Networks discover that rooftop solar is no longer the enemy

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Australian network operators have had an epiphany. The future lies in solar and storage and smart technologies, and the utilities have to cater for customer needs. But is too late?

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It’s taken a few years, but it appears that the Australian electricity network operators have had an epiphany. The business is not about them after all, it’s all about the customer. And rooftop solar is not quite the enemy it was made out to be.

At the Energy Networks 2016 conference in Adelaide last week – a bi-annual gathering of nearly 1,000 folk from government and privately owned networks around Australia, and many of the people who seek to do business with them – “customer” was the main buzzword.

wa rooftop solar

The interests of the customer, everyone agreed, was paramount. “We have to do what any organisation does, and understand what the customer wants,”  said Paul Italiano, the head of transmission group Transgrid, and a former chief of WA distributor Western Power.

Merryn York, Italiano’s counterpart at the Queensland equivalent, PowerLink, agreed, as did just about every speaker: “We have got to focus on the customer,” York suggested.

If that sounds like a statement of the bleeding obvious, it was also, as many suggested, a significant change in attitude from an industry that has seen itself, quite literally, as the centre of power for decades or more. And with no need, or indeed any legal authority, to deal directly with the end user.

But the falling arc of new technology costs on one hand, the rising arc of the costs of the old business model on the other, has forced a radical change in thinking. The question might be: Is it too late?

Rooftop solar, once seen as a pest, a nuisance and an expensive indulgence of inner city latte-sippers, is now seen as an inevitability. And one that should be welcomed, because with the added benefits of storage and smart technology, it is cheaper, cleaner and can add stability and reliability to the grid.

“Solar and battery storage will be in every home in the future,” said Rob Stobbe, the head of South Australia Power Networks. And, most analysis suggests, it will be providing around half of all electricity demand sometime not so very far in the future.

Resistance, therefore, is futile, which may explain the disappearance (almost) of another favourite buzzword of utilities in the past few years – the death spiral.

As Ann Burns, from the consultancy group Accenture, suggested, the “death spiral” was a term of convenience used by those who did not want to adapt. “I haven’t heard anything about the death spiral in the last 18 months,” she said. “Utilities now say they want to be the facilitators of the energy transition.”

That means adapting to customer needs, because that is where the power now lies (there are, after all, 1.5 million power stations in the nation’s households). And what does the customer want? Cheaper electricity prices obviously. And reliability. And rooftop solar PV. And battery storage. And, who would guess: The delivery of all that is entirely possible.

“It is not a matter of  inventing solutions,” Italiano said. “There are a lot of solutions.” Utilities, he says, have to stop labelling such technologies as a problem. “It is a consumer choice. Implement a solution.”

Paul Adams, the head of Jemena, which owns electricity and gas networks, said: “The system of the future, if it is to have the customer at the heart, will enable the consumer to get whatever he wants out of the deal.”

But if rooftop solar is not the enemy it appeared to be, it would be wrong to assume that networks are suddenly about to become its best friend. There is no indication that rules the solar industry finds punitive and restrictive – connection rules and regulations, low feed-in tariffs, export limitations, and new “demand tariffs” that are not as cost reflective as the network make them out to be – are about to be revised any time soon.

Even SAPN, for instance, has proposed tariff structures that it admits will slow down the uptake of rooftop solar, but may encourage more battery storage – something it is trying to accelerate through its own trials that may add the benefit of reduced network bills.

The reality is that these issues will not be addressed until either battery storage costs fall far enough to be taken up by the mass market, and/or the incumbent utilities figure out a new business model to adapt.

So, who wins in this new energy architecture? And with what models? The truth is, no one is too sure. Retailers don’t want networks muscling in, networks don’t want to be excluded from the consumer market, arguing that it makes sense if they can gain efficiencies from avoided network costs.

That leads to the tricky question about all the money spent on building big grids, the principal aim of the past decade. That in turn, has been the over-riding cause of surging electricity bills.

Can the networks they price their services competitively without taking massive write downs on what may become at least partially redundant assets? – something the networks lobby group refuses to countenance.

As Kobad Bhavnagri, from Bloomberg New Energy Finance, suggested earlier in the conference, the new technologies will usher in a new array of services. “Who provides these will be an evolving contest.” And price will be critical.

“If you irritate them so much and make them pay the same amount even though they think they are using it only one third as much (because of their solar and storage), then you will get irrational responses,” Bhavnagri warned.

