Rooftop solar and storage – cheaper than subsidising old coal

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New analysis shows that governments would be better off supporting more rooftop solar and battery storage – rather than ageing coal generators – if they are serious about lowering prices and making the grid more reliable.

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Leading energy analyst Bruce Mountain says if governments were serious about lowering electricity prices for consumers, they would focus more on supporting rooftop solar and battery storage than seeking to subsidise ageing coal-fired power generators like Liddell.

Mountain, the director of Carbon + Energy Markets CEM says the combination of solar and battery storage is already cheaper than grid prices for most consumers in South Australia, and it would not take much effort or expense to make it so in other states too.

The federal government has claimed that forcing AGL to keep open the ageing and decrepit Liddell power station will lead to more reliability and cheaper prices, despite most analysts and energy companies saying it would do the exact opposite.

“If the federal government is determined to deliver lower electricity prices, it might focus its effort on ensuring that demand is more responsive to short-term price signals, and on making up the narrowing shortfall needed to encourage widespread uptake of distributed batteries,” Mountain says in a presentation to an energy forum in Melbourne.

“Such policies will not be difficult to develop or implement, they will require outlays many times smaller than those needed to build baseload coal plants, and will show results during the term of a government.”

The idea of using rooftop solar and battery storage (part of what is known as “distributed energy”) has been raised in numerous studies – by the CSIRO, by energy networks, and most recently by the Australian Energy Market Operator, which sees 40 per cent of all demand being serviced by localised generation and storage.

(See our story today about rooftop solar meeting 48 per cent of South Australia power needs on Sunday afternoon, sending grid demand to a record low).

AEMO boss Audrey Zibelman sees such resources as critical to not just lowering prices, but also creating a smarter, cleaner and more reliable grid than the system which now relies heavily on centralised generation and extended networks, and is vulnerable to catastrophic failure of equipment, storms and bushfires.

The government knows only too well the benefits of rooftop solar, and battery storage. Many politicians have rooftop solar in their homes and some like Malcolm Turnbull have battery storage. Yet none have ever chosen to champion this, instead promoting the technologies deployed by large corporations.

“One of the few constants in Australia’s energy debate is the fervour of politicians’ and administrators’ homage to the idea that electricity prices should be lower than they are,” Mountain says.

“That electricity prices have reached the level they have, suggests the homage has all too often been a camouflage for other agendas.

“For too long ideology and the protection of vested interests has lurked behind the apparent pursuit of “lower electricity prices”. The obsession with coal-fired “baseload” generation is an enduring manifestation of this malaise.”

He notes that the technology limits of the era required oversized and poorly insulated water heaters to be operated at night to keep inflexible baseload coal generators operating in the dead of night, when there was little demand.

But the viability of the coal fleet relies on its ability to operate continuously, but this is being threatened by the emergence of new cheaper technologies, such as rooftop solar, which cost around one sixth the cost of grid supplied electricity.

“It is no surprise that photovoltaics are now being installed at record rates not just on household roofs but also on farms and in businesses.”

This is now being accompanied by the plunging cost of battery storage, particularly those with lithium chemistries, whose cost curve is even more dramatic than that of solar PV.

MEF pres graph 1

“Rooftop solar PV is clearly much cheaper than the grid, but solar PV typically only displaces around 30 per cent of grid consumption for a typical house,” Mountain notes (see graph above). “Rooftop PV pays for itself in almost all cases with north or west-facing roof. There is also rapid growth in the commercial sector.”

The combination of battery and photovoltaics installed behind customers’ meters now promises to meet customers’ needs more cheaply than grid-only supply.

MEF pres graph 2

In South Australia, which suffers from concentrated electricity markets, dependency on expensive gas and structurally high network charges, this is already the case,

This estimate is supported by the local network operator SA Power Networks, which predicts the cost of solar and storage to fall to just 15c/kWh within five years – less than half the current grid cost.

The combination of solar PV and  Battery storage allows grid-independence for 70-100 per cent of consumption,” he says, although the optimal sizing of the two technologies would depend on many factors.

 

MEF pres graph 4

 

And Mountain argues that it soon will be in other states. This graph above compares the cost of a rooftop solar installation with battery storage, and grid only prices. With the costs of battery storage falling quickly, this equation will quickly change.

