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Networks ‘push back’ on more small-scale solar. But why?

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Last week the Clean Energy Regulator announced that Australia had reached a new milestone in installed small-scale renewable energy capacity – 6,000 MW – most of it small-scale PV. But can the rapid rate of small-scale solar energy adoption continue?

My paper, also released last week (and available for free until October 20), suggests that electricity network operators may be ‘pushing back’ on additional grid-connected solar capacity – even if there aren’t explicit policies or regulations in place allowing them to do so.

During my conversations with government representatives, industry members and the community I heard that network operators in Western Australia ‘push back’ on increasing penetration by increasing the cost and complexity of network connection applications, delaying the approval of network applications, making important information difficult to access and transferring network costs (for example network upgrades and generation management systems) to solar installers.

Interviews, including with representatives from the network operators, indicated that there are four motivating factors that lead network operators to ‘push back’ on additional solar capacity.

Firstly, there are genuine technological issues, in particular increasing grid instability, associated with an increased penetration of intermittent distributed generation, like solar.

Technological solutions to most of these issues are available, however these may be costly to administer and may not provide any direct benefit to the network operator.

While there is now plenty of evidence showing solar reduces peak load, and therefore creates benefits for network operators, benefits of additional solar (without the help of batteries etc) may be minimal once the network peak shifts to outside daylight hours.

Secondly, solar adoption has the potential to reduce income for network operators.  Where the majority of cost recovery for network assets is sourced from the consumption tariff, and use of solar reduces consumption, there is going to be a reduction in revenue for network operators.

Thirdly, network operators are influenced by regulatory and political environments that may prevent strategic planning to deal with increased solar adoption.

This is particularly the case for government-owned utilities.

Government-owned utilities are exposed to: a lack of clear long-term objectives given political cycles; governments interfering with the way utilities operate; and state-based budgetary limitations.

However, privately owned utilities may also find it difficult to undertake long-term planning considering they are (seemingly constantly) awaiting updated rules, regulations and reviews from governments and energy agencies.

The effect of policy inconsistency on generation investment decision-making is often discussed, but this inconsistency impacts the long-term investment decisions and planning of all companies associated with the electricity sector.

Changes to regulations that could help network operators adjust to increasing solar may also be required.  For example, in WA batteries might be considered generation assets and therefore Western Power, the network operator, is prevented from owning them.

This is in spite of the fact that batteries might serve an important function in stabilising the network.  Regulators may also be required to change/increase tariffs to help network operators recover the costs of upgrading the network to connect increasing solar capacity.

Finally, the culture within network operators influences the potential for ‘push back’.  In particular, a risk averse engineering culture was seen as a major barrier to allowing an increased penetration of solar.

While the culture of an organisation shouldn’t stand in the way of increasing renewable energy penetration the reluctance of the network operators to move into technically risky areas is understandable – if anything goes wrong they will receive the brunt of the criticism.

So, which of these four motivating factors is strongest in promoting ‘push back’ from network operators?  It is likely to vary between network operators depending on the potential benefits of solar, the potential costs of solar, levels of political influence and ownership models.

It might be easier for Western Australia’s network operators to self-start a shift towards increased acceptance of distributed generation.  After all, the shareholders of WA’s network operators are the voting WA public, so there is a political incentive for WA’s utilities to function in the best interests of the voting public, including potential solar installers.

This might not be the case for privately-owned network operators in the eastern states, where minimising costs and maximising network benefits from finding the ‘sweet spot’ in solar installations – with maximum reduction in peak use but minimum network investment costs required – will be of the greatest benefit to shareholders.

Given network operators generally have monopoly control over assets, there is little incentive for investment or innovation in this area, with RenewEconomy recently publishing that network operators are charging more for providing less.

In this case, government, regulators or market operators might be required to amend rules – or explicitly direct network operators – to reduce the likelihood of network ‘push back’.

There are also practical steps that can be – and are being – made to help network operators accept more solar onto their networks.

For instance, although politically unfavourable, the latest increases in electricity tariffs in Western Australia saw a doubling of the daily supply charge instead of the consumption charge, which will reduce the loss of revenue to network operators associated with solar.