Hence the big focus on the “ring fencing rules” currently being negotiated with the market regulators. It has huge implications for network providers, retailers, and a host of smaller players that want to be in the market too.

The networks are pretty confident of their future. Ron Stobbe, the head of SA Power Networks, who said at the same conference two years ago that he saw a future for networks, but not for retailers and generators, hasn’t changed his mind. “We (the networks) will be only ones around in 30 years to look after everything,” he said.

Jemena’s Adams agrees that there will be great change, and quickly too. He flagged new players, the Googles of the world, also entering the market in a big way. And, he added: “The current model of retailer and a network operator – that is not going to the model in five-10 years time.”

So, what do the non-network players in the industry say?

There were not that many at the conference, apart from AGL managing director Andrew Vesey, who is not afraid of saying that the future is uncertain, and admitting that the players in the industry simply don’t know which business model will succeed.



What is certain, Vesey told the conference, is that the “technology paradigm” based around large-scale generation and large-scale poles and wires is over. The Native Americans have a saying, he said: “When you are riding a dead horse, dismount.”

The problem, Vesey continued, was that while everyone was coming to the realisation that technology had made the fundamental business models dead and redundant, most people were spending most of their efforts trying to be the best rider of a dead horse.

And he used another quote to illustrate that point, and the situation that utilities of all types find themselves in: “Change takes a long time to come, but when it does, it happens too quickly.” And, it appears, that’s what the networks just figured out.

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22 Comments
  1. Phil 3 years ago

    The rooftop solar was NOT my customer story. The grid itself and it’s management was.

    I went 100% off grid due the Unreliability of the network (as low as 97 % uptime) .And the unkempt meter reader with no visible I.D that entered my property to read my meter on multiple occasions.The staggering thing was that this was a Government Owned Corporation subcontractor . (Queensland Government – Energex) who is totally unable to control this situation as they clearly told me when i complained many times over many meter reads.

    I had an epiphany that day that this entire electricity grid industry in Queensland Australia treated their customers as doormats

    So i went 100% off grid 3 years ago and never looked back as it has less cost , 99.9999 % uptime and is environmentally far more sustainable.

    For the industry to now say they respect the customer will be a very hard story to believe by people such as myself who have experienced these shocking service levels of Multi Billion $ corporations with a free electricity network the public purse paid for.

    • DevMac 3 years ago

      The way business works is that they ‘respect’ whatever it is that will ensure their profitability. The fact that the pendulum has swung towards the customer again means that there’s been some kind of disruption that has given the customers a larger range of choices, meaning that whoever wants to survive must ‘sweeten the deal’ with the customer.

      The customer must take the opportunity with both hands, because the pendulum will eventually swing back the other way.

      • solarguy 3 years ago

        Too right. They want our solar made storage cheap as chips. Time should prove me right here!

      • david_fta 3 years ago

        We use about 16-20 kWh per day, of which our panels might generate 80%.

        We could buy a dedicated battery, or we could buy an EV. I’m told a Tesla 3 might have ~55 kWh.

        • Diego Matter 3 years ago

          You can easily drop that to 10kWh/day.

  2. Ron Horgan 3 years ago

    So the distribution network which has been overcapitalized in recent years is likely to become a stranded asset, and the owners are not happy about writing down the lost value.
    The electricity offers of a simple fixed price for the supply of power and unlimited power without further cost ( as much as you can eat!) may be an attempt to maximize the value of the network by “giving away” the electricity for free.
    This may result in the network being floated as a profitable investment and sold off to small investors.
    If they come calling with this proposition , loose the hounds.

  3. Stan Hlegeris 3 years ago

    Meanwhile, the networks have made enemies for life among the best-informed and most capable among us.

    Their new and enlightened business model assumes enough of their customers are sufficiently apathetic and forgetful to imagine that the networks won’t find new ways to abuse them.

    • MaxG 3 years ago

      This is actually spot on! And I was thinking how many more times do people want to be screwed by the same corporations; why I left — not with me 🙂

  4. john 3 years ago

    {Rooftop solar, once seen as a pest, a nuisance and an expensive indulgence of inner city latte-sippers.}
    I so remember this statement meanwhile in fact the major take up of roof top PV were not higher income inner city latte-sippers but outer suburban lower income tea drinkers.
    The advent of solar has turned the bell curve of demand into a duck tail curve now with the implantation of storage the tail now the highest demand area is about to be lessened.
    This has major implications for the networks and more importantly the generators because they are not going to have those demands to upgrade networks and the generators will miss out on the $12,500 a MwH price gains.
    The stabilization factor is acknowledged and once storage becomes common place ever more so.
    Where do the network and retailers come into the picture?
    Well obviously get into supply and support of storage is my answer.
    For the network being able to switch on storage in bulk to get over peak demand will lesson load and for the retailers they need a future so they had better get into supplying storage are my thoughts.
    In the interim a very retrograde step would to be to try to implement demand charge connection this will result in total loss of client.

