Could a 500-house community go off-grid?

In the era of ever rising electricity prices, not to mention that thing called global warming, the idea of Australian households choosing to generate their own renewable energy – and not rely on the main grid – is looking less and less off-beat.

Last year, a CSIRO study suggested one-third of consumers could go off-grid by 2050, based on the prospect that it would be economic for households and businesses to do so from around 2030 onwards.

But what about taking whole communities off-grid?

According to a study published recently by Energy for the People and the Alternative Technology Association, the shift away from a centralised NEM to stand-alone community power solutions could be “quick and dramatic”, with most Australian regional towns and new housing estates expected to be able to function viably and economically off the electricity grid by as early as 2020.

Published in January, the report, called What happens when we unplug?, explores the consumer and market implications of taking community groups of 500 houses off-grid, using three Victoria-based scenarios modelled on the inner-Melbourne suburb of Preston; a new-build housing estate in Werribee; and a rural housing estate in Bendigo.

In a talk expanding on the report this week, the ATA‘s energy market specialist and consumer advocate Craig Memery said that the economics were constantly tipping the scale in favour of individual houses going off grid, but in terms of building economically viable, “none-of-your-business-Mr-Distributor” mini-grids for entire communities, the scales had already tipped.

“You don’t have to be Einstein to work out that, the more electricity prices go up, and the prices of solar and storage come down, the more incentive there is to go off-grid,” Memery said on Wednesday night in a talk at Swinburne University.

In fact, he added, “(the ATA Energy for the People study’s) analysis showed that, all costs added together, including buying back the asset value from the distributor, it was more cost effective for those communities to go off grid – both existing and new.”

Indeed, for new-build communities, said Memery, “it would be an absolute no-brainer”, when compared with the other option of paying, potentially, hundreds of thousands of dollars to upgrade the local network.

Memery noted that while our consumption of electricity used to be billed mainly on a volume basis, the main offender of today’s ever rising electricity bills was the fixed service charge – the flat rate charged to households and businesses for the cost of building more poles and wires.

“Australia’s NEM is the biggest national grid in the world, geographically speaking, and also the most sparse,” said Memery. “The cost of maintaining it and expanding it is driving up the price of power every year.”

On the other hand, the study found, shifting a community to a mini-grid using 95 per cent renewable energy and currently available battery storage technology would provide clean, sustainable electricity via a more reliable system, for the same price or cheaper, and with better service.

So what would be involved in taking a 500-home community off-grid?

Quite a lot, obviously. But the key ingredient of the ATA plan, says Memery, is solar PV; with an estimated 450 of the 500 homes sporting rooftop PV systems of between 4-8kW, leased through an (as yet non-existent) independent, fully integrated energy services company. This allows for around 10 per cent of households to continue being passive energy users, and paying bills, presuming some might not want to participate, while others might not be suitable for rooftop solar.

The next key ingredient would be energy storage – “you need a lot of it,” says Memery. To this end, the ATA chose lithium-ion phosphate batteries for their modelling – the same as are used in most EVs – as the cheapest and most efficient market-ready option.

The plan assumes that one in every five of the houses in the off-grid community would house a 120kWh battery bank, roughly the size of the average modern kitchen island bench. For extended periods of little-to-no sun, there would also be back-up generation, supplied by two or three bio-diesel ready diesel generators.

Memery said the system would use some smart technology, too, but noted that most of these “smarts” would be in the storage component of the system, because the off-grid community model doesn’t need a lot of peak shifting.

“Mini-grids are not as vulnerable to shifts in peak demand,” Memery said. The only real issue would be the capacity of the inverters. So we use big (and smart) inverters from the start.”

The next question, and the perhaps the thorniest, is who – as in, which energy company – would undertake a project like this.

For a community-scale project like this to work, Memery said, you would need a vertically integrated energy services company (ESCO) – the only key innovation the ATA plan is still waiting on.

As Memery noted on Wednsesday night, Australia’s retailers are “a very long way” from having the right mentality – or even the right business case – to undertake this kind of project any time soon.

“Retailers hate it when people use less energy, and use energy from decentralised sources,” Memery said. “This ESCO won’t be a large energy retailer and it won’t be an incumbent retailer.”

Besides which, he added, “if you work (a project like this) the way the energy market is working now, where there are four different entities you pay profit margins to, it will not add up.”

“This model only works if you are not paying your distributor for the cost of the poles and wires,” Memery said. “Energy companies’ business is owning and financing poles and wires, so they have a strong interest in replacing existing infrastructure.”

Which leads to another potential road block: provision for buying a chunk of the network from distributor, who would probably charge an inflated price.

As one audience member noted, “distributors love the return of investment” they are currently getting. So how do we break that love affair?

Memery’s answer: “Some things can be changed with the rules. What can’t be changed is the business imperative.”