Late last month, I had the opportunity to meet with the NSW Minister for Resources & Energy, the Hon. Chris Hartcher, as well as his senior advisors on energy and renewable energy to discus various issues facing residents of NSW, and western Sydney in particular, around solar and it’s impact upon residents.
The meeting not only allowed me to voice concerns over the lack of support NSW residents, who have installed solar under net metering, have received from their electricity provider’s, but also gave me the ability to openly discuss opportunities to obtain better outcomes for NSW residents through supporting the energy sector to invest in solar and related technology.
Issues covered during the meeting included:
- The current lack of financial benefit many residents find after installing solar under net metering, as they often have taken out personal loans or extended their mortgage to pay for the system then find that due to them having to work long hours they do not have the ability to utilise the power their systems generate and have to pay full tariff for the power they consume outside of daylight hours and during peak demand times.
- The growing call for a ‘parity’ net metered feed-in tariff for NSW through the Campaign For A 1-for-1 Solar Feed-In Tariff http://www.communityrun.org/petitions/campaign-for-a-1-for-1-solar-feed-in-tariff-1 .
- The opportunity for residents to utilise more of their own power through the introduction of residential battery storage and how this could significantly reduce electricity costs for residents, especially through programs similar to what Vector Energy is currently offering in New Zealand.
- Opportunities for the distribution network to restructure their operations to accommodate solar and storage and provide savings for the community as well as ensure profitability of the distribution network.
- The potential issue of the lack of maintenance to existing solar systems which were installed under the Solar Bonus Scheme, noting that many of these systems were installed near the closure of the scheme and were rushed as well as using many components from overseas, which did not have the long lifespan of many of the materials utilised today. This would not only generate a threat to existing solar generation infrastructure, but could result in serious safety concerns for residents who try to identify & remedy issues with their aging systems.
The issues facing NSW and the electricity sector when it comes to solar are varied, but the overriding issue which I came away from the meeting was, that to get widespread penetration of solar into the market it must not cause any financial burden for NSW residents or the government, i.e. tax payers. Therefore we must put aside all the arguments about environmental sustainability, carbon reduction, etc, and focus on the one issue which affects everybody in NSW, that being the economic issue of electricity supply and price.
Focussing on the issues which were discussed; It was clear the Minister understood that the current net metered scheme does not support all those who have installed solar, or who want to, and that any increase in feed-in tariff’s (FIT) would be welcomed by those customers and could be justified given the debt most of these have incurred from purchasing and installing their systems. But it would impose an unjust impost on the rest of the NSW electricity user’s by imposing higher supply tariffs, which could not be justified. I am awaiting his formal response to the issue and hope that the idea of a minimum ‘guaranteed’ floor price for all customers, who have net metered systems, is given serious consideration by his office.
Second, with regard to the issue of storage it was again clear that the Minister, and his advisor’s, were well aware of Vector Energy’s leasing scheme and serious thought was being given as to how such a scheme could benefit NSW residents.
Not only did we discuss the storage system being utilised by Vector, but also the Vanadium Redox Battery being developed by UNSW which the Minister indicated his office was taking a key interest in and which he recommended that I look into further.
I was able to discuss a potential idea for a similar leasing package for NSW residents based on a capital outlay of roughly $10,000.00 per storage unit (this was based on estimates I’d received from battery suppliers and was based on the retail price of a unit), and was aimed at supply through the energy distribution sector.
In dissecting my proposal one question was put to me, which I was unable to answer, that being “Would a battery manufacturer be prepared to supply their systems through a leasing arrangement?”. This question came about as it was pointed out to me that the initial outlay for purchasing storage systems could adversely affect electricity prices for all customers if the distributor had to outlay the funds. Again it was pointed out to me that any innovation, such as residential battery storage, must be implemented with a preferably nil net increase in costs for consumers.
Noting this concern, and the feedback I received in the meeting, it dawned on me that if the industry is serious about introducing storage & solar to the network then the manufacturers of these systems need to work together to come up with a viable option to ensure there is no increase in costs for the community. Whether this be by offering to supply there systems through long term leases to the energy companies and thus consumers, or absorbing initial outlay costs to generate market penetration and drive demand, especially as manufacturing costs decrease.
They also must work with the energy distributor to identify opportunities to implement suburban storage and generation in conjunction with residential storage, i.e. how to convert substations to store the excess power from residential units for use during peak times and thus reduce the demand for energy from the grid.
If storage manufacturers do not have the capability to absorb the cost of supplying the batteries, etc, through leasing arrangements, perhaps they need to look for investment opportunities to fund such leasing packages.
If a storage system has a lifespan of 10 – 15 years, with a guaranteed monthly rental return, would the supplier be seen as a potential prime investment opportunity for an infrastructure fund, or superannuation scheme, which could support the initial outlay of supplying the storage systems to the market? Would this generate penetration into the NSW market?
Finally, we come to the issue of maintenance. As part of my proposal I suggested that any leasing package provided by the energy distributors could include a component for an annual inspection of the residential solar array and storage system.
As most people interested in the developing issues of solar in Australia are aware, that towards the end of the Solar Bonus Scheme (SBS) there was a rush of installations and that some of these installations were not done properly. On top of this a lot of the systems which were installed at this time contained potentially inferior components with limited lifespan.
The issue, what happens if these systems fail? Who is responsible for the maintenance of them noting a lot of the installers who were operating at this time are now defunct and out of the industry.
Is it up to the owner to inspect their system, and identify where repairs are needed? How do they identify that connection cables are damaged, etc? What is the risk to the home owner for injury, or damage to their property?
How do residents identify that their system is nearing the end of its lifespan prior to it ceasing to operate, and what happens to the network as these systems come off line?
Recently a major electricity retailer operating in NSW was forced to enlist the aid of a leading Sydney solar installations provider to rectify numerous systems which the energy provider’s customers had purchased, and installed, through them and had experienced serious faults. Surely this highlights the risk facing the community if no inspection regime is in place.
A proper annual inspection, as part of a leasing package, would ensure the viability of those systems which are part of the package and provide security to the customer, but also secure electricity supply from these systems for the rest of the community.
I’d like to point out that the comments, and idea’s, posed here is my personal interpretation of my meeting with the Minister and his staff. I would also like to point out that I am firmly of the opinion that if industry can come together and put forward a viable option to implement residential storage, with solar, into the grid which will not impose an increase in costs for the wider community then the Minister’s office would give it serious consideration.
If the industry can come up with a viable solution to funding battery storage implementation into the NSW market the potential for rapid growth in the area is clear. It also appears clear that once storage enters the market in volume, then the returns to the industry over the long term will be significant as the costs reduce thus allowing investment in newer and better technology as the market continues to grow.
All it will take is the bullet to be bitten on how to deal with the initial outlay of supplying the battery/storage system and then we will be entering a golden age of energy supply in this state. There is the potential for all NSW residents to invest, through their super funds, in valuable infrastructure which benefits the state and provides a stable platform for continued growth to meet the State’s growing electricity needs as our population increases and our economy grows to meet the continuing demand.
I’d like to thank my local Member of Parliament, Ms Tanya Davies, who managed to arrange the meeting with Mr Hartcher and who has supported my efforts in dealing with the whole solar issue since the closure of the Solar Bonus Scheme. I’d also like to thank the Minister, and his staff, for their approach to our discussions.