Networks fret over threat of mass grid defections

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Networks push case for tariff changes, arguing that houses with rooftop solar getting generous “cross subsidies” from non solar users, and suggesting that cost of going off-grid is more than 5 times the cost of staying. But what if they are wrong?

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Australia’s electricity networks are becoming increasingly nervous about the threat of mass grid defection and the prospect of significant write-downs in the value of their assets in the coming decade.

The growing popularity – and significant price drops – is challenging the incumbent networks to radically adapt their business models. Most agree that it would make economic sense that the grid is not discarded, but used to incorporate the new technologies.

But the fundamental difficulties for the current grid operators is how to price their assets, and how to justify and get a return on their massive investments – particularly in the last five years – when consumers may be presented with a cheaper option; to quit the grid, or use battery storage to significantly reduce their reliance on the grid.

Numerous studies have pointed to the fact that within a few years, individual households and some businesses may find it cheaper to quit the grid. Research groups have suggested networks may have no choice but to write down their assets. The industry talks of massive “disruption”.

Professor Ross Garnaut on Thursday weighed in with a prediction that the “creative destruction” of established electricity networks would take four to five years to play through, the result of competing technologies and surging network costs that would “overwhelm” the regulatory inertia of the existing pricing model.

“We’d see that happening through the 2020s, through the next decade,” he told the AFR before a speech to be delivered in Melbourne.

Hence the need for the network lobby to begin vigorously defending the grid, and to push for changes in network pricing as the proliferation of rooftop solar accelerates.

The Energy Networks Association on Thursday released a study highlighting what it says are the “hidden values” of the grid, and to point out the cross-subsidies it says exist not just with solar PV, but with air-conditioning. The idea is to push for changes to the tariffs to allow more fixed charges – a move some analysts have suggested could be perilous.

Still, this is the ENA argument. It hired consultants Oakley Greenwood to crunch some numbers on the uptake of solar, how it is used and its impact on the grid. Currently, there is more than 3.5GW of rooftop solar that accounts for nearly 2 per cent of all electricity demand, with around 4,000GWh of production. By 2022/23, this is expected to jump more than three-fold to more than 14,000GWh, or 7.5 per cent of demand from the National Electricity Market.

This is having, and will have, an impact on pricing models for the grid. The operators argue that a network with fixed costs cannot continue to try to get its money back with tariffs that are based largely on the amount of consumption. Critics argue that they shouldn’t have charged so much in the first place.

Hence the ENA focus on the “hidden value” and the cross subsidies. Hidden values include back up services, at night, start-up power services (you need a lot of power to switch on some appliances), balancing and quality. It also cites market access, but given that the average household with a rooftop solar panel will get just $93 a year from exporting nearly half its solar power back into the grid, that is not such a powerful argument.

network graphic

ENA chief executive John Bradley says connected solar customers provide benefits of up to $10 per month by assisting in deferring network investment, but they also receive $69 per month in value by staying connected to the grid because they retain a backup supply ($61 per month) and are able to sell surplus energy ($8 per month).

And because the tariffs are currently based on volume charges, which don’t reflect network cost drivers, a grid-connected customer with solar is effectively receiving a cross subsidy of $98 to $163 per year.

To further underline their argument, ENA notes that the Oakley Greenwood analysis suggests that the cost to a suburban family of leaving the grid would be five-to six times greater than sticking to it.

It puts the cost at $56,000 a year – including solar 4kW of solar panels, 67kWh of battery storage, balance of systems costs and a diesel generator (really?!). It suggests that the cost of having enough power to run enough air-conditioning to cool the lounge room, master bedroom and possibly one other bedroom or study – would cost about $72,500 inclusive of GST, with 6kW of panels and 96kWh of storage.

Here are their calculations of the first scenario.

ena offgrid cost

Now, it is clear that many will dispute those figures, and RenewEconomy looks forward to the discussion we hope will follow.

The Oakley Greenwood scenarios, for instance, are based on 14kWh consumption a day for the average household.

Glen Morris, from Solar Quip, says he quotes $3,000 to $6,000/kWh/day for houses going off grid, depending on how much redundancy they want built in. He says energy efficiency should get the average all-electric family down to 7-10kWh/day, which suggests a median price range of around $40,000. Others quote lower, he says.