“The combination of solar PV and  Battery storage allows grid-independence for 70-100 per cent of consumption,” he says, although the optimal sizing of the two technologies would depend on many factors.

The issue with a growing uptake of rooftop solar and storage has implications for the grid operators, who have built a network on the assumption of growing demand and “many years of wasteful gold plating”, Mountain says.

They may have no choice but to contemplate write downs. “The biggest adjustment is needed where the networks are partially or fully government-owned,” he says.

“The challenge is not insurmountable but requires governments to take responsibility for their past mistakes. For the privately owned networks, asset write-downs raise legitimate worries about political expropriation and these would need to be resolved.

“If the federal government is really concerned to do something about electricity prices, yesterday’s heroes must be put out to pasture. Those calling the shots must drop the ideology and find the gumption to put the customer first in deed, not just in word.”

 

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62 Comments
  1. Dee Vee 1 year ago

    Why would anyone with Solar Panels and a battery sell their excess back to the grid at 5.5c when they are being charged 45c by the greedy energy suppliers.

    Time for those with the extra capacity send a “price signal” to the energy industry that they won’t be ripped off any more.

    • solarguy 1 year ago

      Mate, I’m getting 12.5cents FIT and I’m not using any power from the grid.LOL

      • Joe 1 year ago

        I’m with Energy Australia and collecting a tidy little 12.5cents as well.

        • solarguy 1 year ago

          Happy days!

        • Roger Brown 1 year ago

          Origin and the Newman Govt give me 51 cents / kWh till 2028 , I don’t mind sending half of my 3 kw system excess it pumps out daily . Sharing is Caring !

          • Joe 1 year ago

            Here in NSW we had 60cents Gross FiT but that ended 31/12/2016. Enjoy your 51cents !

    • juxx0r 1 year ago

      A better question is how do you rack up $400 a year in power bills with a 13.5kWh battery at your service and 5kW of panels. Hell $400 is more than my annual consumption used to be in kWh.

      • bruce mountain 1 year ago

        no, $11,000

        • Joe 1 year ago

          …that 10 year payback just shortened.

      • Greg Hudson 1 year ago

        $15k would be for a 5kW PV array AND the PowerWall (installed). That’s what I’ve been quoted, and will install in a couple of months.

    • Greg Hudson 1 year ago

      In Victoria we have a Govt fixed rate of 11.3c/kWh which includes ”implicit carbon price, network benefits and environmental benefits into the tariff.” See:
      https://reneweconomy.com.au/victoria-solar-feed-in-tariff-more-than-doubles-to-11-3ckwh-87581/
      I’m currently going through my last 12 months worth of power data (in 30 minute segments, downloaded as a csv file) so I can analyze how much I could save with a 6kW PV array, a 13kWh Tesla PowerWall2, and the 11.3c/kWh Feed In Tariff. Based on eyeball figures at the moment, I could reduce my bills by at least:
      5.9kWh($1.39) for midnight to 10am (battery would supply all power)
      4.9kWh($1.15) for 10am to 4pm (solar takes care of all usage, plus fills battery)
      3.3kWh($1.57) for 4pm to midnight (battery again supplies everything).
      A minimum daily saving of $4.11 Total System cost would be around $15000 so divide that by 4.11 = 10 years payback time.

      The ‘actual’ figures will probably be a lot less, as the $ values above look too small based on my power bills, which I have not double checked against (yet).

      Some variables to the above would be:
      1. Moving to a much smaller home (just purchased) with a North facing roof with no shadowing. (compared to no solar at current home)
      2. Higher cost to buy from the grid (up from 23c to 40c per kWh) just because I will have solar (what a ripoff)…
      3. FIT exports not included because I plan on getting a Tesla Model 3, and it would be charged during the day after the powerwall is full, or charged during off peak hours.

      If only I could figure out how to get Google spreadsheet to create a graph I’d be happy 😉

      • john 1 year ago

        Greg to create a graph click on insert, click on line, then
        right click on the graph on your sheet click on select data.
        You can increase the size of the graph to suit your data.
        I often include several columns of data and as many rows as needed.
        Use the first column as the date then your data.

  2. howardpatr 1 year ago

    Trouble is the dominant mix of RWandRNJs in the Coalition have limited interest in addressing the shorter term energy supply issues OR recognizing anthropogenic climate change and the renewable energy future.

