Network operators in Australia are starting to offer super-cheap rates to encourage consumers to switch their consumption to the middle of the day as part of a radical re-shaping of the industry to try and soak up the “solar sponge” and encourage yet more PV into the system.
South Australia Power Networks next week will present the final draft of its proposed tariff structure which will offer significant discounts that it hopes will encourage households to switch “variable” loads such as hot water heating, pool pumps and other appliances to the middle of the day rather than overnight.
The proposed cost for the “solar sponge” – to be offered between 10am to 3pm – will be just one quarter of the normal network tariff, and one half of the “off-peak” that currently comes into effect around midnight.
It is one of a number of initiatives being proposed and contemplated around the country as networks and market operators, and energy generators, consider the implications of the enormous amounts of rooftop solar being installed in Australia, and the impact it is happening on demand.
Small scale rooftop solar is being installed at record rates, will likely total around 2GW in 2019 alone and shows no sign of slowing down. And while it is sometimes labelled a problem, there is a growing acceptance that it is inevitable, and can be turned into a major asset to the grid.
Larger scale solar arrays are also being installed in industrial locations at a rate beyond even the most ambitious scenarios, and this is contributing to the so-called “solar duck curves” that hollow out grid demand in the middle of the day.
This has an impact on existing fossil fuel generators, who now have less demand to meet in the middle of the day, and on large scale solar plants who are now encountering lower prices at the time when their output is greatest.
Networks know that the uptake of rooftop solar will continue to grow, and so they should as consumers look to take control of their options with new technologies. Within a decade or two, nearly half the energy system needs will be met by “distributed energy resources”, which will comprise rooftop solar, battery storage, electric vehicles and demand management.
The networks are looking at a range of different options to manage and control the output of rooftop solar. Some are focused on time varying tariffs that would encourage batteries storage – but at different times of the day.
Others are focused on seasonal “export limits” that may impose restrictions on certain times of the year (such as mild but sunny spring days) when “operational” demand on the grid heads to record lows.
This is particularly topical in states such as South Australia and Western Australia, where “operational” demand is expected to hit zero within four to five years if no action is taken. The “seasonal” export limits may replace current absolute limits, where new installations are often restricted to a maximum 5kW output, or in some cases none at all.
- “To respond to the change in the residential daily profile, we propose to introduce a ‘solar sponge’ component offering a super cheap off-peak charge within the ToU (time of use) tariff for the time when solar exports are high,” SAPN says in a submission to the market regulator.
- “We are also proposing incentives and time clock adjustments to shift some hot water away from the 11:00pm spike in demand and into the solar sponge. This is more of a residential issue than a business issue.”
How it is implemented, however, will largely depend on if, and how, retailers pass on the new tariff options to their customers, and to nature of metering in households.
In South Australia, for instance, some 87% of households have so called “accummulation” meters, which make it difficult to switch the timing of hot water loads – although deals with retailers, new installations, and the increased uptake of rooftop solar should see the share of more flexible interval meters grow significantly over the next five years.
- “The intent is to change behaviour in a way that will benefit customers in the longer term by reducing the need for future investment in the network and better utilising cheap solar energy generated in the middle of the day,” says SAPN spokesman Paul Roberts.
- He said customers would have two windows of low pricing to schedule energy use (1am-6am and 10am-3pm). Many appliances these days can be set to operate on a timer, and electric vehicle charging also can also be undertaken in off-peak times if retailers offer a residential TOU tariff.
- “By encouraging more energy use in the middle of the day we will be able to facilitate more solar rooftop exports which increases the amount of low-price renewable energy available in SA, better manage the impact of solar on the grid and will favourably influence reducing the evening peak,” Roberts says.
“How do customers get rewarded? The off-peak charge between 1am and 6am will be about 9ckWh less than the peak charge and the 10am-3pm solar sponge rate will be about 12ckWh lower than the peak charge.
“Imagine having an EV that uses 4MWh per annum – much better to charge it in either of those two off peak periods (saving the customer $440 or $560 respectively per annum) and avoiding EVs being charged during peak periods because that would mean we would need more generation and grid capacity.”