Ergon says solar is game changer for energy business models

Queensland utility says average household demand down 20% in past decade, 21% of houses have solar, plans first commercial battery storage rollout.

Ergon Energy, the utility that manages the sprawling network in Queensland outside the south-east corner, says that rooftop solar is a game changer that will impact the way the grid is managed and its business model.

In its annual report released this week, Ergon notes that 21 per cent of detached homes in regional Queensland now have rooftop solar. Over the past 10 years, the average demand for electricity from the grid has fallen 20 per cent. In solar homes, it has fallen closer to 30 per cent. (see graph to right, please click to expand).

Last year, Ergon predicted that by 2020 many of its customers may find it cheaper to disconnect from the grid and use renewables and storage instead.

This year, it refrains from such predictions, but says the pace of change will be rapid, and some of the scenarios outlined in the CSIRO’s Future Grid report – which made startling predictions about the competitive costs of solar and storage, and for the potential of mass grid defections – are “already becoming a reality” in its area.

“We anticipate a rapid rate of change,” the company says. “What the future will ultimately look like will depend, of course, on consumer choices, technology, government policy and commercial responses – regardless it will require us to adapt and even play a central role in creating an energy future that delivers the best outcome for our customers. “

There is now 339MW of solar in Ergon’s network. Energex, which operates the network in the south-east corner, has 871MW of solar. That makes a total of 1,210MW on more than 360,000 households and businesses in the state.

Ergon says 17,000 customers added solar in the last year. “The take up of solar is a game changer for the way we manage the network and for our business model.”

Ergon says it is investigating how battery storage can be used in households, with electric vehicles and on the grid.

“The greatest potential for solar energy systems to benefit the network and our customers will come as battery-power storage becomes financially viable,” it says.

After testing of a medium scale battery application dubbed the Grid Utility Support System (GUSS), Ergon says it is now ready for commercial implementation.

“This is the first known application of its type in Australia to move beyond the trial phase based on a positive business case. In most areas where other utilities are deploying energy storage, it is being done as a demonstration project or with government seed funding. “

“From a business-model perspective, our efforts are about changing the value proposition we offer customers, from one of an essential service, to a provider of essential infrastructure that connects buyers and sellers of energy services.

“This will see the network increasingly used as an open access platform for distributed energy resources. To do this we are engaging with the solar industry to keep up with the technologies, and the direction the industry and customer desires are taking. We are also developing tariff structures to send the right price signals to customers.”

In the meantime, however it has introduced measures to manage the transition that have courted controversy. This includes a new rule that allows it to prevent customers from exporting excess electricity back into the grid for solar systems up to 30kW – essentially encouraging some consumers to quit the grid – and for the low rate of tariffs for exports that are made. High fixed charges for business users have also courted controversy because it reduced the incentive to install solar.