NSW expresses interest in battery storage leases for solar

Late last month, I had the opportunity to meet with the NSW Minister for Resources & Energy, the Hon. Chris Hartcher, as well as his senior advisors on energy and renewable energy  to discus various issues facing residents of NSW, and western Sydney in particular, around solar and it’s impact upon residents.

The meeting not only allowed me to voice concerns over the lack of support NSW residents, who have installed solar under net metering, have received from their electricity provider’s, but also gave me the ability to openly discuss opportunities to obtain better outcomes for NSW residents through supporting the energy sector to invest in solar and related technology.

Issues covered during the meeting included:

  • The current lack of financial benefit many residents find after installing solar under net metering, as they often have taken out personal loans or extended their mortgage to pay for the system then find that due to them having to work long hours they do not have the ability to utilise the power their systems generate and have to pay full tariff for the power they consume outside of daylight hours and during peak demand times.
  • The growing call for a ‘parity’ net metered feed-in tariff for NSW through the Campaign For A 1-for-1 Solar Feed-In Tariff http://www.communityrun.org/petitions/campaign-for-a-1-for-1-solar-feed-in-tariff-1 .
  • The opportunity for residents to utilise more of their own power through the introduction of residential battery storage and how this could significantly reduce electricity costs for residents, especially through programs similar to what Vector Energy is currently offering in New Zealand.
  • Opportunities for the distribution network to restructure their operations to accommodate solar and storage and provide savings for the community as well as ensure profitability of the distribution network.
  • The potential issue of the lack of maintenance to existing solar systems which were installed under the Solar Bonus Scheme, noting that many of these systems were installed near the closure of the scheme and were rushed as well as using many components from overseas, which did not have the long lifespan of many of the materials utilised today.  This would not only generate a threat to existing solar generation infrastructure, but could result in serious safety concerns for residents who try to identify & remedy issues with their aging systems.

The issues facing NSW and the electricity sector when it comes to solar are varied, but the overriding issue which I came away from the meeting was, that to get widespread penetration of solar into the market it must not cause any financial burden for NSW residents or the government, i.e. tax payers.  Therefore we must put aside all the arguments about environmental sustainability, carbon reduction, etc, and focus on the one issue which affects everybody in NSW, that being the economic issue of electricity supply and price.

Focussing on the issues which were discussed; It was clear the Minister understood that the current net metered scheme does not support all those who have installed solar, or who want to, and that any increase in feed-in tariff’s (FIT) would be welcomed by those customers and could be justified given the debt most of these have incurred from purchasing and installing their systems.  But it would impose an unjust impost on the rest of the NSW electricity user’s by imposing higher supply tariffs, which could not be justified.  I am awaiting his formal response to the issue and hope that the idea of a minimum ‘guaranteed’ floor price for all customers, who have net metered systems, is given serious consideration by his office.

Second, with regard to the issue of storage it was again clear that the Minister, and his advisor’s, were well aware of Vector Energy’s leasing scheme and serious thought was being given as to how such a scheme could benefit NSW residents.

Not only did we discuss the storage system being utilised by Vector, but also the Vanadium Redox Battery being developed by UNSW which the Minister indicated his office was taking a key interest in and which he recommended that I look into further.

I was able to discuss a potential idea for a similar leasing package for NSW residents based on a capital outlay of roughly $10,000.00 per storage unit (this was based on estimates I’d received from battery suppliers and was based on the retail price of a unit), and was aimed at supply through the energy distribution sector.

In dissecting my proposal one question was put to me, which I was unable to answer, that being “Would a battery manufacturer be prepared to supply their systems through a leasing arrangement?”.  This question came about as it was pointed out to me that the initial outlay for purchasing storage systems could adversely affect electricity prices for all customers if the distributor had to outlay the funds.  Again it was pointed out to me that any innovation, such as residential battery storage, must be implemented with a preferably nil net increase in costs for consumers.

Noting this concern, and the feedback I received in the meeting, it dawned on me that if the industry is serious about introducing storage & solar to the network then the manufacturers of these systems need to work together to come up with a viable option to ensure there is no increase in costs for the community.  Whether this be by offering to supply there systems through long term leases to the energy companies and thus consumers, or absorbing initial outlay costs to generate market penetration and drive demand, especially as manufacturing costs decrease.

