Solar: The ‘No-Brainer’ That Could Take Suburbs Off Grid
Originally published on RenewEconomy.
The installation of rooftop-solar has become such a “no brainer” for Australian households that whole suburbs could generate and store enough electricity to go-off grid.
That is the remarkable vision painted by Australian Renewable Energy Agency CEO Ivor Frischknecht last week in a key-note speech at the All Energy conference in Melbourne. Frischknecht told the conference that one in eight houses across the country had solar, and one in five houses in South Australia and Queensland. A recent survey found that 88 per cent of Australians support the idea of rooftop solar.
“(Support for solar) is a no-brainer in most respects,” Frischknecht told the conference. “Rooftop PV makes energy costs more predictable and increasingly saves money, which is particularly pertinent for low income earners.”
But to what extent will they take it up? As Frischneckt noted, the huge uptake of solar is having an impact on incumbent utilities, who are now struggling to recoup the billions invested in network upgrades and expansions, and who are looking to pass on those costs to other users.
That in turn is leaving to a vicious circle which is pushing electricity costs up even higher, and making rooftop solar, and new technologies such as battery storage, even more attractive.
Frischknect said he knew many examples of city folk who had gone off grid – including in Sydney’s North Bondi. He recalled that ARENA chairman Greg Bourne had told an energy conference in Canberra the previous week that in the not-too-distant-future whole suburbs could embrace distributed generation and, by generating their own power, have no need to be connected to the grid at all.
That, needless to say, is a shock to the system for the incumbents, although it shouldn’t come as a surprise. Even Ergon Energy, which delivers electricity to regional and remote users in Queensland, where distribution costs are higher, made the same prediction just over a week ago.
In Germany, thousands of towns and villages are looking to “buy back the grid” from the commercial operators, reasoning that the arrival of distributed energy solutions, including storage, means that they are probably better placed to look after their own needs. Cities such as Boulder in the US are looking to do the same thing.
Which would be the first suburb or township to do so in Australia? Most likely a regional centre where farmers make heavy use of energy, for irrigation for example. Robert Mierisch, the Australian co-founder of solar technology group Terrajoule, bets it will be a regional town in regional NSW or Queensland that goes first.
“We’re at the stage now where a rural town in western NSW could decide to stop buying electicity from the grid, and do whatever is necessary to reduce consumption, install storage and local generation and buy the distribution network back from the operator,” he told RenewEconomy in a recent interview. (We’ll have more from that interview sometime soon).
The reaction of many of Australia’s incumbent utilities – be they network providers or generators – has been to vilify solar and seek tariff changes to protect their business models. Frischknecht himself noted that some distributors were preventing further solar connections, particularly in regional and rural locations.
But while some of the problems are technical, the major threat is economic, as Energex and studies such as those done by the APVA on Magnetic Island have suggested.
ARENA, however, is looking for means to help continue the proliferation of rooftop solar.
It commissioned a study from ACIL Allen Consulting that supported other findings that it is not the “hip and wealthy” inner-urban residents who have solar on their roofs, but people who live in the outer suburbs and in regional areas (see map above). “This is a pattern we see repeated across Australia,” says Frischknecht.
Indeed, the most likely homeowner with solar on the roof lives in a rural town, is aged over 54 and earns around $77,000 a year. But as this next graph below illustrates, there is surprisingly little difference in penetration across the income groups.
Still, many people are missing out. Solar is put almost exclusively on the rooftops of owner occupier. That’s because they gain the benefits of lower energy bills.
ARENA is now looking to help support financing models that will help deliver rooftop solar to lower income families who cannot afford the up-front payments, and to provide the right incentives for those living in rental accommodation or in apartment blocks.
The first of these is to support the “leasing” model that allows households to install rooftop solar with no money done. This accounts for ¾ of installations in California, and while some firms have introduced this into Australia, Frischknecht says the take-up has been slow.
Part of the reason has been the cost of finance: bankers are applying “first of a kind” premiums, because they haven’t seen the business model before and don’t know for sure the key metrics – such as the default and loss rates. That premium creates extra cost and makes the leasing option less attractive.
ARENA is looking at a model and a mechanism that could provide that “first of a kind” financing, prove the model, and allow financing costs to fall.
The second financial model is focused not on leasing modules, but on leasing roof-space. This could be applied to rental properties and apartment blocks, where developers pay “rent” for the use of a rooftop and sell the output to the residents or other local customers. Frischknecht says it may be that ARENA will create a separate fund that could help finance such investment.
