Are households the wrong people to be buying power stations?

At the main conference for the Australian clean energy industry there was a session which debated whether or not households would be interested in using batteries plus solar to disconnect from the grid and what might motivate them to do so.

Part of the debate hinged on whether or not households would make such decisions based on financial metrics or whether they’d be also heavily influenced by non-financial considerations.

Non-financial considerations might be that some households: like the idea of being independent of large power companies; really value power reliability; are tech-heads who want the latest gadget; or simply want to impress their neighbours.

At the end of the session, I posed the question to a range of highly experienced solar executives: if households make decisions on pure financials then why are so many of them buying big 5 kilowatt solar systems which, largely, export most of their generation for just 8 cents a kilowatt-hour?

(Essentially the household makes a good financial return on the first 2 kilowatts, which offset grid imports at about 30 cents a kilowatt-hour, but beyond this they’re losing money.)   

One of the businessmen gave an incredibly insightful yet blunt answer: 'Households are the wrong people to be buying solar systems.'

Intrigued, I probed further and he pointed out that his business had repeatedly encountered owners of solar systems who didn’t realise their solar systems were not functioning properly, or at all. He noted that the company had come across localised areas where shoddy installers had been active and as many as 30 per cent of systems were faulty – and several of the owners had no idea.

I’ve heard similar stories from other experienced solar operators.

One little noticed finding from the 'Smart Grid, Smart City' trial was that they found 25 per cent of the solar systems installed in the Sydney 2000 Olympics Village in Newington were not operational, mainly due to inverter failures. In addition, only 11 per cent of these systems were fixed when customers were informed that their systems were no longer operational.

The reality is that many of those considering purchasing a solar system have very little idea of what they’re buying. They don’t understand what’s good quality and what’s bad, they may not even understand what an inverter is and what it does. They don’t understand how much power they consume during the day and what sized system is ideal to offset this power consumption. Many are simply focused on getting the biggest system they can for the lowest purchase price. They don’t understand the compromises they might be making in going for the lowest price equipment, and how that might impact on their electricity bill over time.

Solar panels are a very long-lived piece of equipment – typically designed to still be functioning effectively 20 years after installation. In addition they are set and forget – the householder doesn’t have to interact with them at all – unlike say a fridge, water heater or washing machine where a breakdown becomes readily apparent.

After handing over several thousand dollars, householders will no doubt pay close attention to what the solar system is doing after it has initially been purchased. But will they even be living in the house in seven years’ time, after the inverter warranty has expired? And will they be able to evaluate whether the output of the system has degraded by more than what the panel manufacturer guaranteed after 10 years of operation? Also, will the next person who moves into the house be quite so focused on the performance of the solar system they've inherited when they bought the house, say, because it was located nearby to a good school?

Now these anecdotal cases of high failure rates which owners fail to recognise and resolve are probably unlikely with systems installed in recent years. In chatting with Mark Twidell, Australian head of SMA, the globe’s largest inverter manufacturer, he provided several reasons why the rate of unresolved failures in older systems (and particularly the more than 10-year-old Olympics Village installation) are unlikely to be characteristic of systems installed in recent years.

Firstly the reliability of inverters have improved.

Secondly, going forward all SMA inverters have internet-enabled communications and this functionality is becoming more widespread with other inverter suppliers as well. This means the inverter, traditionally hidden around the side of the house, rather than signalling a problem through just flashing a red LED light instead of, say, a green one can actually e-mail or send a text message to the householder or installer of the system to tell them of a system fault. Also, fault diagnostics are becoming more sophisticated so users can be told if the output received from the panels is unusual given local weather conditions and past performance of the system.

Thirdly, systems these days are much larger in size than the past (average size is around 4-5kW whereas the Olympic Village systems were 0.5-1kW) so when they drop off it’s hard not to notice the impact on your electricity bill. And in addition, a much higher electricity bill will provide a stronger motivation to get it fixed.

Yet in spite of these improvements and, in fact, partly because of internet-enabled inverters, it seems likely that householders are still not the people best-placed to purchase and operate solar systems.

As detailed in the article How solar may become a service, not a system, a range of solar companies are moving towards becoming retailers of electricity rather than solar equipment. These businesses know solar equipment inside-out. They understand the trade-offs between reliability, performance and price. Because they are selling electricity from solar rather than solar equipment, they are the ones who will suffer – not the household – if the system falls over or generates less electricity than it should. And because electrical output is their lifeblood, they’ll therefore watch the system’s performance (which is possible via the internet) far more closely than a household is likely to, and will be faster to notice when something goes wrong and fix it. They’ll also be better equipped to hold suppliers accountable for equipment that doesn’t perform as specified, even 10 years after it has been installed.

This new model for selling solar is not inevitable. It involves higher levels of administration and legal difficulties than just handing over a solar system to a household to own located on their own rooftop. But it seems that householders are probably not the best qualified people to own power stations.