They also must work with the energy distributor to identify opportunities to implement suburban storage and generation in conjunction with residential storage, i.e. how to convert substations to store the excess power from residential units for use during peak times and thus reduce the demand for energy from the grid.

If storage manufacturers do not have the capability to absorb the cost of supplying the batteries, etc, through leasing arrangements, perhaps they need to look for investment opportunities to fund such leasing packages.

If a storage system has a lifespan of 10 – 15 years, with a guaranteed monthly rental return, would the supplier be seen as a potential prime investment opportunity for an infrastructure fund, or superannuation scheme, which could support the initial outlay of supplying the storage systems to the market?  Would this generate penetration into the NSW market?

Finally, we come to the issue of maintenance.  As part of my proposal I suggested that any leasing package provided by the energy distributors could include a component for an annual inspection of the residential solar array and storage system.

As most people interested in the developing issues of solar in Australia are aware, that towards the end of the Solar Bonus Scheme (SBS) there was a rush of installations and that some of these installations were not done properly.  On top of this a lot of the systems which were installed at this time contained potentially inferior components with limited lifespan.

The issue, what happens if these systems fail?  Who is responsible for the maintenance of them noting a lot of the installers who were operating at this time are now defunct and out of the industry.

Is it up to the owner to inspect their system, and identify where repairs are needed?  How do  they identify that connection cables are damaged, etc?  What is the risk to the home owner for injury, or damage to their property?

How do residents identify that their system is nearing the end of its lifespan prior to it ceasing to operate, and what happens to the network as these systems come off line?

Recently a major electricity retailer operating in NSW was forced to enlist the aid of a leading Sydney solar installations provider to rectify numerous systems which the energy provider’s customers had purchased, and installed, through them and had experienced serious faults.  Surely this highlights the risk facing the community if no inspection regime is in place.

A proper annual inspection, as part of a leasing package, would ensure the viability of those systems which are part of the package and provide security to the customer, but also secure electricity supply from these systems for the rest of the community.

I’d like to point out that the comments, and idea’s, posed here is my personal interpretation of my meeting with the Minister and his staff.  I would also like to point out that I am firmly of the opinion that if industry can come together and put forward a viable option to implement residential storage, with solar, into the grid which will not impose an increase in costs for the wider community then the Minister’s office would give it serious consideration.

If the industry can come up with a viable solution to funding battery storage implementation into the NSW market the potential for rapid growth in the area is clear.  It also appears clear that once storage enters the market in volume, then the returns to the industry over the long term will be significant as the costs reduce thus allowing investment in newer and better technology as the market continues to grow.

All it will take is the bullet to be bitten on how to deal with the initial outlay of supplying the battery/storage system and then we will be entering a golden age of energy supply in this state.  There is the potential for all NSW residents to invest, through their super funds, in valuable infrastructure which benefits the state and provides a stable platform for continued growth to meet the State’s growing electricity needs as our population increases and our economy grows to meet the continuing demand.

I’d like to thank my local Member of Parliament, Ms Tanya Davies, who managed to arrange the meeting with Mr Hartcher and who has supported my efforts in dealing with the whole solar issue since the closure of the Solar Bonus Scheme.  I’d also like to thank the Minister, and his staff, for their approach to our discussions.

 

 

 

 

 

Comments

9 responses to “NSW expresses interest in battery storage leases for solar”

  1. Jo Avatar
    Jo

    I suspect the situation is much worse than explained in the article. At the moment our state government may say that each installation of renewable energy (in this case solar PV and/or batteries) must come at zero cost to residents and state of NSW.

    But you can be sure that when when we reach that point and could install gazillions of PV systems and batteries (and don’t forget about wind and biogas) at no additional cost to the state and non-involved residents, we will face a new wall of resistance. This is because the state is deeply entrenched with the traditional power companies. And a significant increase of renewable energy will chew their margins away. Just read about ‘death spiral’ of the energy industry.

  2. Robert Johnston Avatar
    Robert Johnston

    There is no need for battery technology companies to provide a leasing solution direct to customers. Plenty of companies will be prepared to offer that if there is a business model to do so. Technology providers don’t need to become leasing companies, they simply need to sell their products to others who can/will.

