Australia's micro-grid opportunity

A new report finds housing estates and towns will soon be better, allowing for some conditions, opting for stand-alone power systems – indeed it's a more economically viable option for some already.

A new report released today suggests that the improving economics of solar and battery technology mean that by 2020 it would be cost-effective for greenfield housing estates and regional towns to employ stand-alone power systems instead of relying on the larger electricity grid.

What’s highly surprising is that the authors of the report suggest that it could be economically viable for some Victorian regional towns to move to self-contained solar micro-grids today.

The study was prepared by the Alternative Technology Association and the organisation Energy for the People, which is focused on developing community clean-energy power projects. It looked at three alternative Victorian locations for assessing the viability of stand-alone power solutions: the regional town of Bendigo; Werribee – a fringe suburb of Melbourne experiencing rapid greenfield housing estate growth; and inner urban Melbourne.

Importantly, it examined the viability of such a solution if provided at the scale of 500-plus homes, not just a single home by home installation. Under this 500-plus home model the authors estimated the provider would be purchasing the equipment at wholesale prices, saving 35-40 per cent on the retail price for all components other than the solar PV panels (where a discount of 10 per cent on retail prices was assumed).

The table below summarises the situations where they foresee that stand-alone power solutions could be viable either right now or by 2020. In each scenario, a range of energy efficiency measures were implemented in parallel with the stand-alone power solution. Important to making such solutions financially viable is that they consider options to avoid the need for electricity to heat homes (important to reduce the capacity of the stand-alone power system required). Another important element is that they capture the financial benefits from avoiding the use of expensive bottled gas or the cost of new electricity or gas network infrastructure.

Graph for Australia's micro-grid opportunity

When the costs of a stand-alone 'solar plus battery' solution are considered on an individual householder basis, it appears prohibitive relative to these households getting power from the grid plus solar. However, by delivering the solution aggregated across 500 homes it’s likely that a range of infrastructure can be shared, reducing the capacity and capital cost of the system. The authors of the study note that both the PV and battery banks were distributed, with not every home needed to house its own entire stand-alone system. This helps avoid such constraints as roof space.

In addition, the authors expect the costs of batteries will decline substantially over the next few years, citing the data in the chart below. The study notes that forecasts for lithium-iron battery storage tend to converge at, or slightly above, a retail price of $200/kWh by 2020 – a 7.5 per cent price reduction per year compared to today’s retail prices of $350 per kWh.

Lithium-ion vehicle battery cost projections from various analysts

Graph for Australia's micro-grid opportunity

These results will be supplemented by a more detailed research study report that will be released in early 2014.