    A lot could be achieved with energy storage before 2022 with sensible energy policy setting and some appropriate incentives

    How many of the pumped hydro sites identified by the ANU could be developed in that time if Joyce’s scare brain infrastructure fund had its attention put in that direction rather than the corrupt Adani proposed rail line?

    • Fabio Barone 1 year ago

      What is “RWandRNJs”? I understand RWNJ, but this one escapes me.

      • Kevan Daly 1 year ago

        Yes, I’ve wondered about RNJ and RWNJ.

        • howardpatr 1 year ago

          RIGHT WING and RELIGOUS NUT JOBs – people like Abbott, Joyce, Canavan, Bernardi and the list goes on of parliamentarians whose faiths teach them our planet was created about 6,000 years ago ; helps explain their aversion to science.

      • stalga 1 year ago

        “religous.” One of the guys here made it up.

  3. Joe 1 year ago

    The COALition now reap what they sowed going all the way back to the Howard years with their denial of the climate science. That they are now in power at a time of ‘energy prices crisis’, you just have to laugh. They never had an energy policy, still don’t have an energy policy…except to blame everyone and everything else from The Labor Party to Renewable Energy for the sticky stew that they now find themselves in. And the dopes still want to deny climate change by banging on about…. moooooore Coal, whether it be Scotty’s Lump of Coal, Liddell Coaler going until whenever, Clean Coal, HELE Coalers, Adani Coal. The COALition brought it all upon themselves. A price on carbon emissions will eventually come after this rabble pretending to be a Government are chucked out. The so called, self labelled great economic managers, champions of the free market have now gone full tilt ‘socialist’ with their interventions.I just can’t stop the belly laughs.

    • solarguy 1 year ago

      No, Joe old son their not socialists. Where in the hell that idea from?

      • Joe 1 year ago

        It was a spoof against The COALition and Rupert’s newsrags for their recent ‘socialist’ themed attacks on Bill Shorten / Labor. When Labor proposes to ‘intervene’ in the market it is bad ‘Socialist Labor’ at work again. But when The COALition ‘intervene’ in the market it is Strong Government, Strong Leadership, The Liberals standing up against profit hungry ripoff merchants in the other Energy Majors.The hypocrisy is laughable

        • solarguy 1 year ago

          Oh yes sorry, I’m a bit trigger happy, of course your being cynical. I’ve been fighting climate change deniers lately and fired a few rounds at the wrong target.

          • stalga 1 year ago

            Similar here SG. It happens occasionally to all of us.

          • Joe 1 year ago

            …just put me down as ‘collateral damage’.

      • Mark Roest 1 year ago

        Socialize the costs, privatize the profits — not at all the same as socialism for people.

        • Joe 1 year ago

          “Socialise the costs, privatise the profits”….it’s straight from our rent seeking Capitalist’s handbook and the FF Industry is of course… Exhibit A !!!

      • mick 1 year ago

        mate thinking about nationising liddel whiles belting agl for realistic forward thinking sounds like the antithesis of capitalism to myself

  4. Chris Fraser 1 year ago

    This will turn ‘energy-rational’ house design on its head – far in advance of any State-based energy savings design requirements.Future dwelling roofs are going to be very convenient places to collect heat, dispose of heat, and generate energy. Not just a place to bolt down a TV aerial. Just a moment, will we even need a TV aerial ?

    • nakedChimp 1 year ago

      Still building complicated roof shapes up here in the north, that make any roofer happy for the extra work he has to do and get paid for.

  5. solarguy 1 year ago

    Great article Giles and right on the money. The only thing missing is changes to the National Building code, so we don’t keep on building energy inefficient shit boxes! Added to that, efficiency of appliances like air con. If all a/c’s had a COP of at least 4, that would make a huge difference and any thing below that shouldn’t be allowed to be sold.

    Then along with other changes, we would only need 6KW PV systems and 10KWh battery systems on the average house.

    • stalga 1 year ago

      I don’t know about any Federal code, but ceilings and the west wall must be insulated in QLD at least. Also 4mm glass, instead of 2mm is mandatory in NSW and QLD. This has been in for several years now. One of the main problems not to lose sight of is the aspect issue. New homes are better than they were ten years ago IMO.