  3. Alex Avatar
    Alex

    Aren’t the subsidies for the coal industry and related health issues already a burden for NSW residents and taxpayers? Won’t these costs continue to escalate while the cost of sunlight will remain the same?

  4. Martin Avatar
    Martin

    A generally accepted definition of net metering is: “Under net metering, a system owner receives retail credit for all the electricity they generate”. Contrary to what the author seems to suggest, the current system of an export tariff set at or near the wholesale price of electricity does not constitute net metering.

    Question to the author: Why would you want “widespread penetration of solar into the market” if not for reasons of “environmental sustainability, carbon reduction, etc.”? If PV system owners “do not have the ability to utilise the power their systems generate”, what was their reason for installing a PV system in the first place?

    As to the “potential issue of the lack of maintenance to existing solar systems”, I would call that a misnomer. The examples given either point to warranty issues, which are dealt with by consumer law, or point to the common responsibility of any purchaser for any good they purchase.

  5. taiyoo Avatar
    taiyoo

    Good work on organising and reporting the meeting. First thought – I don’t agree the discussion should start on the requirement that there is no increase in cost to the taxpayer or government. Basic economic theory treats climate change (among other unintended side effects) as a negative externality caused by the combustion of fossil fuels to produce energy. A negative externality imposes costs on society – ie the taxpayer – for climate change it is increased frequency and severity of natural disasters, loss of arable land etc etc. Obviously the trick is to get the balance of cost incurred by the externality and the cost of supporting alternatives, but to start from the position that there should be no cost incurred by the taxpayer to support alternatives is stupid. Aside from that, as readers of RE are familiar with, the current system is already heavily biased towards the negative side giving the gentailers a free ride on exported solar.

  6. MoreBikesPlease Avatar
    MoreBikesPlease

    The state governments could help by assisting councils to set up Environmental Upgrade Agreements, available in some councils already (mostly for businesses). Instead of paying upfront, the money is provided by investors on 15-year finance at low rates.

    The building owner pays the loan back via a charge on their council rates. If it’s a rental property, the owner can pass on part of the charge to their tenants (as long as they get agreement upfront).

    If the property changes hands, the solar generation and loan payments pass to the new owner.

  7. John C Avatar
    John C

    Pity the Minister’s line “must not cause any financial burden for NSW residents or the government, i.e. tax payers” doesn’t apply to purchasing air conditioners which require $7000 of grid infrastructure/supply capacity and are cross subsidised by every customer who doesn’t have one.

  8. Solar Fuel Blog Avatar

    Everyone seems to be going green. Hope the leases would be renewed at the end of the day.

  9. Giles Avatar
    Giles

    On behalf of Craig Blanch, who having trouble with Disqus:

    “Many people in western Sydney, and throughout NSW, have taken on greater debt to pay for the installation of their PV systems. These people have no option other then to work long hours which means there is no one at home during the day to utilise the power their system is generating, so this power goes into the grid and they receive a nominal amount for it if they’re lucky. When they get home, they use power and pay the top retail rate for the power they use as it’s often dark. So these people, who have invested in solar to reduce their bills get very little benefit and still have high bills on top of increased debt to pay for the system.

    The Minister agreed with me that this is creating a serious issue in the community and he understands the case for bringing residential battery storage into the grid to help alleviate this situation. I believe the Minister would support a financially viable leasing package, but the industry must put it together without relying on Government financial support, as I don’t know about you but I think I prefer the Government to be trying to put more money into schools and health rather then close hospitals to fund the purchase of batteries.

    With regard to the issue of maintenance, I come from a background personal injury claims/law and note that all home owners are NOT covered for personal injury they receive as a result of accidents around their own homes. Do you seriously want people getting on their roof’s to examine their systems and risking their safety without having any knowledge of what they are doing, or knowing what to look for?

    If the Government moves to support residential battery storage, and puts in place legislation, etc to encourage distributors to restructure their business to accommodate solar with storage, wouldn’t it be feasible to have them provide an annual inspection service to ensure that the residential infrastructure is operating effectively and remains a valuable part of the national generation and distribution network thus ensuring uninterrupted supply?”

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