Victoria regulator wants "market" to decide network value in rooftop solar | RenewEconomy

Victoria regulator wants “market” to decide network value in rooftop solar

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Victoria regulator says there is obviously network value in rooftop solar, but it says it is difficult to work out how much without a grid services market.

Solar panels can be both a headache and an opportunity for network companies. AAP Image/Tracey Nearmy
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Victoria’s Essential Services Commission says there is obviously network value in rooftop solar, but it says it is difficult to work out how much value, and it may not be able to do so without the development of a grid services market.

The ESC has been asked by the Victorian government to come up with a “fair value” of solar, and value the “benefits” of rooftop solar which had hitherto been missing from regulatory assessments of solar feed in tariffs.

So far it has addressed issues such as solar’s benefits for climate change, avoided transmission losses and environment (the ESC couldn’t identify or value any). This, combined with an increase in wholesale prices, has resulted in a doubling of the FiT.

ESC solar VicNow it has had another go at the so-called “network value”. It says these values do exist – solar PV and other “distributed generation” can and does create network value, it says.

“The main source of that value is the way distributed generation can reduce network congestion, which may defer the need to upgrade the network and thereby save costs. Reducing network congestion can also reduce the amount of expected unserved energy.

But it says these are hard to value because they vary by location – for instance, if a lot of money has already been spent on upgrading a network, the value may be less. (That is highly contentious from the point of view of solar advocates, as it seems to justify network spending).

The ESC also says there is a time cycle, and the asset life cycle is also important.

It says this value may be more easily recognised when the “intermittent” output of solar PV is “firmed” through the additional of battery storage, and energy management technologies, and the introduction of new concepts such as virtual power plants.

Because it is reluctant to put a fixed value on this, it wants to regard the main benefit – reducing network congestion – as a form of ‘grid service’ and it is looking to create a market for such services. That though will be complicated and will take some time.

“Such a market could provide adequate opportunities for small-scale grid service providers, including distributed generators, to be remunerated for the grid services they are capable of providing,” it says.

It is proposing yet another review to look at how this market can be structured, including auctions and other means.

Shani Tager, senior campaigner with advocacy group Solar Citizens, says the decision is disappointing.

“It is an important report in its effort to recognise the true value of solar. Unfortunately, their recommendation of further investigations into a market mechanism will cause unnecessary delays in Victorian solar owners getting a fairer price for the power they produce,” she said in a statement.

“Solar Citizens believes that the simplest and most effective way to recognise the value from locally produced and used energy is through a feed in tariff (FiT) system where solar owners receive a fair price for the power they produce.”



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  1. Ren Stimpy 4 years ago

    I think it’s time for zero FiTs so that solar owners feel a compelling need to buy home storage to complete their investment. So, 8 hours of solar generation reducing their bills, followed by two peak hours subverted by their battery power to much further reduce their bills.

    The solutions to the current energy crisis are out there on the living nodes, not in the dying and corrupted nucleus.

    • Herv 4 years ago

      Sure storage is a great idea. If I understand you correctly, you give
      the energy from the solar no value at all if its fed back into the grid?

      • Ren Stimpy 4 years ago

        Solar generation is growing great guns, but we need to lift storage to the point that it is cost effective. What is the point of (collective) solar without matching storage? The two technologies complement each other but we have been full steam ahead with one and negligent on the other.

      • Ren Stimpy 4 years ago

        OK How about this – Zero FiT until the solar owner has a battery and is on the smart grid, and still zero FiT until the smart grid detects that the owner’s battery is fully changed. Only when that condition is met, then pay a very generous FiT, like 40c – or something relative to the owner’s storage capacity

        Secondly, if the solar owner’s premises is certified 10 stars energy efficient – I’m talking fully LED lighting, energy efficient air conditioner and other appliances, insulation, etc – then double their FiT to 80c – or something relative to the owner’s storage capacity.

        In exchange for this generous FiT the owner must participate in load shedding when emergencies arrive, which means their home’s electricty usage is remotely switched to be supplied by their own battery, whatever its current level of storage.

        • Herv 4 years ago

          Actually sounds quite reasonable!

          • Ren Stimpy 4 years ago

            Further thoughts – it would need a few multipliers to derive the final FiT for the day – firstly some type of ratio of the home’s storage capacity to its solar capacity. This is so that people don’t buy an undersized battery with a large solar system just to cash in on the FiT. Secondly the calculation should use the percentage of the storage that was charged by solar that day. If a solar system has had to work most of the day charging the home’s battery, the FiT that afternoon should be large. If the solar system only has to top up the battery with an hour’s charging, the FiT that day should be small, and if the battery remains fully charged from the previous day, zero FiT, or perhaps a minimum FiT of 5c so that the owner still gets some income while away on holidays.

          • Herv 4 years ago

            There would have to be a minimum. The energy produced does have value. You would never see the retailers/generators giving electrons away for free.
            Maybe a FiT based on the wholesale price at the time of export?

            In all honestly all l want is a zero electricity bill for the year.

          • Ren Stimpy 4 years ago

            There’s a lot more at stake than one or more me-first solar owners. Here we have an opportunity to enact systemic change, to ensure more people transition to storage which is what we need and be on the smart grid to stabilise our energy grid via the stable nodes and to ensure security of supply.

    • Greg Hudson 4 years ago

      Here’s an alternative view… Apply a FIT based on the Wholesale price as per the AEMO dashboard:
      This would immediately discourage home solar to export during peak periods of generation due to over supply, and a low FIT. This is turn would encourage battery installs, and promote time shifting the export. Ideally, the user should be able to ‘choose’ the minimum FIT they will accept, and benefit from those times when the companies (like Snowy Hydro) are gaming the system and getting near to the $14k/MWh maximum wholesale price (which IMO should be lowered to $5k)
      Just my opinion…

      • Ren Stimpy 4 years ago

        The transference of midday power to peak 6pm-8pm power is what we need. You solar owners might want this in a conscientious sense but I think you want to make or recoup money even more than that above-stated. Hey I dig it. The market and such. It’s why the government needs to intervene to ensure a right and proper direction that we are headed in. They are failing atm.

  2. William 4 years ago

    Here’s an alternative view…the report is rubbish and I’ve finally realised that on energy sector policy, regulatory analysis, and emissions reduction market design the ESC is not fit for purpose, and little more than a self fulfilling bureaucracy unable to deliver on its charter.
    We are literally dependant energy slaves to grid businesses run by tax dodging multi national corporations whose shares are owned by foreign governments.
    Abolish the FIT, descope and decapitate the ESC removing water and energy sector involvement, and introduce state and federal policies that promote energy generation & storage self-sufficiency that will encourage grid defections thus forcing the largely foreign owned network owners to downgrade their asset valuations that translate currently to ~50% of an energy bill to a more realistic 5-10%.

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