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Clean Power australia solar potential

Published on September 23rd, 2012 | by Giles Parkinson


2 GW of Solar PV Pointed in the Wrong Direction in Australia?

September 23rd, 2012 by  

This article (minus the picture) was originally published on Renew Economy. It has been reposted with full permission.

australia solar potential

Australia solar roofs via Shutterstock

A Perth-based energy expert has challenged the conventional view that time of use tariffs and the forced introduction of smart meters are the best way to address the challenges and costs of peak electricity demand.

Adam McHugh, a lecturer in energy economics and energy policy at Murdoch University, argues instead for a new pricing system that would encourage householders to point their rooftop solar PV panels westward rather than north. Or they could go to the shops, the cinema or the beach at times of peak demand rather than sit at home with the air conditioning.

McHugh says rooftop PV could play a major role in reducing network costs, because the price of these systems had fallen so much that they were economically attractive for households to install. However, under the current tariff arrangements, most systems – and it is estimated more than 2,100MW of rooftop solar will be in place in Australia by the end of the year – face north because that is where they produce most electricity, and deliver the best returns for households.

But McHugh says that if these systems were facing west, they would correlate with peak demand on the grid, and make a major contribution to lowering network costs. West-facing panels could reduce system capacity by 75 per cent of their rated output, and one 1.5kW system could offset a 1kW air conditioner at peak times. This could be significant, given that some forecasts put the extent of solar PV at 12,000MW to 18,000MW between 2020 and 2030.

McHugh’s tariff system is all about reducing the summer peak demand, which occurs in about a dozen interval periods marked by hot, sunny weather. And they occur in mid to late afternoon, when west-facing PV is producing.

“By basing tariffs around peak kW capacity, rather than overall consumption measured in kWh, McHugh says households would face significantly lower bills in winter, spring and autumn, and much higher bills in summer, the season of peak demand. This would encourage them to install solar PV, and point it west,  or enter other demand management arrangements that would see them switch off appliances when peak demand was reaching the top 10 or 12 peak intervals. (Tariffs based on individual peak demand would be a PV killer and would not be as effective at reducing network costs.)

Households would be alerted and could take action to slash their bills. In effect, they would be paid to switch off and go to the cinema or the shops, where the air-conditioning would be running regardless of whether there were 2 or 2,000 people in the store. “Why not get in a bit of movie time or retail therapy during the peak?” McHugh says. “Escape the heat and boost the retail sector while cutting your annual electricity bill in half.”

He says this system would encourage owners to orient their PV sytems to the west, and others to install interval meters, rather than an imposing an overall cost by rolling them out to all consumers. Everyone (except the monopoly network businesses) would benefit from the tariff change, but those who benefit the most will be customers who buy interval/smart meters that want to participate in system-peak demand reduction activities.

“About 40 per cent of the retail electricity price is caused by network costs,” he says. “Under system-peak pricing, if you had west facing PV and went to the movies during the peak you would not only avoid that 40 per cent, but would receive a credit on your bill for your negative system-peak contribution. North facing PV would also receive a credit, just not as much.”

McHugh says that PV facing west and meeting peak demand meant it was effectively acting as a competitor to transmission networks, which is delivering power from distant sources of generation to major demand nodes. This competition may explain some of the perverse tariffs that were now being contemplated, such as the “bi-directional” tariff approved recently by WA’s  Economic Regulation Authority which will allow Western Power to charge a higher rate to owners of rooftop panels, even though these mostly north facing panels have reduced peak demand by around 125MW, or the size of a gas-fired peaking generator. Western Power wants to extend such arrangements to battery storage and electric vehicle systems.

“In my view the ERA’s approval of the tariff is a case study in regulatory capture,” he writes in a submission to the Senate inquiry on power pricing. “It seems to me that the bi-directional pricing arrangements approved by the ERA are intended to serve the interests of the regulator and the regulated entity rather than the interests of the public.”

