Baptists and Bootleggers: Is energy storage riding the wave of bad solar policy?

The evidence of the key importance of battery storage was everywhere to be seen at the All-Energy Australia conference in Melbourne this week.

Battery products of all shapes and sizes (and amazingly light weights!) were on display at the exhibition centre, and with them, a proliferation of the inverter technologies that are considered the final piece of the distributed generation puzzle – the smarts of solar and storage systems that will maximise self-generation and manage bi-directional energy flow without consumers having to give it a thought.

But while batteries and inverters dominated at the All-Energy exhibition downstairs, some at the conference upstairs were questioning the role of energy storage on the future grid and whether it was really the “holy grail” of renewable energy distribution it is made out to be.

“There are the best of reasons to install energy storage,” said Iain MacGill from the University of NSW, which is collaborating with other universities on the CSIRO Future Gird research program.

“But there are some arguing that you shouldn’t install renewables without storage. And that’s not true.”

On the “best of reasons” side, there is certainly plenty of weight: the potential to triple or quadruple the value of PV for rooftop solar homeowners; the development of dazzling new technology like the Tesla Powerwall, that has transformed energy storage into something approaching an appliance – you go to a shop, buy it and plug it in.

Energy storage for households is “available, attractive and quickly deployable,” said Tony Vassallo – another speaker at the conference session who is another member of the Future Grid research team, from the University of Sydney – and is drifting towards the the break-even point on cost for Australian households.

But when it comes to regulation, the policy is “probably 10 years behind the technology,” he adds. And this is part of what worries MacGill.

“There is a risk with renewable energy and energy storage,” he told the conference on Wednesday afternoon, and it’s a brings to mind the Bootleggers and Baptists theory.

As MacGill explained, the Bootleggers and Baptists theory – formed by US regulatory economist Bruce Yandle and based on the era of Prohibition in America – relates to economic market trends that are driven by the best of intentions and the worst of intentions. Or as Yandle himself put it, it is a marriage of high-flown values and vested interests.

More specifically, it is when the regulations behind those economic trends are supported by two distinct groups – those that want the ostensible purpose of the regulation (in this case, energy independence and cheaper bills for consumers) and groups that profit from undermining that purpose.

The concern here is that, rather than adapting energy policies and eletricity market regulations to make rooftop solar a fair proposition for those who install it and export excess energy to the grid, the uptake of batteries is encouraged, instead, making solar self consumption the solution.

Downstairs at the All-Energy exhibition, one big industry player in inverter technology in both the solar panel and energy storage space illustrated how this works.

In an interview with RenewEconomy on Thursday, he said that while any wind-back to solar feed-in tariffs in any market around the world effectively delivered a 6-month freeze in investment for his panel inverter business, it was a boon for his company’s storage management systems. This makes Australia, of course, with its 1.4 million solar rooftops, disappearing FiTs and high electricity prices, a key target market for the latter.

What MacGill sees emerging is “a potential disconnect between what’s viable for consumers and what’s best for industry and market as a whole.

Which brings us back to Vassallo’s point, that energy market policy is probably about 10 years behind the technology.

Thankfully, this is a gap that Vassallo, MacGill and the CSIRO are working on bridging. But there’s a lot of work to do.

What would astute and effective policy look like for Australia’s future grid?

At this stage, says MacGill, “the answer is nothing like it looks right now.”