It doesn’t really matter whether they are right or wrong, what matters is what happens when it is cheaper for an individual consumer to quit the grid or stay. UBS has suggested that time may come as early as 2018; the CSIRO says it might occur by 2030 (give or take a decade), some say it is already the case now.

The ENA does not seem to have a ready answer, and this is where Garnaut’s prediction of “creative destruction” becomes crucial.

“There is a lot of talk about people going off grid,” Bradley told RenewEconomy. “We think that while you could theoretcially go off grid now, it’s bit like having a computer without the internet.” It may make sense in regional areas, as some networks suggest, but not in major towns and cities.

Basically, the ENA is pitching a sales job on the value of the network, as an individual good and as a societal good. RenewEconomy agrees, but only if this good is priced right. If the individual finds more value in going off-grid, a scenario that Oakley Greenwood and the ENA don’t appear to accept, then the concept of a societal good becomes tricky.

That’s when the battle over tariffs will get really interesting. At the moment, the power, so to speak, lies with the incumbents, and they are seeking to use this to frame the tariffs of the future. (Bradley, for the record, said he had no knowledge of any network operator pushing for network charges to be imposed even when not used, as per sewage).

But in the coming years, as more solar PV and battery storage is added to households, that power balance may change.

As one industry analyst observed. “These questions are fairly difficult to answer and as usual there are so many vested interests.

“For the time being, I think the focus should remain on getting as many houses and factories with solar on them as possible, add in the storage. After the consumers have got, so to speak, all that power at their disposal we can have a discussion about how best to allocate it.”

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  1. juxx0r 5 years ago

    If we need to survive five days straight of no sun and then have to use the generator, we won’t have to worry about where to get the petrol from, it’ll be the zombie apocalypse that will be more urgent.

    • adam 5 years ago

      Sorry, ENA forgot to mention the test site was in Reykjavik.

      • Chris Fraser 5 years ago

        Great work Oskaar ! No doubt the natural beauty of Iceland (on longer days) makes up for all of it ?

  2. Leigh Ryan 5 years ago

    Well this is moving from a debate to total war, the utilities, the retailers, even the coal miners will do whatever they can to maintain control over electricity, sooner or later they will be joined by the gas companies who will also be thrown into the battle due to rising gas prices, and consumers converting to all electric housing, not long after that the oil companies will be seeing society converting to electric cars and they too will side with the dinosaurs to protect and maintain their profits and control, this horse and buggy brigade will apply pressure on the politicians to install legislation and regulation to protect their industries, the common good will be least on their minds this is when politicians will either have to become dictatorial and Orwellian or bend to the will of the people and allow the old to pave way for the new, every politician in this country should recognize that the people have already made their choice, they can come with us or pass into history with the dinosaurs.
    One can argue the semantics and the economics of the renewables debate but that is all they can do, the tide has turned and whilst we will rely for some time on coal and probably nuclear, domestically at least the people have made a choice and any politician working against us will find himself looking for work, probably in Oil or Coal, because no one else will want them as they fail to perceive the future for industry in Australia is in cheap even free energy taking a massive burden off manufacturing, agriculture and mining.

    • Miles Harding 5 years ago

      I like running an electric car….
      Charge off PV at home and only visit petrol stations to air the tyres and buy their loss-leader bread and milk occasionally!

      There is only one way for the retailers to win and that is to meet their customers needs and desires. They must be the best show in town if they want record attendances.
      Ironically, attempting to corral their customers will only lead to increasing numbers jumping the fence and going feral.

  3. Alan Baird 5 years ago

    When the debate first started (before there was much roof solar) the obvious subsidy was to the networks ramping up to cater for all the air conditioners being installed at the time. One lot of consumers was dragging from the grid in the heat of the day while the other was supplementing it. Now the networks are wailing.

  4. Miles Harding 5 years ago

    Should we be looking at this along a sliding scale:
    -1 Do absolutely nothing and don’t complain.
    0 Do nothing except consumption minimisation
    1 Grid tie PV
    2 Grid Tie PV + Grid tie battery
    3 UPS PV + Battery + inverter (grid as backup)
    4 UPS PV + Battery + inverter (generator as backup)
    5 UPS PV + Big battery + inverter

    Some other variations such as battery and charger or wind etc are possible, but I have assumed an urban renewable aspect.