It would not be the only example, as RenewEconomy has pointed out here.

McHugh says a new pricing system would change the way in which consumers think about their contribution to those few half-hourly trading intervals of the year when most of the system costs are incurred. Given that network costs make up such a large proportion of a consumer’s bill, the effect of this change would be to incentivise consumers to reduce their contribution to system-peak demand and therefore lessen the need for network augmentation.

“My hypothesis is that the price of electricity should reflect the cost; then people will orient their PV in whatever direction is best for them,” McHugh says. “North facing PV is good for energy production, west facing PV is good for meeting peak demand.”

“The fundamental flaw in spreading network costs that occur due to system-peak demand across units of energy consumption in other billing periods of the year. Energy-based average pricing (kWh pricing) of this nature does nothing to signal the actual cost of network augmentation to consumers.

“A customer’s individual peak demand will not affect the capacity requirement of the system unless it happens to coincide with the system-peak. So under energy-based network tariffs, or tariffs based on a customer’s individual peak demand, residents and businesses have few incentives to reduce their contribution to system-peak demand and, therefore, network costs.”

 He also suggests a new formula for network operators, which instead of rewarding them for inflating demand forecasts, would penalise them for ‘gold plating’ their network. He wants to put the risk of an overly high peak demand forecast on the regulated entity rather than on electricity consumers.

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About the Author

is the founding editor of, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.

  • SirSparks

    I have 20% of my total PV’s pointed due West at 45 degrees azimuth.
    They extend my useful power by 2 hours per day (5pm to 7pm). At the times when they have reduced power compared to my South array I already have an excess anyway. I am OFF grid and most of my power needs (air conditioning) falls between 2pm and 8pm.

  • Dimitar Mirchev

    I was thinking something similar that when the PV gets cheaper enough there will be PV specifically installed to have peak production in the morning and the evening.

    But all this is sound if we forget about Grid Storage. If one have big grid storage capabilities – distributed or whatever – this will be unnecessary – PV will have to be reoptimized for yearly power output.

    • Bob_Wallace

      “Live” solar will probably always be cheaper than “stored” solar.

      West facing panels should produce about 80% as much power as panels pointed toward the equator. (South in the northern hemisphere, north in the southern.)

      So if equatorial-pointed panels produced power at 10 cents per kWh you would expect power out of west-facing to produce at about 12 cents. We are a ways from having storage for less than 2 cents per kWh.

      Solar is headed toward a nickel which would make stored solar not competitive with west facing.

      • Dimitar Mirchev


        I was thinking more from the EVs prospective when one will go to work with the EV while the PV charge the home grid storage than at night the energy is transferred from the home grid storage to the EVs battery. EV mileage is around 15-20 KWh/100 km.

        Also I am thinking that second hand EV batteries will be used for grid storage. Once the battery performance degrades and it can not be used for EV anymore it still will be usable for grid storage for some time before it totally degrades. And after that we recycle them.

        We’ll see. I am very optimistic about home (or community) grid storage and that it 5-10 years it will be surprisingly cheap – pretty much what happened with PV in the last 3-4 year (and what will happen with PV in the next 3-4 🙂 🙂 )

        Just some thought. If you find west oriented PV useful – do it 🙂

        • Home / community storage is the most exciting area of cleantech for me now. Hoping to see a lot of growth and improvement in this arena in the coming years. Let me know if you run across anything awesome! 😀

        • Bob_Wallace

          When panels get cheap enough, point some toward the east as well. They will grab morning sun and hand off to the west-facing panels at noon. Stretch the solar day on both ends.

          I know people who are off the gird and have poor morning sun so installed their panels facing west, and someone who has poor sun from the west who uses a tracker to grab early morning sun and on until ~ 2PM when trees block him out.

          There are locations which commonly have morning fog that generally lifts during the day. Here’s another place where simply facing south might not be the most productive direction.

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