    • solarguy 3 years ago

      They will offer you storage and solar if needed but, at a cost you won’t like, once you do the numbers you will think, that isn’t that great an offer. What do you think they will offer you for your stored solar at peak and critical peak times and keep in mind that you will pay for the infrastructure.

      • john 3 years ago

        In New Zealand we already have a business model lets us have a look at http://vector.co.nz/electricity
        Now they did offer a battery system that they maintained and yes had the ability to use to augment the grid in the evening period where high demand happened or at other times when there was an outage the rest was for the householder to use.
        I feel the network or the retailer will supply the storage with an agreement that they have right of use as outlined above and the rest is for you to use.
        You will be paid at a reasonable rate above normal cost of supply, when they utilize storage and the consumer will pay for the storage system over 5 or more years.

      • david_fta 3 years ago

        If they offer you storage and solar at a price you won’t like, then maybe there’ll be a business opportunity for others to undercut them?

        • solarguy 3 years ago

          Have you heard of collusion, they could do that, the monopoly you get when it seems there’s competion.

          • david_fta 3 years ago

            Probabably does happen, but it may not always happen. Every now and again there’s an attempt at disruption.

          • nakedChimp 3 years ago

            They just need to cripple competition enough to be no real competition, but a mere alibi function.
            And that’s completely in their reach.

      • Pfitzy 3 years ago

        There are presently two models.

        Flat Rate e.g. GridCredits100 = $1/kWh. I’m on this at the moment but don’t expect it to be a long-term thing as the customer base grows. Still a bit of a risk for the generator.

        Market Spot Rate: whatever the market offers. This is probably the long-term placement for the market, as it offers flexibility – and the user controller software can make the decision.

        The networks will probably go into battery installations reasonably hard – Origin, EnergyAustralia, etc are already there. But they’re going to still have a large base of installers to compete with including Bradford Solar whose billboard I saw the other day, and local guys like Natural Solar, SolarHub, etc.

        The pricing I’ve seen for the networks is still slightly on the high side compared to the smaller guys though. Like Telstra, they’re trading on reputation more than anything.

  5. Ian 3 years ago

    Conference talk is cheap. Until we see proper recognition of solar’s benefits with solar -promoting tariffs then nothing has changed. At least the electricity industry is in the contemplative stage of quitting fossil fuels. Batteries are still the big unknown, most think we are on the cusp of a future with incredibly cheap and plentiful batteries. The general tenor of the article is of a stirred hornets nest or the sense of direction of headless chooks. They just don’t know which way to hedge their bets. To clarify a few things for the industry they need a road map.

    This is what we need for a renewables future1. Use of all renewable resources with minimal impact on the environment 2. Rapidly phasing out the use of fossil fuels liquid, solid and gas in electricity production and for transport. It’s as simple as that.

    (Quitting an addiction – like smoking – is a good illustration of the electricity industry quitting fossil fuels. 1. The precontemplative phase. 2. The contemplative phase 3.Preparation. 4.Action 5. Maintenance)

  6. solarguy 3 years ago

    And be prepared for them to argue for ultimate control of your storage, because without that their business model is f..ked.

    • david_fta 3 years ago

      What – your networks control your Tesla?

      • solarguy 3 years ago

        If it’s connected to the grid on charge and they need power, well could be yeah.

  7. Peter Castaldo 3 years ago

    Ausnet and jemena are both providing a horrible quality of service for solar installers. They even wanted one of our customers to pay for the repair of the Ausnet transformer before they would permit the solar install.

  8. Jerry 3 years ago

    The thing that ties them all together is storage. Energy storage has no enemies and certainly benefits both sides of the discussion. This is where a lot of the money should be going. And there is plenty of innovation out there…. sometimes really out of the box stuff
    http://oilprice.com/Alternative-Energy/Solar-Energy/Flower-Power-Takes-On-A-New-Meaning-With-Pollen-Batteries.html

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