If ever there were a need to develop off-grid power systems it would have to be now, when transmission costs are now up to around 60 per cent of non-solar power bills.
Solar systems have historically been classified into two broad camps – “grid connected” or “off-grid” systems. This distinction has arisen due to historical segments of the market that needed solar to do different things. The vast majority of systems we see around Australia’s towns and cities are grid connected and have been driven by feed-in-tariffs and consumer desires to cut electricity costs and do something positive for the environment.
Off-grid systems have historically been the preserve of regional customers seeking to avoid expensive network augmentation costs to provide power to their remote locations. Off-grid systems are usually a lot more expensive as they require battery storage, more complicated control technology and often diesel backup generators to ensure the lights will always shine. Battery technology has also been a culprit as the memory effect of old-style lead-acid batteries has meant that battery arrays are oversized to ensure the depth of discharge is not high and hence battery life is extended.
An emerging trend though is for so-called hybrid systems which take a little from column A, and a little from column B. Such systems could either be described as an off-grid system which uses the grid as the standby generator or a grid-connected system with some added battery storage. Either way, these systems don’t require expensive diesel generators since the grid provides that service, and the size of the battery arrays can be downgraded as the cost of back-up power using off-peak grid electricity is much lower than that provided by diesel generators.
The technology that is making this possible is a new generation of products capable of directing energy flows as the consumer best desires. One such product is the PowerRouter which enables the home owner to optimise, control and manage any self-generated electricity. A homeowner in NSW appalled by their retailer’s offer for solar buyback, for instance, could arrange for excess solar yield to be diverted to their batteries for use at another time when electricity prices are higher. The batteries could also be re-charged on off-peak tariffs and re-used during peak periods as a straight arbitrage opportunity.
Another technological development is occurring in the battery sector with heavy investment by the auto-makers looking to reduce battery size and extend life using lithium-ion based solutions. Importantly, Li-ion batteries have no memory effect, so battery arrays can be better sized to suit demand. Intersolar fairs these days are increasingly showing attractive, compact and affordable Li-ion battery solutions capable of helping consumers make the jump to these hybrid systems. The introduction of electric vehicles with batteries will add another exciting dimension as the household battery storage effectively gains wheels and becomes mobile.
So where is this opportunity apparent in the Australian context today? There are probably three broad consumers to whom this hybrid model would appeal:
My grid keeps dropping out! Many solar consumers ask the question about what happens when the grid goes down? Unfortunately the answer they get is “so does your solar system in order to prevent injury to electrical line workers”. Having a hybrid model appeals to consumers who are looking for higher levels of reliability than their existing supply. A hybrid model would allow the home to effortlessly switch from solar to grid to battery as the need arises on a least-cost basis.
I hate my retailer, how can I get them back? Spite is a strong motivator and many consumers have just had enough of traditional electricity retailers. While the cost of completely switching off from the electricity grid (i.e. an off-grid system) is probably cost-prohibitive for most householders, installing a hybrid system would be a lower cost since there are no back-up generators and less battery storage. The original intent would largely be delivered.
The network won’t let me expand! Many consumers, especially businesses in regional locations, are constrained in their growth due to limitations imposed by the electrical networks. One recent customer owned a coffee shop in a small suburban Sydney shopping centre. The grid operator would not provide them with the 130A supply it needed without an expensive upgrade to a substation. The landlord and the shop owner went halves in a 10kW system which reduced their peak demand to the allowable 80A through a system of batteries and recharging off the grid when power is available. The system cost half as much as the substation option and will pay for itself in around 7 years – compare this to the sunk cost of the substation which would only make a return for the grid operator.
The larger policy implications of this shift are interesting. In 1999, the term Web 2.0 was offered forward as a description of the cumulative changes taking place in web development which facilitated greater collaboration, interoperability and information sharing. These days, more and more content on the web is user-generated and the nature of how we use the internet is vastly different from the embryonic, static website version of the 1990s.
Increasingly the electricity grid is moving towards Grid 2.0. Eventually, the networks will cease to become simply a delivery mechanism for electrons to your home and will morph into a shared network designed to help each energy user effectively manage their surplus or deficit of electrons to meet their needs. With this will come enormous changes to the business models of the network operators as customers gradually become more and more self-sufficient and use less and less from the grid.
The immediate response from network operators will most likely be higher peak demand charges to reflect the (in)tangible economic benefit offered to customers through the grid acting as the standby generator. As these charges start mounting, however, this will only encourage consumers to go the whole-hog and take their homes completely off-grid, thus completely avoiding network charges. Inevitably this will leave the grid a stranded asset – similar to the telegraph poles dotting the country side.
The response from networks operators should be more collaborative and understanding of the market dynamics and accepting of the new role they will likely have to play. This will involve changes to the asset’s valuation and pricing regimes – no small thing – but in the end will deliver better outcomes for society, the environment and energy users.
Jeff Bye is head of CBD Energy’s solar division.