    Which option we may choose depends on a number of factors, among which is the behavior of the electricity suppliers. If they are going to be unhelpful jerks, which seems to be the case in QLD at least, the choices will be biased towards options 4 or 5 and a grid defection ensues.
    If they get on-board with their customers aspirations, options 0,1,2,3 will be more likely in the near term and they will have a viable business.

  5. Vincent Selleck 5 years ago

    Thanks Giles for your excellent reporting and astute analysis. I read your reports every day.

    I just met with a client who has 5kw of solar on their roof and wants to go off grid now. They are prepared to cut their usage and monitor their energy use to achieve this and we have just quoted them $8785 for 12kwh of battery storage and inverter/charger system. They will camp in their home if necessary to achieve this whenever there are prolonged periods of low solar production. They hate the network and their retailer and are going to vote with their feet now. We can double up the storage for less than the above price. $20k in total investment would also buy a reasonable generator which can be on auto switching. The cost of the batteries over their lifetime is 16 cents per kwh.

    There is a big shock coming to the network sooner than later. If they think they can just increase network costs to make solar uncompetitive on kwh rate they are going to drive more people out of the network. Giving solar producers 6 cents for export and then charging them 31 cents to buy their power back has people fuming. It is just not fair in their minds. If the network wants solar producers to stay in they had better value their contribution more.

    Putting a cost of $50-70k to go off grid – per year – is ludicrous. It can be done for $20k upfront and about $2k p.a. for maintenance.

    The revolution has begun!

    Vincent Selleck

    • Miles Harding 5 years ago

      Good one and for having a brave customer!

      Note link is

    • Peter Castaldo 5 years ago

      Great price for the system but looks like a $6 a day service charge that’s compared to a $1 a day charge if your grid connected. They could increase network fixed charge almost 600% and it would still be better. You have got to hate the network a lot to go this path at the moment.

      • Vincent Selleck 5 years ago

        Hi Peter

        I may have overstated maintenance costs. Battery replacement at today’s prices in 8-10 years is only $2688. Batteries are only going to come down in price. The electricity savings are:
        Solar used by
        residents @ 31 cents kwh year 1
        $1,900.92Plus network costs for service of $480
        Total savings $2380.92 p.a.

        This gives a 4 year payback on the add on inverter/charger and batteries.

        • Peter Castaldo 5 years ago

          yep I missed the best bit the savings on the power as well. As much as I’d love to go that approach I think just a small battery solution would be best, stay on grid and use it to take out the new peak in evenings after solar has diminished. I am speaking as a utilitarian though.

    • WA David 5 years ago

      If you look at the table presented, it suggests that the upfront cost is $56,000, not the yearly cost as was reported in the article.

    • Calamity_Jean 5 years ago

      What kind of batteries are they? Lead-acid or some other chemistry? I want to do the same in the US. I have a place for a wind turbine as well as solar PV.

      And tell your client they may be leading the way, but many hope to follow and will admire them in the meantime.

      • Vincent Selleck 5 years ago

        Hi Calamity

        German Gel Acid – Still the best bang for your buck.

        • Calamity_Jean 5 years ago

          Thanks for the information. I appreciate it.

  6. Peter Campbell 5 years ago

    I suspect many grid defectors are going to want to re-join the grid when they have an electric car or two to charge as well as running the house, unless they have a lot of north-facing roof.
    The way I see it, there should be no difference so far as the retailer’s fees are concerned between the household that halves its electricity usage by becoming more efficient or the kids moving out and the household that halves its usage by having some PV and therefore taking less from the grid.
    By all means send a price signal via time of use metering to all. Some will get batteries to shift their import from the grid and/or store their PV production.

    • patb2009 5 years ago

      actually EVs will enable defection, that big rolling battery lets you stabilize the home and provide big backup and smooth via V2H

      • Peter Campbell 5 years ago

        Perhaps for some if the vehicle is left at home a lot of the time. In my case our two electric cars tend to be in the car parks at my wife’s work or my work so not available at home to soak up any PV generation. It is the petrol car that is left at home. In the evenings we could use the spare capacity of the cars to take us through the evening peak then do a bigger off peak charge later at night but we would want the car’s fully charged again before the sun gets up.

