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Solar pays its way on networks. It’s no free rider

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The National Electricity Market wasn’t designed with distributed generation in mind. Indeed, one major design flaw acts to penalise solar power, and does so more in Australia than occurs in practically every other country in the world. In the USA ‘net metering’ means solar earns the same tariff as retail electricity rate, up until generation exceeds consumption across a billing cycle. In Australia, net metering means if you produce more energy than you consume in a half-hourly period, you’ll receive a pittance for the excess power production. Households may pay 25-35c/kWh for power consumption, but receive between 0-8c/kWh for any excess production in any given half-hour. One would almost guess this is an anti-solar conspiracy.

Without a hint of irony, electricity networks have been claiming that solar owners aren’t paying their way for network use. If all solar production was consumed within the house, then their argument might have some merit. What they conveniently ignore is that the network operators are charging solar exports full-fare for electricity that is only transported next door, which is one reason export buy-back rates are so low. It’s like charging $50 to drive the entire length of a 50km toll road in one direction, while charging $50 to drive only 100m in the other direction. Even as solar is causing less congestion on the network, some operators are saying we won’t take your excess power, which must be the ultimate own-goal from the utility businesses Australians most love to hate.

Australia’s version of net metering is problematic for solar homeowners as most solar production occurs when the home is unoccupied. Homeowners can maximise their daytime self-consumption of solar production by running pool pumps, dishwashers, and washing machines during daylight hours. But the full benefit of doing so is only gained with a house consumption monitor (ideally linked to a weather forecast) that intelligently sequences the whitegoods into operation over the day, and there is a limit to the extent to which householders can shift consumption patterns.

Analysis by SunWiz of 300 solar households . The median 1.5kW system exports 37% of its production, but half of 1.5kW systems export between 28-45% of their power production. We have extended the calculation to larger systems that are more representative of recent installations. Most systems sold these days are 3kW or 5kW – which have median export volumes of 60% and 74% respectively. These exports are far higher than most would guess, and have significant ramifications.

Solar owners need to be careful to size the system appropriately to their load. Analysis of the same extended data set (graphed below) shows that to keep export below 50% of produced solar energy, a 1.5kW system is a wise choice if you consume 10 kWh/day (excluding off-peak hot water). If you consume 15kWh/day, a 2-2.5kW system is likely to keep your export below 50%. You really want to start thinking about a 3kW system when you consume more than 19kWh/day, and the chances are you’ll export more than half of your production from a 5kW system, unless you consume 40kWh/day

 

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Now, export varies considerably depending on a house’s daytime occupancy. Households with people at home during the day will naturally self-consume more of their solar production, and thus export less. This means a quicker payback period, or the ability to opt for a larger system with improved reduction in electricity bill. From extensive analysis, SunWiz has identified five major classes of residential consumption patterns, which are integrated into our PVsell software. These are shown below.

1.Double hump – typical of families with school-age children

2.Evening Peak – typical of households without children

3.High Day, Higher Evenings, Low Overnight – typical of families with infants and pre-school children

4.Day Focus – typical of retirees and work-from-home households

5.Night Focus – typical of night-shift workers

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The problem is that very few solar salespeople account for the shape of the load profile when recommending a system. Our analysis shows that a 3kW system may export as little as 33% of its energy if there is a high level of daytime occupancy, but could export 85% of its production if there is low daytime consumption. This could mean the difference between a 5 year payback and a 10 year payback, so it is crucial to obtain hour-by-hour calculation of solar export in order to ensure a favourable return on investment. PVsell is produced by SunWiz and ensures accurate calculations that are tailored to the customer’s needs; we recommend that you demand a PVsell analysis from your solar salesperson, or obtain independent advice on your Solar ROI.

Our Big PV Wisdom report provides analysis of thousands of results from solar proposals entered into PVsell. It shows that PVsell users are far better at sizing systems suitable to a customer’s needs. The graph below shows that PVsell users recommend residential systems that export about one-third of their production, and commercial systems than only export 20-25%, producing far better outcomes for their customers. When you combine this with accurate calculations of production which are time-adjusted for panel direction, plus account for tariffs that vary across the day, PVsell can be trusted to accurately calculate the financial return for your investment in residential or commercial solar.

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So when the incumbents argue that solar isn’t contributing its fair share to network costs, you can now point out that most new solar systems are paying network fees for well over half of their power generation. Commercial PV systems are exporting less power but they reduce peak demand by a greater amount, providing a network benefit in this regard.

Source: Sunwiz. Reproduced with permission.  

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  • Stan Hlegeris

    I think this sort of analysis could produce the wrong conclusion for homeowners in Queensland.

    For all new installations in Qld, exports are barred absolutely. To benefit from new solar PV, you need to be able to use at least some of your production during the day, as suggested in the article.

    But you also need to look just a little way into the future. For most people, the best result will come from installing the biggest PV system you can fit on the roof. In the short term, you’ll be wasting some of your daytime production. But within a year or so the cost of battery storage will have fallen so far that it will make perfect sense to buy a storage system sufficient to cover all of your evening consumption.

    As production (PV modules) is still cheaper than storage, it will continue to make sense for the next few years to err on the high side as far as production goes, even if this means you waste some, while sizing your storage capacity a bit more precisely.

    For business premises, of course, the situation is clear. You’re now prevented from exporting any power, but that also frees you from any constraint on the size of the system you can install for your own use. In almost every case businesses come out way ahead by simply installing the biggest PV systems they can fit.

    • Matthew Wright

      I agree with your conclusion that you should install as bigger system as you can fit on the roof however you are not correct that Queenslanders are now banned from exports. As I understand it in the Ergon distribution area In Queensland customers are automatically approved if they do not export. They can still apply to export but the approval process may take some time.

  • John Bromhead

    All grid connected solar systems are reliant on the grid. All the time and should be expected to pay a share of grid costs all the time.,

    • Andy_Adelaide

      They do in the form of little feed in tariff! If I sold my excess power to my neighbours for retail price by running a line to them then my payback time would be a lot shorter! Unfortunately the regulators don’t allow me to earn this passive income from my largest asset. My home. Why can’t I?

    • Matthew Wright

      All grid operators are reliant on electricity consuming customers. By your logic they should pay customers to use their grid. Your rationale doesn’t make sense.

  • Matthew Wright

    Install a bigger system now 5kW, 10kW, 15kW and then add batteries in a few years. You take advantage of the Small Scale subsidy which may not last long in the mean time and ready yourself for shifting the solar production to meet your demands with batteries. Do not waste your time installing a 1.5 or 2.5kW system if you can afford a much bigger system now.