Network tariffs blamed for failure of warehouses and businesses to follow household lead on rooftop solar

Solar is a common sight on houses but less so on warehouses, offices and other commercial buildings due to a complex knot of challenges that need unravelling.

Australian households are generating nearly four times as much solar energy as retailers, manufacturers and other non-residential buildings, with most commercial rooftops panel-free.

Harvesting the vast, untapped generating and storage potential in cities and towns depends on devising incentives targeting this “missing middle” and reforming the way commercial players interact with the grid, an energy think tank says.

Despite using more electricity than households and most of it during the day when solar is generating, the commercial sector lags well behind residential on rooftop systems and batteries.

Australia is a world leader in household rooftop solar, with 22GW installed on more than four million homes, compared to the measly 5.6GW generated by businesses, based on Institute for Energy Economics and Financial Analysis research.

Yet technical rooftop potential for solar across commercial and industrial areas could be close to 40GW or even exceed 80GW if agricultural areas were included.

The same quandary locking out renters from the solar and battery revolution applies to the many businesses that do not own the buildings they operate in.

Landlords have limited incentives to invest in clean energy infrastructure that will largely benefit their tenants through cheaper bills, and solar and batteries typically have longer lifespans than leases.

Innovative models have been trialled to address the “split incentive” issue, including allowing building owners to repay loans through council rates, but the think tank says businesses still struggle to overcome this hurdle.

That’s partly because the barriers do not stop there.

Commercial and industrial facilities are not well-served by government incentives and policy typically targeted at households or grid-scale infrastructure.

The headaches associated with connecting to the electricity network and paying for the privilege pose another set of challenges.

Businesses operating across multiple states are often dealing with a patchwork of different demand charges devised by Australia’s 16 network providers, the entities responsible for power poles, electrical wires, transformers and meters.

IEEFA lead electricity analyst Johanna Bowyer said network tariffs, which make up upwards of 40 per cent of business power bills, create complexity and cost for commercial and industrial solar and storage providers.

”Network tariffs should be reviewed and standardised,” she said.

The grid connection process also needs streamlining and network regulation rethought to recognise onsite solar and battery assets can provide grid services, including providing stored energy back to the network during a spike in demand.

Ms Bowyer said the potential of commercial solar and storage will go unrealised if barriers are left unaddressed.

Such a reality risks higher bills for individual businesses and all users, with more generation on urban rooftops and onsite storage leading to less large-scale renewables and the accompanying costly poles and wires.

More renewables generation and storage would also help pave the way for timely coal station exits which will be key if Australia is to meet its emissions-reduction targets, including reaching the 82 per cent national renewable energy goal by 2030 closer.

The think tank calls for an energy infrastructure “warp speed” approach elevated to a National Cabinet priority, akin to the COVID-19 pandemic response.

Source: AAP