All of this will be of interest to the new federal Government, which as part of its “million solar roofs” program wants to focus on the lower income sector for any incentives. That program nominally has a $500 cash back subsidy, but it could be that the government will find the ARENA approach a lot more attractive.
The studies are part of a broader “integrating renewables’ project that ARENA is undertaking. This will include adding storage to solar, and looking to see where such installations would be a benefit to a network, and where they would not.
“There is much more to the PV story than just putting panels on a residential roofm” Frischknecht says. “It involves giving control to consumers, reducing user costs, development of a viable Australian industry bristling with technological know- how, and the creation of new jobs, skills and investment that will strengthen the Australian economy.
“And that’s just rooftop PV, from within the much larger suite of solar energy solutions.”
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As mentioned in the article, the leasing method of financing is prevalent here in california. Saying there’s no basis for default rates, etc that would support a less risky and less costly financing model sounds crazy…look at banks in cali…reapply or partner with them to get the inside scoop on what a model should look like based on the working models in cali. This isnt rocket science…but it is a HUGE untapped market in Australia if 3/4 of all installations in cali are lease (PPA – power purchase agreements). It’s a bit of a shocker to me, honestly.
Just a note on the side;
It is easier to store water (at a high place) than electricity. So for farmers using solar power for irrigation it would probably more efficient to pump up water to an above-ground reservoir when it is sunny, and let gravity bring the water to the plants when needed, than to use batteries.
Here in sunny Southern California where the California Solar Initiative (CSI) and its predecessor programs have been actively promoting and subsidizing Solar PV for over 20 years, we’re dealing with many of the same issues as elsewhere but usually a little more proactively. There is a newer program (SGI) that promotes and supports self-generation and is technology agnostic. By using a rebate for consumer purchases that initially is quite generous but then tapers off much as the CSI has today, SGI is expected to provide significant real world cost/benefit data for rate tariff regulation.
For the last 2 years or so the California Energy Commission (CEC – we’ve got more acronyms than most) that sets utility rate policy has studied and begun implementing an energy storage program that treats utilities and consumers alike on a level playing field. The energy storage program will be subsidizing many millions of dollars for technology agnostic storage platforms integrated at all levels of distribution. The purpose of the program is again to collect sufficient data to then determine policy, and is set to run for more than the next 5 years. It’s not surprising that this methodic determination of government policy and regulation has been so effective in both lowering rates to consumers while preserving sufficient profit incentive for utilities.
As to the customer load served by the three big IOUs in our state, Southern California Edison (SCE) has Los Angeles at the center of its service area and recently noted that LA residences currently hold about 10% of the plug-in electric vehicles (both pure electric and hybrid) that have been sold thus far in the US.
A recent ad-hoc survey by an airless tire manufacturer indicated that over 50% of automotive consumers expect that 20 years from now virtually all vehicles sold will be plug-ins; pure EVs and hybrids.
That said, SCE reports that at the current penetration level there has been very little that had to be done to accommodate the additional load (one PEV = approx. 4X a typical household energy load) outside of routine service upgrades, and LA is definitely 2 car+ garage country. Given the rate of EV adoption there (highest in the nation), that would mean an increase in total electrical load by about 8X over the next 15 to 20 years, with only a portion of that power produced by rooftop PV. There is simply not enough rooftop area for the vast majority of consumers to produce the amount of solar PV power (even at 100% conversion efficiency) necessary to support the coming total household electrical load that displaces petroleum for transportation.
So what are the electric utilities complaining about?
The next 20 years are going to see an unprecedented growth in demand that cannot be met by solar PV in urban or even suburban areas. There will be plenty of need for a modernized utility grid as well as major new generation capacity (moving towards renewable penetration in excess of 50%) and bulk energy storage units outside of suburban areas to support that increase in load. All utilities the world over should be preparing for that eventuality rather than the narrow focus they’re having on short term market disruptions as they occur. The massive technology overhaul will transform those utilities’ business model, but also still call for the essential services that they can provide. As the old adage goes: Lead, Follow, or Get Out of the Way!
It’s the coal, then petroleum, followed by natural gas companies that should be concerned about consumption through burning their product disappearing over the next 20 years! If they were smart (and some of them are), the carbon feedstock companies would refocus their product sales to markets that will grow as this transformation occurs.