SA network operator: Rural communities could quit the grid

The head of South Australia’s major power distributor says that rural communities – including major towns – could soon look after their own generation needs.

And, said Rob Stobbe, the CEO of SA Power Networks, it could be inevitable that all forms of centralised generation and transmission will be made redundant over time.

Stobbe made his comments at the Energy Networks Association conference in Melbourne, where the industry is wrestling with the technology, cultural, and economic challenges of the biggest change in electricity markets in more than a century – and their $75 billion of assets.

The biggest challenge, of course, comes from the emergence of renewables, and distributed generation in particular, which along with storage is threatening to turn the tables on the centralized model.

Stobbe’s prediction that  rural communities could go off grid – or create their own micro-grids with just a small connection to the main networks – follows similar remarks by Ian McLeod, the CEO of Queensland distributor Ergon Energy, earlier this week, and from the ENA itself, which has said that regional operators in Queensland and Western Australia would also look to “downsize” their network assets in favour of localized generation and micro-grids. In effect, they are looking to ditch their poles and wires.

Stobbe suggests that is exactly what is going to happen in South Australia, where the power network operator spends 70 per cent of its investment towards meeting just 30 per cent of its 840,000 customer base. Away from the big population centres around Adelaide, there are just three customers for every kilometre of line.

RenewEconomy caught up with Stobbe after his panel session to seek a deeper explanation.

He explained that people in metropolitan areas rarely experience, and have a low tolerance for, loss of power in blackouts. In regional areas, these events can often for for a day or two at a time.

“When it comes to reliability, these alternatives like renewables, going into storage, is actually more reliable than what we can even provide,” Stobbe told RenewEconomy.

“As long as we can top up their storage, it is actually quite a reliable supply. If you look at where it is going to occur first, in my view, I will be in those rural areas.

So what energy sources will they rely on?

“It’s largely going to be wind and solar. If you look at South Australia, some of the best areas for wind is on the west coast, but this is too far away from transmission lines to inject into the grid.

“But if you feed the power into rural areas, with storage, you can see it becoming very attractive in those areas. The benefit for us (the network distributor) is that we don’t need to build that expensive network to service them.”

One striking remark that Stobbe made in his talk to the conference of network operators and other energy market professionals and policy makers, was that, in time, there would be no centralized generation or network operation?

Was he serious about that, RenewEconomy asked him afterwards?

“It gets down to the technology and its availability at a competitive price. Is it one of the scenarios that we are looking at? Yes it is.

“What will be the scenarios in the future?  We might just be operating, managing and building micro-grids, in localised area, with their own renewables on site, and some of their other renewable that could support that community. Why wouldn’t that work?

“Why would they have to be connected to a central connection point. You can see it happening.”

That, of course, has serious implications, not just for centralized fossil fuel generators, but for large centralized renewable plants too. And for retailers, who normally have the primary interface with customers.  “In the micro grid market, why do you need a retailer,” Stobbe asked. “Our market will change.”

“The reality is that customers, I think they will see value in a network of sorts to enable them – look, if you were growing your own produce to live on, if it’s a bad year, you would need to be part of a market, so electricity is the same.”

Still, Stobbe was concinced that community based micro-grids, of the sort possibly proposed by advocacy groups in Victoria – were a better option than taking individual houses off the grid.

That’s because the capital needed for households to do that, and be self containing, would be much higher than being part of a larger network, even if it is only suburban.

“Why build a system to take individual households off grid, it’s a bit like us investing in system just for peak demand.”

Indeed. It would seem careless – and expensive – to make the same mistake on over-investment twice.