  7. John P 5 years ago

    As I have just said in connection with Sophie’s article on this page, we quit the grid in 1992. But we were careful to build a house with high thermal performance characteristics and so a SAPS was not too expensive since we had a modest electrical demand. We actually did it in a rural situation where we could call on solar and hydro – at least until the drought started. (There were no rebates in 1992, but there were sales tax exemptions for any equipment used for domestic power production).
    If I were doing it now in suburbia I would first of all make sure that the building had the best energy profile possible. Then we would install a SAPS where the cost of the generator backup (genset and battery charger) would be invested in the appropriate number of additional PVs (they are now much cheaper than in 1992). In the worst of wintery conditions, if the extra panels are not enough, we would call up some simple demand management practices.
    The ENA model above in B.2. looks a little self serving to me. Any householder contemplating such a move will do as we did and reduce the load on power. With the aid of an experienced installer they could do a lot better than $56,800.

  8. Farmer Dave 5 years ago

    Here in Tasmania, with a renewables-only grid tantalisingly close, the situation should be seen differently. Here the grid should be seen as an important piece of community infrastructure (it is still owned by the Tasmanian Government, fortunately), and for people with their own grid-connected source of renewable electricity, the grid does genuinely act as a battery: if I export power to the grid, then some water stays up a hill that would not otherwise have stayed there, and continues to be available to generate electricity when it is allowed to run down the hill.

    The challenge for the Tasmanian Government is to keep the Tasmanian grid away from the death throes of those on the mainland and to maintain it as a very valuable community resource.

    • Peter Campbell 5 years ago

      The ACT has cheaper electricity than elsewhere since we have not needed the network upgrades that pushed up prices elsewhere. With a 90% renewable by 2020 policy I also see the grid as a community resource. The ACT is looking to lock in fixed prices for power from nearby wind and solar farms. Also, plenty with domestic solar PV would not want to disconnect till the end of their 20 year gross feed in tariff period around 2029.

      • Robert Johnston 5 years ago

        Peter, your electricity price is still regulated and publicly controlled, elsewhere its deregulated and just about fully privatised. Put two and two together as to your low electricity prices.

  9. Engineer Malcolm 5 years ago

    These guys have got to be joking. Fancy having a section of the report that talks about the grid providing the ability to sell excess energy generated, when the networks themselves have put up specific connection barriers to this for PV and also storage, especially in Qld. And doesn’t John Bradley know about the networks increasing the amount of fixed charges in their network tariffs ?

  10. Leigh Ryan 5 years ago

    Your numbers match mine Vincent, whoever the accountants & researchers are at ENA they apparently failed at maths or are deliberately deceptive, possibly in the hope of stopping some solar owners from looking at offgrid, if you don’t mind i am going to borrow your post, i might find you a customer or twenty.

  11. Stan Hlegeris 5 years ago

    Our family of three lives in southeast Queensland. We have a 10 kilowatt PV system and efficient appliances.

    Our maximum 24 hour consumption is 12kWh in June & July. We have never in 870 days so far had a day on which we produced less than our total daily consumption. This includes days on which it seemed to rain all day.

    This means we have no need to store more than our overnight consumption, which maxes out at 4kWh. So we make it 10kWh to have an abundant margin.

    The trick in all this is having plenty of production capacity. It’s cheap. Some of our production may be wasted, but that’s the modest price of avoiding the big expense of massive storage, diesel generators, and all the rest.

    Most people start with a huge overestimate of how much storage they need. This is the range anxiety of independent electricity. Start by thinking big on the production side and many problems disappear.

    • Pedro 5 years ago

      Stan I really agree with your system design, however it would not fit with current off grid design standards. 5 days back up to 50% SOC.

      Having double the average PV output capacity compared to average load makes a lot of sense. Panels are cheap and the STC rebate makes them virtually free. You don’t get rebate on the batteries and other components. With an excess of PV capacity I would be inclined to mount panels east and west at a 20-30% tilt. Have a battery capacity of 2 days max storage. When you have a prolonged period of cloudy weather use your common sense and cut your power consumption.

