Electrification is saving the grid from mass defections

Australians are not quitting the grid in the numbers expected a decade ago, largely because household electrification means defecting makes less financial sense, experts say. 

This is in contrast to the US, where a study suggests quitting the grid could be a sound financial decision for people living in high-solar areas – but using the same reasons heard in Australia 10 years ago.

In 2015, Australia was named as the world’s most likely country where citizens would start defecting en masse from the grid. 

Many of the reasons why are still apparent today: high rooftop solar adoption, high power prices, falling battery costs, and anger at energy utilities about tariffs. Networks were so worried about the revenue loss they proposed high disconnection fees even for properties not connected to the grid to stop defections. 

But electrification is preventing the potential mass defection of up to a third of households from the grid, the figure suggested by a CSIRO and Energy Networks Association report in 2016.

And that means it’s unlikely distributed network service providers (DNSPs) will jack up supply charges or demand much higher disconnection fees, says Clean Energy Finance director Tim Buckley.

And although networks across the country are “antagonising” Australians by creating “sun taxes”, a fee to export rooftop solar power into the grid during peak periods, Buckley says the cost is still immaterial compared to the savings people get from their rooftops. 

“That antagonism and mistrust and misinformation is an issue,” he says. 

“But the real one is when you put rooftop solar in, your electricity use goes down by 50 per cent, so how does the grid operator maintain their compensation? The answer is increasing their charges. If you put a battery in as well, your grid use goes down by 90 per cent, so your retailer’s and transmission operator’s revenue goes down by 90 per cent.

“In one respect the electrification trend is a perfect counter to that [because AEMO forecasts electricity use will rise by 30 per cent in the coming decade].”

As energy experts keep repeating, the way to bring consumers along on the journey is to share the benefits, not just the pain.

For example, the UK’s Octopus Energy is paid a fee to take energy during midday peaks for grid stabilisation, and passes that benefit on by offering free electricity during peak generation periods for electric vehicle charging. 

How to set fire to property values

That’s not to say people aren’t still keen on going off-grid, or that it doesn’t make sense for some areas in Australia.

Property website realestate.com.au lists for sale 1,083 off-grid, off-grid ready, or properties claiming some kind of off-grid capability.

And in Queensland, with its spread out grid and high solar irradiance, intentions to defect from the grid have held steady at 28-29 per cent for the last three years, according to government-owned network operator Ergon’s annual survey.

It says electricity prices are the main reason given for wanting to quit the grid.

Queenslanders have long been keen to defect, to the point that Ergon actually launched a 10–step guide to quitting the grid in 2016 to ensure customers knew what they were getting into.

But while Australians are still being annoyed into buying rooftop solar and batteries – seen as the first step in Australia a decade ago and in the US today towards defecting – in suburbia taking that big next step is unlikely, says Catch Power general manager and co-founder of Solar Analytics Stefan Jarnason. 

For a start, it would torch the resale value of Australians’ favourite investment: their house. 

“Grid defection, excluding rural properties, is very unlikely,” he says.

“The core reason is reliability and hassle. It’s that fear of struggling after two days of protracted no-sun. 

“It’s expensive because there’a a one-off cost to get off-grid. And you’ve decreased the value of your property.”

And although vehicle-to-grid charging is still very in the policy planning stages, disconnecting from the grid means not being able to take advantage of this in the future. 

Right for rural areas

In 2018, Renew Economy reported that increasing numbers of rural dwellers were swapping out high network charges for self-sufficiency.  

For people in rural areas quitting the grid now is the right move, Jarnason says.

“If you are more than 150m from your neighbour it makes a lot of sense. You in the city are subsidising the cost of running the wires to me and maintaining them. Every year [DNSP] Endeavour has to come to my area and maintain the wires and trim the trees and it costs a fortune,” he says.

“They would be much better off tearing down all the poles and wires in rural areas and giving everyone $50,000 to install their own systems.”

The grid reliability issue is one that experts such as Buckley say could be solved by letting people solve their energy problem themselves, and would put Queensland’s and Western Australia’s annual circa $600 million in maintenance spending to better use.  

Western Power is already doing a version of this in Western Australia, to mixed reviews. It has been switching end-of-line customers to standalone power systems – a mix of battery and generator backup with solar. 

However, some farmers are finding that the downside of a network-owned and run standalone power system means long delays in getting it turned back on when the system trips – sometimes multiple times a week, reports ABC. 

And even then being off-grid can be challenging. 

My Efficient Electric Home founder Tim Forcey tells a story about a friend near Ballarat in Victoria who was off-grid. His property was 500m from the nearest power lines and his DNSP wanted to charge $50,000 to connect, so he invested in a solar-battery. 

But he could only use and store a quarter of the generation produced from his solar system and eventually paid up to connect – and get a better resale value when he eventually sold the property.

America still living in 2015

If Australia is coming to an acceptance of who should be off grid and who benefits from the socialised costs of staying on-network, the US is still a decade behind.

A research paper in the Solar Energy journal suggests Americans in solar-rich locations would be better off financially if they quit the grid and rely on a battery, a generator and rooftop solar. 

The paper noted that rising network costs, falling solar and battery prices, falling rates for household solar generation “has seen economic grid defection and utility death spirals become salient issues in the US”.

It says a 12.32 kW off-grid PV system with 2.5 kW diesel generator, and a 31 kWh battery in Honolulu would cost 33 per cent less over its life cycle than staying connected to the grid, or more than $US120,000 of avoided costs on an investment of about $US34,000. 

But while the US looks down the barrel of what may happen if its notoriously independent minded citizens defect from the grid, it could also look at how Australia is evolving, towards a mix of off- and on-grid living for the right locations.