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Power price pain drives ‘ditch the grid’ mentality

Sophie Vorrath
15

We know that more and more Australians are installing rooftop solar in an effort to counter rising electricity bills – last year, households around the nation installed more rooftop solar than Germany, the world’s solar leader – but could rising power prices also be driving them to look for an alternative to grid connection?

Yes, says CBD Solar manager, Jeff Bye, who argues that, with power companies said to be “gold plating” networks by over-investing in poles and wires, more people are looking for answers on how to “ditch the grid” entirely – a move that could be achieved through a combination of solar power and energy storage.

“If people install solar panels and battery storage, they only need the grid as a backup supply,” Bye said in a statement released today.

“Improvements in technology, being driven by the auto industry, are leading to more efficient and effective battery storage which works well with what can be intermittent production of electricity from solar power,” Bye said.

According to CBD Solar, the average cost of energy is now between 20 and 30 cents a kilowatt hour, reaching 43 cents at peak – and according to Treasury estimates, some 51 per cent of this cost is from network and distribution costs.

Solar energy, meanwhile, costs between 5 and 7 cents a kilowatt hour to produce – a level that is applicable over the lifetime of a solar system of around 25 years.

Bye – whose company has operations in wind, solar, and energy efficiency, including large-scale projects in Asia, Europe and the US – offers the example of his own 18-panel solar system with battery back-up, recently installed at his family home.

Bye says the plan with this solar/battery system system – the panels produce 16kWh of clean energy per day, which virtually matches the total daily consumption of the house – was to receive a quarterly bill recording zero kWh consumption, leaving a network access charge of about 50 cents a day as the only payment.

“This system will pay for itself in around five years and after that, we will have free electricity despite the effect of the carbon tax and all the other costs from electricity distribution through poles and wires,” he said.

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15 responses to “Power price pain drives ‘ditch the grid’ mentality”

  1. Barrie Harrop Avatar
    Barrie Harrop

    CBD is right the era of the grid limited as the future will be about distributed energy where the customer wants it.

  2. Warwick Avatar
    Warwick

    Leaving aside the debate as to whether or not the networks are ‘gold plating’ their assets, the more people “ditch the grid” will invariably lead to falling revenues under existing pricing schedules. As these regulated network businesses are allowed to earn a return based upon their asset base, they will either increase charges or alter the way they charge their customers to maintain those revenues.

    This means if many people actually use less grid supplied electricity that these networks may increase the daily standing charge potentially offsetting some of the savings or upping the per kWh charges to maintain their existing revenues. Potentially, this has an equity effect as those less able to afford the up front cost of a PV and/or battery system will end up paying a greater share of the network costs.

    At the extreme, if home owners completely disconnect then the costs per remaining households will rise. One wonders if the expensive legacy costs of inefficient networks were driven by wealthy households installing air conditioning and are they now some of those wanting to ditch the grid?

    There are certainly issues of both equity and efficiency that need to be addressed in this period of significant industry change…

    1. John P Morgan Avatar
      John P Morgan

      The grid in its current format is something of a mess. Many of us saw this coming years ago and opted out. The electricity retailers are the ‘classic’ middlemen! Who needs them. We used to buy our electricity from the generator. Society has turned into an economy where the consumer is there to provide profits for the retailers. Not good enough.
      With the recent collapse in solar module prices, stand alone power systems are now cost effective.
      It is not even necessary to use the grid as a backup.

    2. Shaun Colley Avatar
      Shaun Colley

      Warwick, I agree with your logic and equity considerations are important but that is a result of short sighted decision making on the part of our legislators and regulators to privatise a public asset that was bound to become less profitable over time, but then lock in the return to the new asset owner – in the end we end up paying for it either way. I would not be too worried about it if we made good use of the funds we collected during privatisation but “Did we?” Perhaps when we (in NSW) sell the generators we can learn these lessons (or use the money to subsidise solar panels on low income roofs) but I doubt that will ever happen when apparently we suddenly can’t even afford our education bill.

