Solar must embrace demand management

The biggest takeaway from our largest clean energy conference is how seriously the energy sector incumbents are taking solar. They are shifting their game plans, but can the solar sector stay a step ahead?

The biggest conference for the clean energy sector, Clean Energy Week, has grown an incredible amount from the days that I was involved in helping organise it back in 2005. One cannot do justice to all that is taking place across such a large and diverse conference.

Sessions included such diverse things as a room with stereos which acted to simulate the noise of a wind farm, to a bunch of sparky’s talking about how you can mongrel wiring, to bankers talking about the ins and outs of different tiers of debt finance, to how we design the regulatory structure of Australian electricity markets.

Still out of all of that there was one theme that left a big impression on me. Solar has reached a scale where it will increasingly be pushed by utilities to be coupled with other demand management solutions, such as energy storage and demand shifting.

Solar PV is no longer seen as a little plaything by electricity supply incumbents that might one day in the distant future be an issue they need to deal with. It is a having noticeable effects on electricity demand and it is being treated very, very seriously by networks and the gentailers.

Mike Swanston, who has the odd title of Customer Advocate within Energex, is at the front line of the solar revolution. The Energex network in South-East Queensland is ground zero for the proliferation of solar PV that has taken place in the last three years.

One in five customers on its network have about half their energy needs supplied by solar PV.  In addition they have 50 hubs within their network where solar PV capacity has breached 50 per cent of network capacity.  These areas have now reached a point of reverse flow.

Swanson explained that the current pricing model of recovering a network’s costs based on smeared average per kilowatt-hour just cannot be sustained. The proliferation of solar PV means the kilowatt-hours are disappearing off the network. Peak demand has also declined but not to anything like the same degree. So we still need the same network capacity.

The first wave of change has already hit the solar PV sector with prices for exported generation dropping to only the wholesale energy value of 8 cents per kilowatt-hour, instead of the retail price of 25-30 cents. This is already getting customers looking at how they can use-up more of their PV generation within the home and avoid exporting.

But there’s potential for another wave of change as prices are charged depending on a household’s peak demand. This could mean retail electricity prices become quite low during the middle of the day but then spike up just as the sun starts to go down.

This is driving an incredible amount of interest in battery storage at the conference. And there’s plenty of people looking to sell solar and battery integrated products. But the consensus seems to be they don’t stack-up financially, at least for the next few years.

So there’s also interest in whether smart technology in combination with energy efficiency might allow householders to shift more of their demand into the period when solar is generating, and out of the early evening peak demand period.

The energy supply industry is shifting its game plan, can the solar and smart energy sector shift its fast enough to stay one step ahead?