      • solarguy 1 year ago

        Still not good enough I’m afraid. Hear ya on the aspect issue, very important. Pages and pages could be written by me on this, just haven’t got the time.

        • stalga 1 year ago

          There’s always room for improvement. I was a plasterer, we often installed the insulation, if any at all. Man I’ve worked on some shit homes, the townhouses were the worst.

          • solarguy 1 year ago

            I’m sure.

    • Andrew Woodroffe 1 year ago

      Maybe apply a ‘capacity tax’ to all new a/c installs? The Reserve Capacity Mechanism in the West would suggest it would be around $111 (per kW input per year, say, an upfront tax of $500/kW). And the focus ought to be on the biggest load, the commercial sector.

      That might help people ensure they have adequate insulation and decent awnings on their west facing windows.

      • solarguy 1 year ago

        Taxes are big stick and don’t reliably make things happen. Performance standards can be legislated so that any company that doesn’t comply by selling A/C’s under COP 4 would be fined, I think may be a better tool.

  6. phred01 1 year ago

    Old power plants like our seniors need social security support in their old age

    • solarguy 1 year ago

      No, SEMTEX is the answer and sell off the scrap. I what to set the charges off, should be better than a punching bag. Oh yes baby!

    • Miles Harding 1 year ago

      Mouth full of dentures, callosotomy bag… , or whatever the power station equivalent is.

    • Ian 1 year ago

      No, you’ve got the analogy wrong. You cannot anthropomorphise the old coal plant and give it a pension or pay its medical bills or give it a publically funded burial. A better analogy would be to compare the old coal plant with toe nails that energy company needs to trim and discard, or a cyst that needs to be surgically excised.

      • solarguy 1 year ago

        OR SEMTEX, more fun!

  7. Ken Fabian 1 year ago

    And if domestic solar and storage is cheaper than subsidising old coal, larger scale solar and storage, with the cost advantages with scale, should be also and more so.

    • Catprog 1 year ago

      Except for grid costs.

      • Ken Fabian 1 year ago

        I think grids will continue to serve useful, even essential roles – requiring some agility and innovation, surely. Storage and distribution could well become the primary functions of energy companies of the future

  8. Ken Dyer 1 year ago

    Neither major political party has a record on renewable energy of which
    it can be proud. A few individual politicians have been active, but the
    parties, as institutions, have notably failed to provide leadership.
    This is partly a function of the inordinate influence that minorities
    with unrepresentative economic, moral and social views exercise through these
    parties’ factional systems. But it is also a failure of leadership.

    The Coalition has been in office for four years. In July 2014, they
    repealed the carbon price that Labor had introduced. Many people would
    now ask why energy prices have kept increasing in the three years since
    this repeal. In a mid-August Essential poll, 59% thought they were
    paying a lot more for electricity and gas than two or three years ago.

    In February, 45% in an Essential poll said that recent blackouts were mainly due to failures of the energy market, 19% blamed privatisation and just 16% blamed renewables.

    In mid-August an Essential poll gave the Coalition a net -34 rating on providing affordable and reliable energy, their worst score from a list of 12 issues. In last week’s Essential, 49% blamed private power companies most for rising energy prices, 22%
    blamed the Turnbull government, 9% environmentalists and 5% renewable
    energy companies.

    This is an absolute failure of leadership. Australia deserves better. The Coalition should be comprehensively voted out at the next election – they have ruined energy in this country.

    • stalga 1 year ago

      Did you see the Essential poll a few weeks ago? Only 5%of voters have confidence in the govt to deal with the energy transition.

      • Ken Dyer 1 year ago

        Well there you go! As Abraham Lincoln said: “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”
        That means that 5% of people are being fooled ALL of the time, and 95% are NOT fooled.

        • JonathanMaddox 1 year ago

          “Jacques Abbadie should be credited with the interesting precursor statement in French. QI believes based on current evidence that Abraham Lincoln probably did not employ this well-known adage.”

          https://quoteinvestigator.com/2013/12/11/cannot-fool/

      • Joe 1 year ago

        Ah, our Federal COALition leading the ‘Energy Transition’…back to Coal.

  9. lin 1 year ago

    To the federal “government”, profits for their mates are a far higher priority than cheap power for voters. And their mates seem to be concentrated in the minerals (coal) council.