  3. Rob campbell Avatar
    Rob campbell

    Concurring with Jeff Bye, the concept of going virtually “off-grid” is likely to become the norm quicker than you think. Yes the grid needs to remain as back-up, but in a much less scale that is is now, and certainly no increase size is required under this scenario. The concept we have ready actually reduces the grid size from your front boundary all the way to the Power station, and it is reliable enough that on no occasion will the “old” grid capacity be required. The first target is demand peaks, which makes up 30- 40 of distribution costs, once that one is covered, there is no reason we can’t have a crack at base load, especially in the ‘burbs. Combine this with with some serious load levelling by industrial and commercial users, we should be getting cheques back from the distributors, not additional compo claims.

    1. David Avatar
      David

      Rob, you cannot have your cake and eat it too. By all means leave the grid but if you want to keep it as “back-up” then the cost for this service would have to be almost as much as you pay now for your full grid supply. The costs of poles and wires, transmission lines and generators do not change. All of these things have to be provided whether you use them every day or once a year. All that is saved is some of the fuel cost.

      1. Tim Avatar
        Tim

        An alternative is to quit the grid and have a small diesel genset as your back-up, as has been suggested on this forum before…

        Of course fuel cells would be preferable, but that’s probably a few years off..

        1. Barrie Harrop Avatar
          Barrie Harrop

          look up Zen Tim they have it back up coming.

      2. Ronald Brak Avatar
        Ronald Brak

        Not quite. If you are a power distributer and you try to charge a person who has PV and batteries almost as much for backup service as for full grid supply then obviously this person will buy some more solar panels and batteries, or a generator, and drop off the grid entirely. The trick will be to extract as much money as possible from these people without makeing them drop off the grid.

        One thing that can be done is sign them onto to a plan that bars them from the grid during periods of high demand. As they have batteries this isn’t really a problem for them and can dramatically reduce transmission costs.

        Of course, distributors that have overinvested in transmission may need to go bankrupt and have their infrastructure bought up on the cheap by competitors. The market can be a fickle goddess.

  4. Darren Avatar
    Darren

    I don’t agree that solar “costs between 5 and 7 cents a kilowatt hour to produce”. Sure, if your net installation cost is $2 per Watt AND you assume no cost of capital AND you run the model out for 25 years, then you can show a cost of around 6c/kWh, but using a realistic cost of capital and more conservative assumptions about installation costs and system life you get a cost closer to 30c/kWh.

    1. Barrie Harrop Avatar
      Barrie Harrop

      Darren,
      You are on the money.

    2. Ronald Brak Avatar
      Ronald Brak

      Darren, you’d need a system life of 9 years and a discount rate of 15% to get a cost of around 30 cents a kilowatt-hour. Personally I can borrow money at under 9% and live in an area where roofs are rarely destroyed and so expect solar panels to outlast their 25 year warranty. An installed cost of $2 a watt, a 9% discout rate and a 25 year lifespan gives a cost of about 15 cents a kilowatt-hour for most Australians and a little more in Melbourne.

  5. Damien Avatar
    Damien

    Great. I would love to get off the grid via solar power and energy storage. When is such a product that Jeff Bye has at his house going to be available in the marketplace? When is the self sufficient energy revolution going to start.

    1. Gary Avatar
      Gary

      Australia is not in isolation here, the government needs to consider very carefully what direction they will take with solar or any other renewable power source, they cannot stop innovation, solar is here to stay, it is cost competive and it is getting cheaper by the day.

      All of the whingeing by the generators, against solar should have little effect on what decisions the government make? that’s if they want us to be a clean non polluting and cost competitive nation into the future? we are not the only ones considering what solar or any other renewable power source can do, if we don’t get it right, we will shoot ourselves in the foot again, other countries will be way ahead if we don’t get it right, we can either be part of the solution or sit back and watch the rest of the world adopt what we have at our fingertips right now and pay a heavy price for indecision yet again.

  6. Rob hunter Avatar
    Rob hunter

    I’m really looking forward to the day when I can go completely off grid. I’m so sick of the politics and ripoffs. The poles and wires will eventually become redundant as householders and businesses inevitably switch to the idea of “growing your own” energy. Can’t wait!

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