Western Power is pushing for rules to be changed to allow it to use batteries, initially to reduce costs by providing stand-alone systems but with the potential for use as network protection down the track.

And Horizon Power is doing ground-breaking trials to understand how cloud cover interacts with solar output and network reliability.

It’s worth noting, however, that my interviews suggested that one of the four motivating factors is particularly crucial to network operators changing their approach to small-scale solar: culture.

I was told that individuals within network operators interested in promoting renewable energy were able to influence wider organisational culture and were vital in getting projects off the ground.

And, where a network operator is government-owned, this shift in culture can start at the top – with a Minister committed to direct utilities to solve the issues associated with renewable energy.  

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  • Ray Miller

    Thanks for the article Genevieve and well done on the research.
    My answers to your question.
    On the most fundamental level the route cause is our weak and flawed democracy allowing private companies to directly influence government policy and decisions against the best interest of its citizens.
    I’m in the Amory Lovins camp of distilling everything thing down to energy services and the various market and business models which support this. This services approach is by far the most efficient model and has the best chance of meeting society, environment and business interests. Where as Australia has chosen to implement an energy commodity system and market which has the greatest chance of being corrupted and distorted as you have found by your research.
    It would seem also you have fallen for some of the energy industry propaganda by using terms like ‘intermittent’ relating to renewables. The word ‘intermittent’ is more associated with faults or random negative events and is the word of choice by all the Luddites, where as all renewables are predictably variable, very much as the load on the energy networks is. What is “intermittent” is large generators tripping off line and transmission towers falling over.
    In your reference to “risk averse engineering culture” to me a better description is lazy, narrow minded and incompetent engineering, we need to call it our for what it is. Much of the route cause of this problem comes back to our universities and business not moving into the 21st century. How many of our engineers would Elon Musk employ? Even when we do have the occasional individual who does have the 21st century skills and mindset the toxic environment of Australian energy industry severely dampens the impact which such people will have, we are then the much poorer for it.

    ‘Systems thinking’ is poorly understood by many, and the boundaries of the energy system are equally poorly defined. The current energy system excludes many of the key elements which directly impact on the our current energy system even when they form critical elements! One would have thought that in making decisions on the energy system all the variables need to be evaluated for their impact and where it is found that investing small amounts in end use energy efficiency would have a positive return on investment on the whole system, such options (as witnessed by history) are dismissed outright by vested interests and then government policy.

    On the bright side the train wreck which is Australian energy policy and all its push backs and diversions is slowly changing due to the efforts of some very capable hard working people, you can tell they are having an impact by the ever increasing desperate and painful shrieks by the minerals council and its members.

    • MaxG

      Nice reply… and yes, ‘systems thinking’ is not understood at all 🙁

    • Alastair Leith

      Intermittent is what you have with bad mobile phone reception or returned calls from your landlord when the sewer is overflowing.

      • Mark Roest

        All the people at San Jose State College’s engineering department and all the curious types loved him in 1966, too! All the aisles in the biggest auditorium on campus were packed with people sitting on the floor, as well as on all the seats, during his lecture series on Comprehensive Design Science.
        Those architects who disliked Bucky’s designs probably were deeply conservative. He rocked their boat big-time, and they fought fairly successfully to keep it from tipping over.

        Engineers disliked Lawrence R. Bosch’s structures (www.CaptiveColumn.com) because his strength-limited design threatened their deflection-limited design training — made it irrelevant.
        Architects liked Bosch because he opened new possibilities to them that they could understand. In those days, the engineers won out. Today, we’ll see if there is a new breed of engineer.

    • Rod

      According to Miriam, I think intermittent is a good descriptor. As long as they don’t use “unreliable” I can live with it.

