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Ergon Energy, solar and the case for battery storage

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When regional utility Ergon Energy introduced restrictions on the export of rooftop solar from its customers back into the grid, its intention was clear: encourage the adoption of battery storage.

Queensland is the state that boasts the highest aggregate uptake of rooftop solar in Australia, and has some of the best solar resources. That should, notionally at least, make it a hot prospect for the battery storage market too.

About half of the more than 450,000 households that have rooftop solar in the state don’t have much incentive to install battery storage right now. That’s because many are getting premium feed-in tariffs that encourage them to produce as much as they can and export it to the grid.

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The idea of putting limitations on output for new customers is two-fold, according to Ian McLeod, the CEO of Ergon Energy.

One is to help stabilise vulnerable sections of the Queensland grid – the most sparse in the world in terms of customers per kilometer. By putting in battery storage, customers can store their solar output for use later, and help add resilience to the network.

Indeed, Ergon is installing its own battery storage at key points in the network. Not only will this improve resilience, it will allow for the increased uptake of renewables.

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It is also teaming up with the Australian Renewable Energy Agency, and US solar giant SunPower and emerging battery storage solutions Sunverge to conduct a solar and storage trial in 33 homes in three Queensland towns.

Each household will get 4.9kW of solar PV, and a Sunverge Solar Integration Systems (SIS) that comprises a 12kWh/5kW Sunverge battery storage and control system, which includes back-up power capability, and a 6kW inverter, along with on-board computing and cellular communications.

This means that each home will be able to provide around 75 per cent of their needs through the solar and battery storage units. But the partners say the real significance could be in how their output can be aggregated – to help meet peak demand and overcome network constraints.

Sunverge, which has made its Australian base in the Queensland market, says the advantage of storage is that it can respond instantaneously, or within a second or two, whereas the current model of using gas or other peaking plants often takes minutes.

Sunverge boss Ken Munson sees the installation of storage, even small systems in homes and business – as part of a major shift to “virtual power plants” or even “network clouds”.

“We could roll out this solution to thousands of homes, aggregate those energy systems into a very large virtual power plant to assist in the retailers’ trading portfolio.”

The battery storage market is tipped to take off in a big way in Australia in 2016, as the first offerings from Tesla hit the market, joining other offerings from Enphase, Samsung, LG, Pansonic, and numerous others, including Queensland’s own Redflow.

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Many of these international developers see Australia as the most attractive market for battery storage in the world, courtesy of its high penetration of rooftop solar, its excellent sun, and the structure of the tariffs.

Indeed, independent analysts say one of the key considerations for consumers thinking of battery storage is the low tariff paid to those who missed out on the premium FiTs. Those putting in new panels are paid little, or in some cases nothing for their output. Installers across the state report huge interest from consumers, and businesses facing demand tariffs, for battery storage because of this.

Investment bank Morgan Stanley says Queensland, because of the structure of its tariffs, represents one of the quickest payback times for battery storage in Australia. And according to a survey it conducted, half of all homes are interested. A country high 21.8 per cent of Queensland homes described themselves as “most definitely” interested in solar and battery storage.

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Bloomberg New Energy Finance describes the combination of solar and storage in Australia as “unstoppable”, and uses Queensland as an example of how it was already cheaper for many homes to source up to 5kWh of battery storage at a lower cost than the current grid.

Some, though, will take the matter further than just storing electricity to maximize “self consumption”, or arbitrage time of use tariffs.

Steve Madson, the managing director of Country Solar, one of the biggest solar installers in the country, recently added a 10.8kWh Samsung battery storage system to his 5kW solar array.

His intention is to bump up his solar capacity to near 7kW and, if network tariffs don’t change, take his house off the grid completely. He says he can do that because in north Queensland, the winter is mild. And his biggest demand comes in the summer, when his panels are producing more output.

His reasoning is entirely economic. He faces unavoidable networks charges of at least $9,000 over the next 15 year, and his entire solar and storage system will cost about $25,000.

Including usage tariffs, that can deliver a payback of less than 8 years, getting near the magic number of “mass market” adoption. But Madson – and others – say that return on investment is not the only driver of the off-grid market.

Many customers want the independence, and some are motivated by their dislike of utilities, and what they see as unfair charges. Still, Madson sees it as a missed opportunity, because it would make sense for everyone to stay on the grid and share an existing asset. But only if the price is right.

This is part of a series of articles on Queensland sponsored by Norton Rose Fulbright. For the others in the series, please click here and also visit Norton Rose Fulbright’s COP21 coverage.  

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