      The big advantage of minimizing battery bank size is that you dramatically reduce your battery replacement costs in 5-10 yrs time.

      How long have you had your system? Overall how would you rate its performance?

      • OnionMan77 5 years ago

        “current off grid design standards. 5 days back up to 50% SOC”
        That (US based) figure is a total waste for Australian conditions. If you install lead acid batteries for “5 days back up to 50% SOC” you are using your solar panels to charge the top 10% per day, the most inefficient part (95%-100%) of the charge curve. Battery manufacturers love to exclaim 80+% efficiency but it’s brain dead (lead) thinking: charging a 24V bank at 29v and using at 25v is an immediate 16% loss, “bulk” charge 95% to 100% is very inefficient “absorb” takes another 25% plus water loss and overheating.
        I have been off grid for 9 years and installed “5 days back up to 50% SOC” and a nightmare of maintenance. My average charging efficiency is just 35% due to pushing charge in mainly over 95% SOC and I have some 300 million data points to confirm, so every kwh I use overnight requires 3 kwh produced during the day. If 1kwh of petrol generator costs $1, that is $3/useful kwh.
        If you don’t know what size battery to get, aim for 2 days to 50% and really exercise the batteries for 5 years, rather than trying to make a bigger bank last 12 years. Me, I am going to LiFePO4 with 3 days to 20% – cheaper in the long run.

        • Pedro 5 years ago

          When I found out about characteristics of LiFePO4 I was well impressed. Huge charge and discharge rates, cycling to 80% DOD. Don’t know much about how the BMS works and the off grid inverters that I know most about don’t seem to cater for Lithium batteries very well at present.

          It seems the key to LiFe PO4 is a really robust quality BMS. I also like the idea of having multiple 5+ strings in parallel and being able to discharge one string at a time to build in further redundancy.

          • OnionMan77 5 years ago

            LiPo (used in very high drain fly toys etc) needs good BMS. Low drain offgrid LiFePO4 not so much. BMS is fail safe technology: 1 charge circuit relay opens on overcharge, but the PV charge controller should stop well below that voltage; and 1 discharge circuit relay to avoid catastrophic undervoltage, but again your inverter would be set to cut off well before the low voltage cut off. The other BMS function is cell equalisation but that’s a solved task to shunt small current around to keep cells at same voltage. Some hi drain EV conversions with LiFe just use initial bottom equalise with no BMS equalisation. A product like CellLog 8 works with manual equalisation.

  12. Greg Wilkins 5 years ago

    Has anybody done a break even study for the many electricity consumers that use very little power, so their bills are already dominated by connection charges? I’m thinking for example of almost every body corporate of almost every apartment building out there. Often apartment buildings have very little power usage other than lights and a vacuum cleaner once a week. Some do have lifts, pools and other amenities, but I think on average their power consumption must be small.

    Are there off-grid solutions available today that are cost affective to run the power needs of such users? Surely a small panel on the roof of most apartments with a good battery bank would be sufficient to run the lights over night? I’m guessing there are many such low consumption users and if they were targeted to leave the grid first that could start the spiral that is needed to make distributed power production more competative.

    • Peter Campbell 5 years ago

      I am treasurer of an owners corporation (aka body corporate) of townhouses. Our electricity costs are purely for lighting of the parking areas and footpaths at night. We have a 9kW PV system that puts as much into the grid by day over the year as we take out overnight. We got the last of the ACT’s gross feed-in tariff before it stopped for small systems. Our site is quite spread out so it would be very hard for us to do battery storage from our PV system. Indeed our grid connection is from 5 separate meter boxes and 5x the service charge is half of our costs, fortunately cancelled out by the feed in tariff. If we were doing it now with storage we would need to do 5 smaller PV systems.
      Blocks of flats are another matter. They frequently have a consistent steady load all day and night from lights in corridors and underground parking. They could do well to self-consume all day from PV with or without storing excess for the night.
      A big gain for apartment blocks would be to get rid of the 50W halogens that developers put in everywhere because they are cheap to install leaving the expense of running them to the owners corporation.
      A difficulty can be getting owners corporations to agree to spend money on the common property. Our OC had to try 3 times to install our PV against strenuous opposition from a minority. On the first two occasions (in 2009) we needed a ⅔ majority (special resolution). In some states it might be ¾ or even an unopposed resolution required. Those first two times we had majorities but not quite ⅔. Our experience and my submission to a review of the ACT’s Unit Titles Act resulted in s.23 of the 2011 Act. Now only an ordinary resolution (simple majority) is required to install sustainability infrastructure on common property and the process is much clearer.
      I agree that owners corporations are a significant third area besides standalone residential and commercial sites.