  10. Rebecca 1 year ago

    Congratulations on a great article, how come everyone else & the experts realise the benifits of cheap green power. But when it comes to our elected politicians, they work not for us but the total opposite, they continue to make our lives difficult. The costs associated with living are out of control, wages are being eroded by corporations. We the taxpayers continue to keep their, wages above inflation & apparently expect very little in return, because that is exactly what we receive.

    • solarguy 1 year ago

      Well we have an unlimited capacity to pay don’t yo know.

  11. Ian 1 year ago

    Solar batteries quite clearly provide energy security to households and reduce the impact of household solar on the grid. The prices of batteries are improving but still make up the bulk of the cost of solar plus storage systems. With new battery manufacturing coming onstream, the time to subsidise home batteries may be now. The method of providing solar battery subsidy would need careful design but the graph in the article gives us some good clues as to the amount of subsidy required to nudge widespread uptake of solar batteries.

    Firstly, though, the estimated annualised cost of batteries is too low. Looking at the graph suggests to me that a service life of about 10 years is assumed, this may well be true, but 10 years is too long for most people to pay off an electrical item. 5 years would be more realistic.

    The difference between PV and solar vs the grid as presented in the graph is $1673- $1389= $284 . The subsidy should be $284x 10 years $2840 for the 13.5KWH battery.

    If you shorten the payback time required for the battery to 5 years , the annualised cost of the battery component will double to $1233×2= $2466, the difference between PV+solar vs grid would now be $284+1233=$1517. Multiply by 5 for the practical life of the battery $7585

    Looking at the two calculations $2800 looks perhaps too low to accelerate uptake of battery storage and $7500 looks too expensive a subsidy. Maybe something in between.

    The next thing to consider is the number of installs a year to create a self-sustaining supply industry. Victoria installed 26500 rooftop solar systems in 2016, maybe an initial uptake of 1 in 10 at the lower subsidy figure = 2650 systems.
    Total cost 2800 x 2650= $7.4million
    Total storage capacity= 2650×13.5KWH=35MWH

    The much more generous subsidy of $7500 might result in nearly all new solar installs including storage:
    $7500×26500=$200 million
    Total storage capacity= 26500×13.5=360MWH of storage

    The lower figure is quite affordable and will allow a very modest uptake of rooftop solar.

    The higher figure could overwhelm the ability of the industry to deliver but is still an economical use of public funds.

  12. Tom 1 year ago

    Perhaps in exchange for providing a subsidy for your battery, the deal is that your battery contributes to FCAS.

    It is subsidised if you have an inverter that can be remotely managed by the grid operator to discharge or to recharge for seconds to minutes to stabilise the grid’s AC waveform.

    • Ren Stimpy 1 year ago

      Spot on. Higher FiTs for solar owners who have batteries on the smart network for use in (loss-less) load shedding during emergencies and for FCAS.

    • Rod 1 year ago

      Pretty sure that is how the AGL VPP is structured.

      • Joe 1 year ago

        But haven’t AGL now pulled the plug on the VPP ?

        • Rod 1 year ago

          On hold to investigate new options in tech.
          Given there were only 60 signed up at the time of the Jay v Josh bout and 100 when they put in on hold, it could be a fizza in its current form.

          • Joe 1 year ago

            Such low numbers signing up is unbelievable. I would have thought people would be climbing over each to get involved. Perhaps the constant bagging of SA and renewables from Two Tongues Turnbull and his hand puppet Joshie have frightened the punters away.

  13. Cooma Doug 1 year ago

    The wholesale market we have now will not recognise the energy security solutions in the pipeline. It was designed for base load systems. But we must also recognise that available energy now has modern technology characteristics.
    The energy is the primary asset of course but just like any other product, it now has delivery, efficiency and standards of choice the wholesale market doesnt see.
    Rapid frequency response load side products will render large remote base load coal and peaking gas plant unable to compete.
    These products will effectively split the grid up as if virtually a lot of separate grids. Energy will be taken from generators with more detailed scrutiny. Price nodes will encircle generators such as Liddel and price it out of the market in response to all of the modern emerging options.
    It is very complex but looking at it from my experience, the market will need to be corrupted and or wodfully designed for Liddel to get a gig post 2022. I was thinking sooner but the feds are blocking progress.

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