How 'clusters' could drive the next off-grid wave

For many Australians, winter electricity demand is similar to summer demand, making stand-alone power more problematic. But 'infrastructure clusters' will make it increasingly viable.

The potential transition to stand-alone power systems has been receiving increasing coverage. Today we unpack what stand-alone power infrastructure could look like for single households and mini-grid clusters.

For a single household, solar panels are the 'primemover' for stand-alone power, as it’s a pretty simple proposition. People have been happily living without a big grid connection for decades where it is the cheapest, most reliable energy option.

The key to understanding stand-alone power is understanding how energy demand, and energy production from solar power, varies season by season and hour by hour. In a Victorian winter, on a dark, damp, cloudy winter day – the worst case – a 1kW solar system facing north and clear of shading will produce around 1Wh of energy, after losses. On average in winter, a 1kW system will produce 2kWh and at best 3kWh. In summer, things are different. Your 1kW system will put out around 2.5-8kWh each day, averaging, 6kWh on average.

If your energy demand profile follows the same trajectory as your solar production profile (low winter energy demand, high summer energy demand), going off-grid becomes simple. You simply size your solar system to meet winter energy demand, assuming 1.5 peak sun hours, and give yourself two days worth of full battery backup. For many households in the mild coastal climates of NSW and Queensland, with a reasonably well designed home and efficient appliances, going off the grid might be cost-effective today – you may not even need a back-up generator.

If your winter demand is closer to your summer demand, then stand-alone power costs start to increase. You either have to oversize your solar system and batteries to get through winter, use a back-up generator more frequently, or consider non-electric heating such as gas or wood. The critical energy challenge being to keep a house warm in winter and supplying hot water, without a big ramp-up in electricity usage. Of course, using natural gas is not an option for those committed to 100 per cent clean energy, and wood burning is not suitable for all households.

Individual homes’ leaving the grid has serious implications for the energy market – it will create winners and losers and we should be rightly concerned about that. For many it may not even be an option – renters, apartment dwellers and those without solar access, for example.

For this reason, in our research What Happens When We Un-Plug: Exploring the Consumer and Market Implications of Viable Off-Grid Energy Supply, we also looked at clusters of 500 homes transitioning to stand-alone power together, including 'buying back the grid' from local distribution network companies, thereby creating an exit strategy for network companies who are struggling to survive the 'utility death spiral'.

The 500-home scenarios were of particular interest to us in understanding how stand-alone power could protect regional areas from a shift to more cost-reflective pricing, while improving reliability of supply. We found the combination of shared infrastructure (not every home needed its own solar panels or batteries), increased buying power (buying for 500 homes, not one) and diversified energy load (low energy and high energy users balancing each other out) significantly reduced the per-home cost of stand-alone power infrastructure, making it viable today in some scenarios and, by 2020, viable for much of regional Victoria.

Importantly, our analysis didn’t consider the real cost of servicing regional customers – long lines traversing hills and valleys are not cheap to build or maintain. Given Victoria’s relatively poor solar resources, low energy prices and harsh winter, we suspect that for much of regional Queensland and NSW, the time for stand-alone community power infrastructure is already here.

In our analysis, we assumed a cost of capital of 8.6 per cent, relatively high operation and maintenance costs (professional management of the stand-alone power infrastructure), a fair price for buying back the grid, introducing smart energy monitoring and controls to maintain power quality and stability and, of course, all the costs of buying, operating and maintaining solar power, batteries and back-up generator assets.

We even factored in maintaining energy supply on cloudy days and at night time – fancy that!

We didn’t account for the potential that excess summer energy production could be exported to nearby customers – we simply cut ties with the grid. In short, this made for very conservative financial modelling, and we did this to show the dramatic nature of how stand-alone power economics are changing driven by large reductions in solar PV costs, with battery technologies being set to mirror that experience.

We found stand-alone power infrastructure would not be well suited to dense urban and city environments – our research suggested city and inner-suburban customers would stay connected to the big grid. However, for much of regional and urban fringe Australia, the availability of space and cost of land does not constrain local energy infrastructure. Unless there is a significant industrial load in a regional area, stand-alone power becomes the obvious choice for many communities by 2020.

The upsides? Cheaper, more reliable power for the regions; cheaper power for the cities who no longer need to cross-subsidise the regions via tariff smoothing; a boost to regional economies; and a chance to redesign the energy supply model, putting customer interests first, and historical assets last.

Now that’s something all energy customers can be excited about.

Tosh Szatow is co-founder and director at Energy for the People. Craig Memery is an energy market specialist and consumer advocate at the Alternative Technology Association.

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