SA network operator puts its head in the sand on solar storage | RenewEconomy

SA network operator puts its head in the sand on solar storage

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South Australia network operator reacts to threat of storage with rooftop solar by cancelling feed in tariffs – another attempt to protect conventional business models.

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SA Power Networks is the monopoly distribution network operator in South Australia. In a subtle, surprise move, they very quietly recently announced that “If a customer currently receives feed-in credits under the Solar Feed-in Scheme, they will no longer be eligible for receipt of credits once they install a battery storage system or a Fuel Cell system”.

Given that the vast majority of South Australian solar households are currently on some type of FIT, this policy effectively wipes out the cost effectiveness of using storage in South Australia for the time being.  Intriguingly, only a few weeks ago some Californian distributors used the same blocking tactics and refused to connect some customers who had purchased solar with storage systems although fortunately, only a  week later new regulations were introduced that mandated the introduction of storage.

It is somewhat telling that in their own industry briefing SA Power Networks acknowledge that “..as customers and the Industry seek the next technological innovation to reduce electricity demand and reliance on conventional electricity distribution networks, the emergence of fuel cells and battery storage systems is starting to gain momentum”. 

Innovation. Reduced demand.  No thought given to embracing the advantages or optimizing the network benefits which could reduce all consumers costs; just an immediate reaction to stop any threat to conventional business models.

And they are monopoly so guess what; you have absolutely no choice and absolutely zero consumer power to challenge their decision. This lack of market power was eloquently and acutely described in the report “Going Solar: Renewing Australia’s electricity options” which was recently released by the Centre for Policy Development.

The report noted that:

“Solar consumers have the right to a fair contract with electricity retailers, and one that is not to their financial disadvantage, under the Australian Consumer Law.177 However, the structure of the electricity industry, and relationship between retailers and customers, means that solar consumers have limited market power. Where this constrains consumer choice or creates an uneven playing field for solar compared to other sources of electricity, governments may need to intervene to protect consumer rights” .

Although we are talking about a distributor in this case, I would think that equally, consumers have virtually no power here and are potentially being financially disadvantaged by this ruling. Ironically, stopping consumers from (potentially) making investments in storage has the bizarre consequence of allowing networks costs to potentially rise, or at least preventing the potential of helping to alleviate them, which would seem to be against the broader community’s interest.

Further, it is also plainly apparent  that this ruling is a retrospective condition, added subsequently to householders signing up for the FIT, which would hardly seem in the spirit of consumer law.

The report goes on to say that:

“..the threat posed to ‘gentailer’ profits by rooftop solar is significant and the level of market power and access to information is so heavily weighted in the utilities’ favour that it would be challenging for any consumer advocacy body to get traction. If this proves to be the case, a stronger regulatory approach may be required – particularly if around a million new solar households become disenchanted with the status quo. A recent poll by Essential Media suggests this is more likely than not – power companies are considered the least likely industry to act in the public interest..”

The excuse that SA Power networks uses to enact this ruling is that  “…this equipment can cause interference on our network and can impact the quality of supply for other users connected to the local network” obviously implying that they see a (perceived) technical risk.

Really?Really?

Can someone explain how storing energy from a solar system in a battery and using it in the home to peak times to avoid peak charges (effectively avoiding the purchase of energy) creates a power quality risk? The solar industry is one of the most regulated in the country and I am all for standards and accreditation, don’t get me wrong. Anything we sell or install should be the epitome of quality and safety lest we do ourselves a disservice, but lets not confuse a device that alleviates network load and consumer costs with something that simply threatens the status quo.

Now to be fair, SA Power Networks do talk about an interim process and pending modification of the Small Embedded Generator request process to take into account storage. So the ruling doesn’t say you cant do it, but by default it certainly discourage’s it for pretty much every single South Australian.

We urgently need standards and regulations developed which allow storage on networks and encourage innovation and reduced demand, not policies that block them and dis-empower consumer choice. Let’s hope the modifications to their rules take a much more adaptive and progressive approach.

You can read the relevant SA Power Networks Industry News here.

Nigel Morris is director of Solar Business Services. This article was reproduced with permission.

 

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10 Comments
  1. RobS 7 years ago

    Wiping out FiT for those with storage does not abolish the advantage of adding storage. Storage simply allows you to increase self consumption. It is economically at its best the lower the feed in tariff is, because rather then feed it in for a paltry fee (or nothing) you simply store it for your own use later, offsetting power that would otherwise need to be purchased giving the equivalent of a 1:1 FiT.

  2. Sean 7 years ago

    This idea is not only preposterous, but impossible to enforce. Even if you did somehow manage to legislate for official energy storage behind the meter, a simple UPS system would flout this law. charge during the day, have an automatic timer to switch off the power at night. All customer friendly parts available at your local officeworks. It might not be the prettiest system (from an engineering point of view) but it would be effective.

    A bit of electrical know-how and a trip to jaycar gets you a large sinewave inverter/battery charger and you can run the majority of your house off batteries, no electrician required.

    Go one step further and have all your house wiring circuits terminated into standard plugs (before the fuse, in the fuse box) and you can easily swap between direct connection to the grid, and connection via your homemade storage system.

    Taken to the logical conclusion, you might end up with a 48VDC battery bank, directly charged by solar panels, which could be self installed. (topped up by the grid if necessary)

    AFAIK the retailer cant tell you what appliances you can or cant install (Australian standards obviously) , how many lights or appliances you must have connected in a house. If the only thing you have connected to the grid is a battery charger that you sometimes turn on, there isn’t anything they can do about it.

