right wing. DONG is owned by the government and Goldmann Sachs. In all municipal service companies that handle water supply, natural gas supply, electricity supply, municipal waste management etc. you will find politicians on the board in well paid low effort jobs.

            Status quo is beneficial to so many powerful people, so they just want to keep polluting as long as those nice checks arrive punctual.

            The wind energy revolution was started in Denmark very much as a grass root activity and has never really been recognized as a beneficial thing for Denmark by the right wing.

      • neroden

        How can they make it *mandatory* to use fossils for heating? Anyone who owns their own home can turn off the fossil heating system by turning the thermostat to zero and put electrical appliances in — even without getting permission! It just looks like they’re using a lot of electric toys!

        I suppose they can do it to people who rent, which is probably the majority of Danes?

        • Jens Stubbe

          Electricity is taxed silly in Denmark where we pay +1000% relative to the average spot market price, so your idea is not going to work. Besides you pay to be forced to be coupled to the natural gas net or the district heating net and you pay for the mandatory service technicians and you pay an annual fee to be “serviced” by the natural gas or district heating nets.

          The majority of Danes own their own homes.

  • Radbug

    What if you can’t pay your electricity bill? Will Origin, say, disconnect you? What if you then turn around & install a roof top array + storage? Origin can’t then charge you a solar “fee”, can they? I mean, what would they be charging you for? You have no connection, business or otherwise, with them now. I mean, if, in response to the demand notice, you then pay the original bill, could Origin connect you to the grid again, without your permission, and once again, start charging you an access fee? So, back to the original question. May I suggest that things will get so bad for Origin that, if you can’t pay the bill, they will assess your financial situation, and if it reveals that you lack the means to install solar, keep you connected & quietly put your bill in the “never to be repaid” box, just to keep it all going & keep up appearances!

    • Gyrogordini

      An interesting thesis. I know that when sewerage pipes were put through Perth, we had to pay for the availability, even if not connected. However, unless a Rates- type approach was levied on all premises, there is no commercial link between an energy network and a disconnected consumer. What are they going to do, take away your birthday?

  • Ian

    Interesting when one nation takes the lead in renewables and then suffers a change in political climate, another then takes up the baton. Denmark and Britain have about faced but USA has approved an extension in tax credits. Chile has shot ahead, Australia has languished. In Australia, household solar installs have suffered from tariff structures but commercial have taken up the slack. The ebbing and to and fro- ing make for a fascinating story and 2016 will probably see more of the same.

    Solar plus storage at edge of grid and remote communities will probably enjoy bipartisan support from networks and from renewables supporters purely from a financial perspective.

    Battery storage is the technology to watch as this is pivotal to decarbonising electricity and transportation. There will probably be a divergence of technologies with lithium batteries dominating the EV market and flow batteries the stationary storage market and a convergence of transportation and static storage with electric vehicles doing double duty as transportation and home storage. Homes may start installing solar for individual or groups of non-essential appliances completely separate from their grid connection. Similar to solar powered security lights, but for larger items such as pool filtration or a second air conditioning system.

    One thing you probably won’t see is less of the black and brown sections on the electricity generation charts( except in SA) – hope I’m wrong though!

    • neroden

      The crazy-high electricity grid pricing in Australia has hit the point where full-scale off-grid solar + storage makes sense for a huge number of people even if they’re not very remote. This dynamic is going to start reducing the black and brown sections of the electricity generation charts.

  • DogzOwn

    About closure of brown coal power stations, Greg Hunt says some time in the next 10 to 20 years and Freudenberg says only 1 or 2 will close. Will there ever be an obligation for them to make public apology for such biased untruths?

  • Craig Allen

    I’m hoping that some of the big renewable energy manufacturers will reward South Australians for their ambition by deciding to set up manufacturing there. If the conservatives manage to regain control there they will certainly revoke the 100% renewables goal. A booming renewable energy sector will make people want to stick with the current government, allow them to show the World what is possible, and disprove once and for all the fossil fuel industry’s lies.

  • Nick Thiwerspoon

    Battery costs are plummeting. 15 years ago, your laptop battery cost $2500, 4 years ago $250, and this year when I priced a replacement battery i could buy one at retail for +-$50. This is a compound rate of decline of 23% per annum. Now let’s assume that the Tesla Powerwall is sold for A$6000 initially, allowing for the A$/US$ exchange rate and the “Australian premium”. At 23% per annum decline, in 3 years time we’re talking about just A$3000. Assuming a ten year life (that’s Tesla’s guarantee), you’re looking at just A$300 per year cost. Given how incredibly annoyed ppl like me are with the electricity utilities, $300 a year to get at least partial independence would be worth every penny. As Giles says, I won’t care about payback–except the kind I will deal out to my utility.

    • neroden

      I think 23% per annum is optimistic, but it’s still dropping fast. It may take 4 years rather than 3. 🙂

  • Jonathan Prendergast

    A big part of the ACT story must be how it is already achieving a high proportion of renewables through reverse auctions, and has some of the cheapest electricity in Australia. I just had a look and you can get electricity for 15.7 c/kWh to your house (plus GST) plus 68 c per day service charge.

    In the debate in NSW regarding selling off Ausgrid and Transgrid, it was often cited how Victorian network charges are lower and are privately owned. It was rarely mentioned that SA has the highest network charges (I think) and is privately owned, where ACT is government owned with the lowest network tariffs.

    So, you can have government owned distribution and high renewables and achieve low cost electricity.

  • Roger Brown

    How about Redflow battery systems ? Are they any good ? They are Australian and are rebuild able ?

  • Sam Nelson

    The word from my colleagues who have attended recent talks in Sydney and the scuttlebutt through the Australian Institute of Environmental Accounting is that both sides of government have done a deal to set a de facto price on carbon through the Safeguard Mechanism quietly introduced during negotiations with Nick Xenophon to get the ERF legislation through. It was done so quietly, added as rider amendments to the Carbon Farming Initiative Act which will not actually be updated in the nGER act until July this year. The Safeguard Mechanism requires companies to purchase carbon credits for any emissions over a “baseline”, the level of which is set by a Public Service committee at the discretion of the Minister. The baseline rules as they stand will almost never be tripped, but there are signs both the Government and Opposition have the exact same plan to lower the baselines to similar levels, and around similar timelines after the 2017 review. Everyone is talking bipartisanship and climate change has been tacitly left out of the election debate, while at the same time payouts through the undersubscribed Emissions Reduction Fund have been summarily suspended. So it is almost certain we will have an Emissions Trading System soon, no one will really know the details, and either Government will raise no revenue so have to plug the budget hole with rolling back the tax breaks originally awarded to compensate people for higher energy prices.

    Not to worry, people will just shift to very cheap household solar faster.

    Hi Ray – good seeing you here.