Why network operators will take thousands of customers off the grid | RenewEconomy

Why network operators will take thousands of customers off the grid

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Western Power unveils network of the future, where thousands of regional customers are taken off grid and given renewables and storage, saving money and boosting reliability.

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We constantly hear that the future of electricity will be distributed and democratised, thanks to the new suite of technologies such as rooftop solar, battery storage, demand management and electric vehicles that literally delivers power and controls into the hands of consumers.

But what exactly does this look like in a world that is now based around centralised generation, a hub and spoke network of poles and wires, with talk of yet more large transmission links? And how does the transition take place given the huge sums of money already invested in the status quo?

To get the clearest answer, you need to look west, to the state of Western Australia where the state-owned network operator Western Power has given its latest vision of what the future network looks like.

Like all network operators in Australia, Western Power understands that it is far cheaper, safer and cleaner to serve many remote and regional customers with systems built around solar and battery storage, rather than relying on the costly lengths of poles and wires vulnerable to bushfires, lightning, strong winds, salt and any number of mishaps.

It is why the market rule-maker finally agreed this year on new rules that would remove barriers and give network owners regulatory permission, and a financial incentive, to cut down those poles and wires and replace them with stand alone power systems, or renewable micro-grids.

But only Western Power has thought deeply enough about the issue to talk publicly about what this might look like. And the result is a complete turnaround from we normally expect of a public network.

Its regional sister, Horizon Power, which operates the vast expanse of regional W.A., is taking 17 customers off an isolated grid near Esperance and fitting them out with stand alone systems based around solar and batteries, becoming the first utility to formally take down poles and wires (64kms) and replace them with local systems.

Western Power has been doing its own trials with six customers over the last two years, and found that on average the customers sources 91 per cent of their electricity from solar panels, and they avoided an 90 hours of power outages per year.

That’s cheaper and more reliable. It is now preparing a trial of another 60 customers, spread across its grid.

But that’s just a fraction of what may happen.

According to Western Power, it might make sense for some 15,000 customers to be taken off the grid and given their own power system. Another 100 communities could have micro-grids to serve their needs.

That will likely amount to thousands of kilometres of power lines that are removed. (There are 918,000kms of poles and wires in the country). And Western Power notes that half of its network costs go to serve just 3 per cent of its customer base.

Western Power first gave some insight into why it saw its future as a modular network a few years ago, when it outlined why it made sense to cut some communities off from the grid entirely, and provide only a “thin” line to others who would be largely, but not completely independent.


Now it’s taken the idea a step further, describing the split between “autonomous” customers and those within its “mesh”, many of them served by community-scale batteries, which the utility is already trialling. And Western Power is also keen to take many of its poles and wires underground.

This graph above is fascinating – it portrays the heavily populated part of the South West Integrated System, the main grid in W.A. Western Power sees transmission and poles and wires (in green) continuing to provide links, but vast swathes (in orange) are disconnected and act autonomously. Some are quite close to Perth.

Western Power has long argued that encouraging micro-grids – be they autonomous, connected, or in the form of individual stand alone power systems for individual homes and businesses – is essential to maintain and improve reliability and security.

The micro-grids protect those consumers from faults elsewhere in the network, and reduces costs significantly – both because of reduced spending on costly poles and wires, and also because of the cheaper options on site in the form of renewables, be they solar or wind, and storage and other technologies.

It has argued that they are safer, and they can accommodate the “green town” vision of many communities that want to integrate renewables into their local power needs. And it will stimulate regional growth.

In a recent blog post on the Western Power website titled “Beer and batteries”, the company’s head of strategy Peter Kerr compares the emergence of distributed resources such as rooftop solar and battery storage to that of craft brewers, and described the utility’s response.

“Over the past couple of years, we’ve been trialling a bunch of different solutions and products. It’s exciting stuff, and it’s showed us is that the future of our grid will really be a tale of two networks,” Kerr writes.

Much of the grid will be more autonomous, using stand-alone power systems and microgrids to create their own power, often renewably. “This is a win for them – and for us. Their reliance on the grid is reduced, which means they have fewer outages, and we have less costly upgrades of infrastructure that only services a very small number of people.”

The others will remain part of the “mesh” network. And here, Kerr and Western Power are underlying the importance of staying on the grid and avoiding defections. One of their principal tools in helping this is the development of “community” battery banks, such as in Mandurah, that allows customers to store their excess solar output in a local battery, and draw on it when they need.

Kerr says the network was stunned when a new school in Two Rocks, about 60km north of Perth, chose to spend its money on solar and batteries rather than the cost of a new connection.

“That in itself is not a bad thing, but in doing so we lost a contributor to keeping the grid functioning,” Kerr notes.

“We need to change the perception that going off grid is actually the right thing to do …  by offering products and services that let our customers source, store, use and manage their power the way they want to. On the grid. And by keeping grid power affordable, safe and reliable.”

That, one presumes, will lead to some interesting conversations about connection costs. But at least Western Power is trying.

Most networks in the eastern states have got as far as thinking about cutting off some of their most remote customers, but we can’t see any evidence – apart from isolated trials at Yackandandah in Victoria – of a major re-think on what the grid of the future looks like.

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8 Comments
  1. juxx0r 6 months ago

    “We need to change the perception that going off grid is actually the right thing to do … by offering products and services that let our customers source, store, use and manage their power the way they want to. On the grid. And by keeping grid power affordable, safe and reliable.”

    This clown thinks that power is affordable. He can’t understand how someone could provide power for themselves cheaper than the incumbent. He never will. As old mate said on here the other day, progress comes one funeral at a time.

    What we really need to change is the perception that 30 cents a unit is a reasonable price for power in this day and age and we need this to change in the board rooms of Synergy and Western Power.

