Renewable energy microgrids are the future

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There is a big shift happening for homes, and whole communities, to look after their own energy needs. Microgrids are the future, but what matters most is how network companies respond.

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Please see our stories, This northern NSW town could be the first to quit the grid, and Western Power to take small communities off grid with solar plus storage.

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When everyone you talk to about solar power, talks about battery storage too, you know the energy market is on the cusp of a big change. We often speculate what the future will look like, but what should the future look like? What should our energy market look like in ten years time, and how do we get there?

Three of our recent and current projects explore just that, with the community of Tyalgum in NSW looking to go off the grid as a community, the town of Newstead in Central Victoria looking to transition to 100% renewable energy, and a niche development of 80 homes and a commercial precinct in Bendigo, looking to be off the grid from day one. The common thread is that an efficient transition of our grid will require, you guessed it, new business models and engaged network companies.

There is understandably, a lot of excitement about battery storage. We have been known to get excited too (about Powerwall that is). But there is an artificial, unofficial debate raging about whether people will leave the grid with battery storage, or simply use solar and storage in hybrid mode, while retaining a connection to the grid. In some ways, it doesn’t really matter. There will no doubt be the committed 10% that leave the grid regardless of the cost, and no doubt there will be many others that simply want the comfort of battery back-up, or simply people that fall for the sales pitch.

What matters most is how the network companies respond.

If network companies respond to hybrid storage by shifting tariff structures (shifting the economic goal posts), they are really going to push customers to the edge. When assessing the viability of Tyalgum leaving the grid, we explored a number of scenarios. We found that network revenue could shrink from approximately $400,000 per annum to under $100,000, if the town transitioned to 100% renewables using solar power and storage behind the meter (i.e. hybrid solar and storage).

It would be understandable for a network company to want to claw some, or most of that back. If they tried to claw all of that back, the financial savings to the community of Tyalgum would drop from $580,000 to $265,000. Eeek! That would double the payback time and get the community seriously offside.

There was a sweet spot.

If the network company servicing Tyalgum dropped their revenue to around $250,000, Tyalgum could transition to 100% renewables, with plenty of storage to enhance reliability (about 80% self-sufficiency) and achieve a payback of less than ten years on their investment today. By 2020, it gets below seven years.

But this is not just an economic transition one, it is social too. One of the key themes emerging from workshops and dialogue in Tyalgum, was the need for a more transparent relationship between customer and energy provider, and an integrated energy service solution that helped address inequality across customers. Customers increasingly expect businesses to become meaningful, honest contributors, to community life. The days of set and forget energy supply are over.

As our projects with Renewable Newstead and in Bendigo develop, we will be working with local network companies to explore these tensions between our energy market history and future, and search for a constructive middle ground. Because if we don’t, we risk a chaotic, inefficient and expensive energy market transition.

Tosh Szatow is direct of Energy for the People.

Please see our stories, This northern NSW town could be the first to quit the grid, and Western Power to take small communities off grid with solar plus storage.

 

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4 Comments
  1. Ian 4 years ago

    With the advent of EV having battery storage of 40KWH plus and the possibility of rapid charging, the days of the ‘milkman’ delivering daily milk-and-bread electricity will be over, especially if the utilities continue to milk their customers during their death spiral. Families will be able to drive to the local shops, collect their staple foods and favourite snacks and quickly fill their car’s batteries to be used to power the home at night and to drive to work or ferry the kids the next day. If battery costs drop 80% as the article suggests, EV prices will likewise drop to the point where they become viable alternatives to ICE vehicles. If electric utilities do not respond to the EV market then entrepreneurs will create charging stations for them,possibly powered by solar and large battery storage. If the utilities continue to gouge the domestic electricity market with high connection fees and high KWH charges, people will simple connect their cars to their home network and use that stored electricity to supplement whatever solar and storage the house produces. Connectivity is almost certainly to become as plug-and-play and two-way as desktops, laptops, tablets and mobile phones are today. The analogy of buying electricity like one would buy groceries is intriguing. There would be no need to rely on the electricity network to distribute electricity. The EV will do that just fine. Roadside solar farm stalls, supermarket quick charging stations, electricity servos, cottage industries on-selling network electricity to friends and neighbours. The utilities won’t know how to plug the holes in their network dykes. On the one hand, electrification of private transportation will give utilities a market for their electricity but on the other hand they will lose control of their power to fix prices.

    • Mike Dill 4 years ago

      An 80KW battery pack that I could connect to my house will be enough to power my house for at least three days in the winter, when my PV panels are at their minimum. Almost all of the time, (along with 10 to 20KWH fixed storage), that would be enough to get me through a bout of stormy weather with no additional backup or emergency generator.
      I would have to get my car charged somewhere else, (like my work), but I could definitely go off-grid at that time.

  2. Les Johnston 4 years ago

    Microgrids will have a more clearly defined future when the off-peak electricity cost (driven by coal fired power stations being unable to shut down) is removed. Off-peak matches coal fired stations operations and they almost have no option other than to “dump” that off-peak power. A similar way of favouring wind power would be to have electricity pricing based upon lower cost on windy days. We don’t have that structure in place. So when will off-peak be displaced?

    • David Laloum 4 years ago

      Not true, the mechanism for pricing is there at the wholesale end, but energy companies are not exposing it to retail.

      A pricing system that exposes customers to.the real wholesale price is.what is.needed ( wholesale + margin). Some customers might scream when.they see peak hour pricing go.through the roof….

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