      Definition of intermittent

      1

      :coming and going at intervals :not continuous

      • Ian

        “Variable” is also suitable, and “predictable” for both

    • Hi Ray,
      Thanks for your comment.
      I agree that it seems, particularly in the NEM, that corporate vested interests seem to have an undue influence over democracy. How are we going to address this problem?
      I would agree with Rod, below, and say that I don’t personally see anything wrong with calling renewables ‘intermittent’. The fact is, in most cases, they aren’t dispatchable. This is, of course, why storage solutions are increasingly being looked at to help solve this issue – both in terms of potential network protections resulting from sudden changes to demand/supply and in relation to storing energy when the ‘sun doesn’t blow’ etc. I think it’s worth noting, though, that I don’t think ‘baseload power’ in terms of coal is any better – the high cost and toll that ramping places on coal infrastructure means it isn’t well suited to meeting the needs of changes in demand – which can also be highly intermittent (just ask anyone who has worked on system management and had to respond to changes in demand when a whole bunch of people turn on the kettle at half time!) From an academic perspective I like to call things what they are and hope that the terms I use don’t get tied up into political arguments – admittedly much easier to do when you are writing for an international academic audience than an Australian public one! (It’s also for this reason that I like to use the term ‘risk averse culture’ as opposed to anything more emotive – although some of my interview respondents would certainly agree with you!)

  • Hi! For those interested the free link above is redirecting back to the main page – so please go to https://authors.elsevier.com/a/1Vegt14YGgTtPt for the free version!

    • Alastair Leith

      Hi Genevieve and thanks for the paper and you’re link to a free DL 🙂

      In the intro you link to a 1995 paper about increasing energy consumption. 1995 is a very long time ago to be citing papers in the energy space, isn’t it true that demand on the NEM has fallen since 2012/13? (Although possibly it flattened out or rose in 2016/17).

      There’s a range of reasons including loss of manufacturing post-GFC but EE in appliances, lighting and industrial auditing are a big part of the demand decline story. And of course BTM generation which I assume is not included in the typical AEMO annual demand curves.

      • Tim Forcey

        See “Five Years of Declining Annual Consumption of Grid-Supplied Electricity in Eastern Australia, Causes and Consequences” for an excellent write-up! (I might be biased.) http://energy.unimelb.edu.au/__data/assets/pdf_file/0018/2035116/Five-Years-of-Declining-Annual-Consumption-of-Grid-Supplied-Electricity-in-Eastern-Australia.pdf

      • Hi Alastair,
        Great question. It’s common practice in academic literature to use early literature to indicate that an issue has a long history – and to acknowledge some of the early thinkers in a research area – so you’ll often see old literature in an ‘introduction’ section. You’ll notice quite a few papers from the ’90s in mine! This reference is just acknowledging that concerns about excessive consumption of natural resources has a long history. You’re right in saying that grid-based electricity consumption in Australia hasn’t followed this trend of continuing growth – since about 2010 actually. In most years electricity growth hasn’t been as large as forecast by the market operators, and in a few years has been a reduction on previous years’ consumption. This is widely considered to be the result of three things: increasing energy efficiency in appliances; increased use of ‘behind the meter’ solutions (in particular solar); and reduction in industrial output following the GFC, as you note. (Tim provides a good reference for Eastern states below, however my research relates to Western Australia). Two of these are in no small part the result of government policies that have aimed to reduce the (increasing) reliance on fossil-fuel based electricity. I.e. these policies respond to the issues raised in the 1995 paper. I hope that helps explain why it’s in there!

        • Alastair Leith

          Ok, Genevieve, I understand now. Cheers!

          I’m also in WA, currently looking to fire up the Sustainable Energy Now (SEN) outreach efforts.

          SEN would welcome your input to our policy group, we are talking to Ministerial advisors and MPs all the time. We have strong hopes the new McGowan government is much more rational than the previous one on Energy, Climate & Environmental policy and that they’re receptive to the good news story of renewables for new jobs, clean energy and ultimately lower energy prices as renewables increasingly put downward pressure on wholesale energy prices.

          It’s just about getting the message through to government we think on the right policy decisions and settings. This necessarily involves big changes from things as they’ve always been (as your paper implies things-as-they-ve-always-been is very much a characteristic of thinking in the energy industry in the bigger utilities and regulators).