    Maybe they can start by not putting $2,000 of concrete under their new SAPS solar panels.

    • Francesco Nicoletti 6 months ago

      At least one energy supplier sees autonomous energy generation as an existential threat, that’s something. The discussion here in the eastern states is still on how to keep coal fired power plants alive.

  2. Craig Fryer 6 months ago

    I can see these systems being an option in Victoria in many locations as a way to reduce the risk of bush fires.

  3. Seriously...? 6 months ago

    So it makes sense for them to cut loose customers they don’t make money on, and try to hang onto the customers they do make money on. But then the question becomes: what is the equation like from the customer’s side? What is the benefit to the customer of being grid connected, and paying big fees? At the moment battery prices are too high to be economic for most customers, but as the prices come down…will it eventually cease to make sense to have a ‘grid’, or even a ‘mesh’, especially as power becomes portable thanks to BEVs?

    After all, we don’t pipe petrol to people. Or have milk or bread deliveries anymore. And more and more people are ditching landlines.

    • Ian 6 months ago

      When batteries come down in price. That is the big unknown. There is limited battery manufacture and certain markets are taking precedence namely BEV and grid storage. To the rooftop solar household the choice is basically a 1. a grid virtual battery and 2. hybrid home battery and grid virtual battery and 3. an off grid home battery. You can widen this choice with a BEV or standby generator.

      To make a meaningful comparison between grid and battery you can consider the grid as a type of battery storage. Here are some ideas on this virtual battery
      1. The virtual grid ‘battery’ capacity is open ended – it can theoretically ‘store’ as much electricity as you can generate, in practice it can only store for most gridFiT’s the output of a 5KW solar array each day. Out of an average 25kwh generated you might only ever get to store 10kWH.
      2. The virtual grid battery has a fixed connection fee which would be equivalent to the capital cost of a home battery. For instance a daily fixed fee of $1.2 is about $440 per year. At say 4% interest you can borrow $11000 .Give or take a bit, that is the cost of your Virtual grid battery if you were to ‘buy’ it.
      3. The difference between the FiT and the electricity Tariff is equivalent to the idea of the round trip efficiency (RTE) of a real battery ie if the fit is11c/KWH and the import tariff is 26c/KWH then the RTE 100×11/26 =42% efficient ( for every 100kwh you sell to the grid you can only get 42kwh back)

      Bearing these sorts of figures in mind how does the virtual grid battery stack up against a real battery? 1. The storage capacity for daily cycling is roughly equivalent in price to a 14kwh Powerwall . The advantage is you can store electricity for multiple days in the grid/ you have a standby power supply when your solar array is clouded out for a few days. The grid virtual battery life is decades long, the home battery may survive 10 to 20 years, but the grid battery is only ‘rented’ and it’s cost can never be depreciated. Whereas the home battery you can always buy another at the end of its service life. The daily cost would probably work out much the same. The home battery is super efficient at 90+%, the virtual grid battery is a dismal 42% efficient.

  4. Ian Porter 6 months ago

    The strategy the WA Labor government has embraced since it came into power early last year was to facilitate state-owned Western Power to cut costs through the adoption of micro-grids. The government conducted a (successful) microgrid inquiry. https://parliament.wa.gov.au/parliament/commit.nsf/(InqByName)/Inquiry+into+Microgrids+and+Associated+Technologies+in+WA . The market dominant generator Synergy (also state-owned) is losing money big-time. Earlier this month it posted the biggest loss of any state-owned entity in history: https://www.abc.net.au/news/2019-09-26/wa-power-retailer-synergy-posts-massive-financial-loss/11550420

    Given that Western Power gets only 3% of it’s revenue from 50% of it’s enormous far-reaching asset base (largely due to a heavy maintenance cost burden of it’s remote poles and wires), there is a strong imperative and indeed an opportunity to reduce costs. The current WA government strategy also appears to balance the losses of Synergy with the savings garnered from Western Power. This is not altogether a bad idea and a distinct advantage of common state ownership. The maintenance burden of Synergy’s remaining coal fired power stations, Collie and Muja due to constant ramping due to diurnal effect of the solar duck curve continues to be a gathering storm for the utility and represents an ongoing threat to the bottom line. Watch the space for needed early retirement of those remaining coal fired units and the need to urgently build out renewables replacement together with additional essential system services including additional fast ramping gas turbines and battery storage at the utility scale.

  5. Ian 6 months ago

    When a service like electricity is reimagined as is the case in Western Australia, the whole concept needs to be deconstructed, examined and remade.

    One view of an electricity grid is generator, transmission infrastructure, metering, billing and customer.

    Clearly a profitable company needs at least two things 1. billing and 2.customers. If they no longer have a product then they won’t retain many customers or be able to bill them.

    For a remote and standalone customer, what is unique about the utility’s offer? Is it a financial service or a maintenance service? Is it some specialised knowledge of the wind and solar resource?

    For a minigrid or isolated community is it the above plus coordinating and controlling shared equipment and storage resources?

    For the mesh grid with numerous offgrid-capable homes and businesses an energy storage, transfer and market provider?

    These seem to be some of the ideas Western and Horizon Power are exploring.

    One thing for sure is that whatever service they end up providing, it has to be needed and competitively priced. The old paradigm where grid and billing fees make up 2/3 to 3/4 of the cost of electricity is not going to help their new business case.

  6. Greg Hudson 6 months ago

    Actually, I think I like the idea of a ‘community battery’ that I could store my excess solar in, and draw on after the sun goes down, or in winter when I’m not exporting much. I reckon it’s a bloody good idea – when will United Energy in Melbourne install one I can use? BTW, on a walk around my (large) block last week I noted 48 PV arrays on houses and businesses. Not bad in an area of just 1/2 a square km !

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