Grid parity still doesn’t matter (but grid defection does)

Renewables International

Renews is a regular publication by the German renewables organization AEE. The focus of issue 70 (PDF in German) is on Eigenverbrauch, which I generally translate as “direct consumption.” Essentially, it is when you consume your own solar power without it ever having to touch the grid. You have two options towards this goal: simultaneous consumption and production; and power storage.

The issue is very hot in Germany right now partly because the government aims to clamp down on the trend by applying the renewables surcharge to renewable power consumed directly. Small arrays, however, will remain exempt.

The study speaks of an average retail rate in Germany of 28 cents per kilowatt-hour, with the highest new feed-in tariffs for PV coming in at 13 cents. Germany reached grid parity for PV at the beginning of 2012, and solar power from new arrays now costs less than half as much as retail electricity.

Americans assume that households will naturally switch to net-metering after grid parity. The policy to promote direct consumption was implemented in Germany, however, does all the problems that net-metering does not fix: as the share of solar power in total supply increases, peak solar power on the grid needs to be spread more evenly across the day.

Quaschningdirectconsumption
The bluish area at the bottom is power consumption for a typical German household across a 24-hour timeframe. The yellow area is solar power production, obviously on a summer day (power is produced for far longer than 12 hours). Only around 30 percent of the solar power produced can be consumed directly as a rule of thumb in Germany – the area where the yellow and blue overlap. To increase that rate further, you have to shift power demand and store some of the power produced.

 

I spoke out against policy support for the storage of solar power back when it was implemented in 2009, but Germans continue to like the idea. The main problem I see is twofold: first, solar will need to be stored seasonally for Germany to meet its peak power demand in dark winter evenings; and second, storage makes everything expensive, so we should try to limit storage is much as possible.

The Renews article contains a section on the pros and cons of direct consumption, so I was interested to see whether they address my concerns. They do not, which is not surprising – that discussion would undermine everything else they say. But they do provide an interesting overview.

The KfW bank now offers up to six and 60 euros per kW of battery storage for solar up to 30 kW of PV. In return, the system can only sell 60 percent of its rated capacity to the grid at any one time. The goal is to reduce peak solar power production.

One option is the use of electricity for heat, a strategy that Denmark is also pursuing. But go on vacation for two or three weeks in the summer, and you will not be able to store very much of the heat produced. And by the time the winter comes, it won’t be available.

Renews gives the example of a family of four that consumes 4,000 kilowatt-hours of electricity per year. 1,200 can be consumed directly (simultaneously), and a heat pump with thermal storage increases that number to 1,800. A 5 kW battery pack brings the figure up to 2,800.

Battery storage is still prohibitively expensive. Renews puts the figure at between 24 and 82 cents per kilowatt-hour. On the other hand, by 2020 PV + storage is expected to reach grid parity.

Therein lies the problem – Germans will go for PV plus storage in the 2020s when the combination costs 30 cents per kilowatt-hour, and there is little anyone can do to stop them. This option is bad in terms of the overall cost of the energy transition; onshore wind power is a much better option at 5-9 cents per kilowatt-hour, but then people don’t get to say they make their own energy at home.

Renews speaks of “macroeconomic costs” without mentioning this problem; instead, the article says that the best way to increase the share of solar power consumed directly is to build smaller arrays “although there is enough roof space for a larger system. That would mean that potential roof area is wasted.” They describe the situation in the US very well, but they do not address the problem of seasonal storage of solar power.

Feed-in tariffs will probably no longer be offered for PV once 52 GW is installed, but Renews says that 90 GW or more could nonetheless be built thanks to direct consumption. In other words, households will defect from the grid, making this wonderful piece of infrastructure for more expensive for everyone who has not defected or cannot defect. And once again, Renews has nothing to say on this matter.

 

Source: Renewables International. Reproduced with permission.

 

 

 

Comments

2 responses to “Grid parity still doesn’t matter (but grid defection does)”

  1. wideEyedPupil Avatar
    wideEyedPupil

    You make some good points Craig but you might want to be telling the Australian Utilities and Network operators this because they are almost nothing to make buying energy off the grid attractive to people who care (desperately) about climate change. While renewables make up less than 10% of the grid supply, forgetting about all the other energy consumption in transport, gas and embedded fossil energy in products then storage and solar is one of the few things people can do to take action into their own hands.

    Where are the smart retailers offering smart options for a rooftop solarPV and grid sourced renewables offering? Not many.

  2. Alan Baird Avatar
    Alan Baird

    It’s hard to feel much sympathy for the grid machine. They’d been given free kicks for years by govts of both persuasions firstly as a ploy to fatten up piggy profitability for privatisation and then to gouge the market by “grid enhancement activity”. If people feel the urge to have as little as possible to do with the grid in the not too distant future I can fully understand it. If they’d (govts and corporations) had had the honesty to increase electricity charges rather than sneaking the rise (and rise) via the “system access charge” the market wouldn’t be as distorted as it is now. What a cluster. Oh dear, how sad, never mind.

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