    All of these systems might be second best to a solar inverter with storage capabilities, but if the financial incentive is there, retailers would be stupid to think they can just legislate their way out.

    • Stan Hlegeris 7 years ago

      Spot on, Sean!

      Consumers are way smarter than that and they’ll find dozens of ways to defeat the intention of this policy.

      You might already have an uninterruptible power supply (UPS) for your computer. That’s storage system. Will the retailer search your house to see if you have one?

      Why not get a UPS for your fridge? Charge it with your solar production or off-peak supply, and protect your food during power outages.

      I acknowledge the criticism that some people will charge batteries with fossil-fueled grid power and then sell it back at the FiT rate. There’s an easy fix: make the FiT rate equal to the retail price and no one would have any incentive to fiddle.

    • Martin 7 years ago

      Sean,

      I think you might have misunderstood this SA Power Networks ruling.

      Nowhere do they say that you can’t have storage or even that you can’t feed power from your storage system back into the grid.

      All they are saying is that you will lose your solar feed-in tariff if you also export power from your batteries.

  3. patrickg 7 years ago

    This seems short-sighted – if anything reducing or abolishing FiT will encourage people to use grid hybrid systems as there’s no point putting your power back into the grid.

  4. Warwick 7 years ago

    I’d say it’s not the conspiracy than you suggest. It’s pretty obvious that if you had a fuel cell or a battery storage unit that when you export electricity at peak times to the grid, you could in effect receive a SOLAR feed in tariff despite the fact that this could be supplied by either natural gas or grid electricity respectively. i.e. if you charged up your storage using grid electricity or natural gas over night, there is no way to differentiate this energy from a storage unit charged by PV.

    Distributors may be slow to adjust to changes in energy markets but this is not a “blocking tactic” or a case of “head in the sand”, they are simply stopping people claiming a solar FiT for electricity sourced from the grid or natural gas.

    • Motorshack 7 years ago

      Very nice points.

      In which case it is especially stupid for the authority in question not to have put it that way in the first place – assuming that is what they were really thinking. Of course, I have no way to know what they actually were thinking, but I certainly do know that the best way to defend my own interests is to make the other party feel that he is getting a fair deal. So, the real problem here and elsewhere appears to be the ham-handed way that various parties are presenting their cases.

      More specifically the level of FIT that appeared necessary five years ago, and the length of time those payments needed to be guaranteed, is looking in hindsight to have been more generous than necessary. However, that is precisely because those policies have actually worked, and produced the intended benefits.

      Indeed, because those benefits have been far greater than anticipated, the value of the FIT has an even better cost justification than it did originally. So, the smart thing for the government, and the fair thing for all parties, is to perform as agreed on the original contracts, and to be glad that it worked out even better than expected.

      Going forward is another question entirely, and people investing in solar today, and perhaps storage in the near future, should not waste their time worrying about the deal they might have gotten in the past. The special incentives may be gone, but so are the risks of that time as well. When you invest in solar and storage today, you are getting well-established value at quite low risk, and the only consideration should be the relative advantages and disadvantages of the various sources of electrical power. It is now purely a question of ordinary comparison shopping, governed by pure market economics. Special subsidies are now irrelevant.

      As for the policy preferences of the fossil-fueled power industry, all I can say is that they still have plenty of opportunity to get on the right side of history, and to profit from that choice. If they are not smart enough, or nervy enough, to do that, then let them find some other line of work. They keep telling us in various ways that they are the smartest people in the room, so, fine, let them live by their own wits. After all, is “devil take the hindmost” not the very essence of modern liberal capitalism?

  5. Jason 7 years ago

    Again, our entire macro business model is based on CONSUMPTION!!! these technologies simply are destroying this business model and soon all of you will catch up with what the politico’s and business elite already know, this technology isn’t only disruptive, it is going to destroy the grid as we know it and is it any surprise these guys want protect their interests? Doesn’t mean we don’t continue but for Christ sake this isn’t a conspiracy, the solar industry should be helping the distributors to find ways to make the transition manageable getting the government to help the people in the networks that are going to lose their jobs in the transition to be trained up or re skilled to work in a distributed power network… we can not fight each other on this and make this work we need a vision that unifies the two sides and defines the benefits to society that this transition brings

    • Sean 7 years ago

      its a shame that government doesn’t see it the same way as agriculture, with a potential export market. I recall my grandfather being subsidised off land at Castle Hill, because it was cheaper to grow fruit in the MIA and have it trucked to the Sydney markets with the state picking up the tab as a means to encourage production.

      the elephant in the room is that (aside from the fridge, and homes that still have offpeak hot water) most of the residential grid isnt used for about half the time.
      This WON’T change. What could change is the direction of energy flow.
      The reason energy companies are up in arms ISN’T because it will “hurt the network” and everything to do with the fact they also own generation assets that are getting their asses kicked.

  6. Dadpad 7 years ago

    Properly configured solar storage poses no threat to the network. In fact the German Government offers a subsidy for those installing solar battery storage.

    17. April 2013

    Germany will launch its support program for photovoltaic battery storage
    systems on May 1. Funding totaling €25 million will be available in the
    first year from German state bank KfW.

    Read more: http://www.pv-magazine.com/news/details/beitrag/germanys-pv-storage-incentive-program-will-come-into-force-on-may-1_100010946/#ixzz2jO4ihOht

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