  13. Ken Dyer 5 years ago

    In some places around the world they are installing car charge points
    attached to electricity poles – another use for a centralised energy
    distribution system.

    The power companies need to start decentralising their power grids.

    Several councils in Australia are looking at developing solar farms that could
    easily be hooked to a grid in their municipal area, and residents would
    buy their power direct from the council, which in turn could buy and
    sell its power to adjacent local government areas. This would provide a migration path for the power companies to divest themselves of their assets in an orderly fashion, but
    retain their services model tuned to local government requirements.

    In computer terms, they should move away from the centralised server/client model to a local area network model. The elephant in the room is of course, the obsolete coal fired power stations and the cleanup required when they are finally retired.

  14. Rob G 5 years ago

    The door is wide open for a large scale battery storage provider to come and ‘steal’ the customers trapped in the grid. It might even take the form of 2 or 3 big batteries per suburb, then hooking them up to a network of micro grids. ‘You make the power and we’ll store it for you’. No where in that mix does a conventional utility fit in. And no where does coal or gas fit in. No wonder they’re frightened.

    • Jon 5 years ago

      “a network of micro grids”….Are you suggesting that someone will come along and build another network in parallel with the existing one? No, I think the existing utility network will do just fine. The idea of building microgrids and connecting them together so that they can sell power to each other is great for increasing diversity, but we already thought of that about 50 yrs ago and now we have the grid.

      • Rob G 5 years ago

        Not quite we can use much of the current infrastructure we just divide it up better. We have always thought of one giant utility supplying power down the line and paying them what they demand. Micro grids offer many advantages and are already existing in parts of Germany. Here are some advantages that they have: 1/ The can be owned by the community and enable sharing of self-made power. They store the power that is not used. 2/Unlike big utilities micro grids are smart grids they can distribute power up and down the line, with large utilities it’s all one way. 3/They offer more stability overall, if a large utility goes down for whatever reason then it can potentially take a whole city down, if a micro grid goes down it takes only a small area down (and potentially it’s neighbouring grid can take up the slack. 4.Micro grids balance power better, whereas a large utility produces excess electricity (mainly from coal) to offer ‘base load’ (a term that is now challenged) they cannot turn off and on to meet demand, but must run 24/7 and usually 120%+ over capacity. Wasteful and harmful. 5. Micro grids can use existing wires and have the advantage of growing a smarter network much like a chain of DNA. 6. Micro grids are locally owned and are not subject to big companies with only profits in mind, hence cheaper in the longer term. There are many more advantages but I think the case I present is more than enough to support something that will eventually happen. Google is already writing the software.

  15. Peter F 5 years ago

    One issue we all seem to be forgetting is thermal storage. My friend in Switzerland has a 2000 L water tank which is heated/cooled with a a heatpump system which provides all the heating he needs for a very large Swiss farmhouse/barn even in a cold winter. In the Australian case a 200-300L ice tank for summer (latent heat from melting the ice is much higher than heat from temperature change of liquid water) would serve the same purpose. As heating/cooling is about 1/3rd of demand this can significantly reduce need for batteries/gas or backup generators. My calculations show that with adequate thermal storage a 6 star Melbourne house could get through the worst of winter with 6kW solar and about 10 kW hours of batteries.

  16. WA David 5 years ago

    The table you presented suggests that the upfront cost in the study was $56,000, but in your words you state “It puts the cost at $56,000 a year”.

  17. lin 5 years ago

    If they run a fair grid, people will stay on it. Simple really.

