Australian offgrid push may leave unfair burden of grid costs

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The movement towards solar+storage Down Under is clear. The combination of high and rising utility bills, meager and falling solar feed-in tariffs and a fleet of over 1.4 million solar households is driving an uptake of battery storage. But it might be a poor outcome when considering how Australia’s vast electricity network upgrades will be paid for.

An array of battery providers have pushed into the growing Australian storage market and there is widespread sentiment from consumers that “going off grid” may offer protection from future electricity price hikes. This has even been encouraged by some comments from within the Federal Government, with Environment Minister Greg Hunt saying that it is “inevitable” that eventually households will begin to add large storage arrays and say goodbye to their electric utility forever.

“Already we have about 15 per cent of Australians, the highest level in the world, who have solar power,” Hunt told the Australian Broadcasting Corporation. “Increasingly we will see adoption of storage, which is the key thing that allows people to be off-grid.”

However Ric Brazzale, from Green Energy Trading, says that a large-scale move offgrid may not be a good thing for ratepayers generally.

“I think it would be a tragedy in some ways if we saw a failure to properly price networks, driving a lot of battery storage, making more networks redundant and then we have a vicious cycle,” Brazzale told pv magazine. “I think ultimately we have to fix up our network pricing and the network business will need to write down their assets because the value of their services can’t compete with PV and batteries.”

A debate is currently underway in Australia regarding grid pricing, with some grid operators arguing for an increased in fixed electricity charges to pay for grid assets. Total electricity demand in Australia has fallen in recent years as a result of rising electricity rates, increased energy efficiency in homes and the rollout of residential rooftop storage.

Green Energy Trading monetizes and trades the renewable energy credits generated when a household installs a PV array. It also tracks the amount of PV going onto Australian roofs as those certificates are generated. Brazzale says that consumers without the resources to install a large battery array may be forced to shoulder a larger proportion of the grid costs while others disconnect.

“There is always going to be a grid,” said Brazzale. “I would put to you that in the short term Australia is likely to become a good market for battery storage but in the long term there can’t be half of consumers going off grid while the other half paying twice as much. Eventually there will have to be some sanity come back to network pricing and to PV export prices, and it might take five to ten years to go through that adjustment process”

By contrast, Brazzale notes that both distributed and large battery storage systems can be deployed strategically to strengthen the grid in rural areas or in new housing developments.

“Australia also has a really long and skinny grid and a lot of network businesses will move towards distributed batteries as a solution before they expand and augment their grids anymore,” says Brazzale.

Some such programs are already being rolled out, including the Alkimos Beach project in Western Australia. The project is being supported by the Australian Renewable Energy Agency and will see a large battery array added to a new residential development. By doing so, the project and property developers hope to reduce peak electricity demand from households and therefore the capacity of the grid infrastructure supplying the suburb.

Brazzale notes that such projects represent an intelligent deployment of electricity storage, rather than in places where existing grid infrastructure is sufficiently robust, and importantly, needs to be paid for.

“The [Australian] grid is pretty robust. So much money has been invested on the network over the years, there has been billions of dollars spent,” he explains. “So I can’t see the rationale for battery subsidies, unless it is for avoided network augmentation. Batteries per se do not reduce CO2 emissions, pricing PV exports properly which supports further roll-out of rooftop PV will be what results in lower CO2 emissions.”

pv magazine is rolling out a series of articles on the battery storage and Australian market. The December 2015 edition of pv magazine includes a feature article on the regulatory and commercial landscape underpinning solar+storage market Down Under.

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