          Feel free to drop us a line at [email protected]

  • Joe

    I don’t know why home battery storage isn’t receiving any national incentives. There are incentives in ACT and by Adelaide City Council to install a home battery. Aren’t VPP’s part of the energy future. So many homes already have rooftop solar, lets get them hooked up with home batteries. RE plus storage is Two Tongued Turnbull’s constant chant. Well he can be our… ‘Strong Leader’… and get it rolling years ahead of any Snowy 2.0.

    • Alastair Leith

      Snowy 2.0 is a photo op pulled out for polling weeks and when Jay Weatherill and Elon Musk are getting to much of the lime light. Even with PHES (which is a good and well established technology) Andrew Blakers says small, distributed turkey nest dams makes a lot more sense than massive flow of river valley dams, even when the upper dam is already build as in the case of Tumut 3. One reason is because with smaller turkey nest dams you can achieve much great heads (vertical fall) and another is avoiding environmental damage in high conservation value areas (that would be Snowy 2.0, so yeah great choice Malcolm, another opportunity to try and wedge environmentalists and call us hypocrites).

    • Hi Joe,
      I think there are some real benefits in having more residential-scale battery systems – both for consumers and for the network. However, in my longer form paper I talk about the dangers of jumping in too quickly and ‘locking in’ a particular technology type. One reason it might not be in governments’ best interests to support battery just yet is that best use can be made of batteries once there is some level of agreement on the best way to use these batteries as grid support mechanisms – i.e. linking these batteries with Advanced Metering Infrastructure and deciding on terms that will allow network operators (or retailers) to be able to prompt when the battery is used by the house and when it might be used by the grid – not to mention the exciting possibilities of blockchain/peer-to-peer trading that could come about from these technologies! Another reason is, unfortunately, the ongoing problem around an Australian Standard for battery installations. While there is the potential for batteries to present a fire risk (or even the perception of a fire risk) a lot of governments won’t want to touch them for fear of a potential ‘pink batts 2.0(/3.0)’.

      • Alastair Leith

        The AS issue is coming from a QLD branch isn’t it,? Big coal exporters in QLD, completely unrelated to this bureaucratic issue, I’m sure.

        • I think regardless of who might be pushing concerns around AS in the media, policy agencies do consider safety as part of their decision-making when proposing new policy options for government to consider, so I think it’s still relevant.

      • Joe

        Hi Genievieve and thanks for your article and your feedback. I have had my rooftop solar very nicely doing the business for quite some years now. I was getting excited about home battery install until that dreaded idea of a ‘Bunker’. Surely it will not become a reality to stymie me and a whole lot of other homeowners in our plans for RE plus storage.

        • Hi Joe, I’m hopeful that reason will prevail and we won’t have hideous bunkers all over the place! I think the recommendations surrounding the bunker do highlight the perception of safety risk (and are possibly further evidence of risk averse engineering approaches to distributed gen?). Hopefully a resolution will be reached after further testing and feedback from industry (and seeing the experiences elsewhere) and it should give govs more confidence in promoting batteries.

      • Richard

        I think battery installation will move ahead of policy makers and the energy system business model anyway, simply becasue they are going to become very cheap over the next 5-10 years, combined with even cheaper solar panels.
        I support this argument by the rise of electric vehicles overseas, that appears to be an unstoppable revolution in the making. And the attendant massive expansion in battery manufacturing facilities underway worldwide and with many more planned. There is going to be a general global move to clean self generation on site.

        So the current business model and system architecture is headed for a perfect storm in 5-10 years. I can’t see how the networks and generators are going to manage such a consumer/business led revolution. And there is no way they can stop it.
        This will affect not just coal and gas generators, but also large wind and solar farms. The demand for electricity from the network is going to crash.

        And on current form the chances of governments planning for what is coming are zero.

  • Ian

    At least two Australias on this continent. People Australia and Big Business Australia. It seems that the People Australia exist purely to feed and work for, support and house Big Business Australia. As Emperor Tiberius said so long ago: “Boni pastoris est tondere pecus, non deglubere” A good shepherd shears his sheep, he doesn’t flay them. Love the article, but unfortunately the Author has her eyes on the wrong Australia. Who’s the master here and who’s the servant? Grid or Mom’s and Dad’s?