  18. Peter Grant 5 years ago

    This reports assumptions regarding the calculated cross subsidy to solar customers of $93pa are suspect. As canvassed elsewhere on Renew Economy the stated network peak demand time of 4:30pm is later in the day than it would otherwise be due to the behind the meter effect of Solar. This report only appears to account for solar generation at the time of current peak demand, and the report states that the subsidy to solar would be even even higher at $163 if the peak was at 5:30pm – because solar generation would be less at that time. Behind the meter incentives to self consume will only increase as more systems are connected or reallocated to lower feed in tariffs – in this environment the the it is not the solar output at time of peak dispatch that is the primary saving to grid expenditure but the saving from not having to meet the alternative (higher and earlier) peak that would have be the case without embedded solar.

    The bundling of transmission and distribution into “network” charges is also extremely disingenuous coming from the ENA. Solar electricity traverses only a small section of the low and intermediate distribution network and so should not be charged for transmission services on a volumetric basis. It is also an extremely long bow to draw to say that the alleged benefits to solar customer for night-time consumption, balancing and surge capacity would justify a proportional (per household) allocation of transmission costs. Transmission is sized to peak – if there is any marginal cost to providing night time and ancillary services to solar customers – that is how it should be priced – marginally.

    The report also provides a novel way to “value” the electricity not sold to PV households. This is the kind of approach that is sadly typical of energy utility thinking failing to account for simple supply and demand economics of a post monopoly environment. Should we be charged for the “value” of foregone consumption or energy efficiency as well?

    The suggestion that solar customers might be willing to pay more for night time consumption because of its higher ‘value’ to them is the real screamer in this report. Inflexible thermal generators and low network losses have created an off peak ‘market’ for nightime electricity for over 60 years. Why should solar customers receiving low ‘market’ rates for solar feed in have to pay above ‘market’ rates night time off peak?

    demand on the g
    rid occurs at

    • Peter Grant 5 years ago

      Oops sorry for typos above.
      Finding the time of day of Annual Peak system demand in NSW is not straightforward.

      However, a proxy might be AEMO’s NSW price and dispatch at:

      Time Day System Peak dispatch in NSW has been:
      3pm on 30/1/08 of 12954MW
      4pm on 6/2/09 of 14106MW
      3pm on 22/1/10 of 13765MW
      4pm on 31/1/11 of 13786MW
      4:30pm on 30/1/12 of 11885MW
      3:30pm on 18/1/13 of 13787MW
      4pm on 16/1/14 of 11854MW

      So on average system peak dispatch has been during the half hour between 3:20 and 3:40 pm over the past seven years and never later than 4:30pm. This reports assertion that

      “The use of 4:30 PM in this analysis as the time of peak demand provides a realistic but slightly optimistic assessment of the value of rooftop PV.”

      seems factually incorrect and requires further justification. Do the network operator commissioning this report not know when NSW system peak occurs?

      It would also be interesting to see the basis for AEMO’s 50% POE for system peak being after 5pm.

  19. Steve Fuller 5 years ago

    It’s time that our welfare sector advocates spoke up about this issue.

    The crisis facing the grid operators over the next half dozen years can only portend badly for the most vulnerable in our society. Most people on low incomes do not have the resources to cover the upfront costs of solar and/or batteries and many do not have access to use their roof anyway.

    If there is a general migration off the grid or the creation of micro-grids in rural areas or even in cities the poor will need to be affordably catered for. This will require government intervention to prevent many people falling into ‘energy poverty’ which is already happening for some.

    These problems will be a challenge for our democracy.

    The grid has provided a public good and essential service until now.

    However, there are four big problems to be faced. 1/ The adoption of a laissez faire approach to the expansion of the grid and consumption (many people think that we should cater for anyone who wants to consume as much power from the grid as they like). 2/ The privatisation of generators and networks where they are now motivated purely by profit seeking and not the public good. 3/ The extreme complexity and opacity of the electricity system, its component parts, regulations, decision making processes etc. 4/ The inevitable but uncertain changes that will occur as a result of new technology and the imperative for carbon emission reduction.

    A vibrant democracy would be able to deal with these issues effectively and efficiently and in the interests of us all.

    Do we have what it takes? Or are the vested interests, including those of the individuals who want to go off grid, too formidable?

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