The utilitarian approach to ‘bottling sunlight’

Pushing for utilities to invest big in solar storage is a transformative policy that could eventually gain traction in Australia.

The thing I like about Californian Governor Jerry Brown is he seems to be able to look a problem squarely in the face and simply say "How do we solve this?”. He knuckles down (really hard by all accounts), gets input from stakeholders and then makes tough decisions fast, when they are transformative and critical.

Case in point? His proposed new solar storage policy.

“There’s plenty of sun out there, and it’s going to take storage,” he said recently. “We need to bottle sunlight."

This week the California Public Utilities Commission will vote on this incredibly far-sighted proposal that would require the incumbent utilities (PG&E, Southern California Edison and San Diego Gas & Electric) to collectively buy more than 1.3 gigawatts of energy storage by 2020 roughly enough electricity to supply nearly 994,000 homes.

What makes this so incredible is that as late as last week, these same utilities were refusing to connect solar owners who had purchased solar with storage, citing a lack of regulation and technological control.

One customer (Matthew Sperling, a Santa Barbara, California resident), invested $US30,000 to install an eight panel, eight battery system at his home in April this year.

“We wanted to have an alternative in case of a blackout to keep the refrigerator running,” he said in an interview. Southern California Edison rejected his application to link the system to the grid even though city inspectors said “it was one of the nicest they’d ever seen,” he said according to a story on Bloomberg.

Now to be fair to the utilities, their concerns are pretty valid. They are concerned that there are a lack of policies, rules and regulations about how such systems should be installed and connected. Safety and consistency are vital.

They are also concerned about the potential for consumers with storage to “game them”; effectively buying cheap off-peak electricity and then using it to recharge their batteries, re-selling it to them at peak rates. This is unlikely I would suggest, but technically possible. It also opens up the policy elephant in the room of “unintended consequences” that we always have to be aware of. The inter-relationship between feed-in tariffs (no matter what form), storage imports and exports and, potentially, power quality management all need to be considered. And that’s before you even start to contemplate the cost and profit regulations which utilities in Australia particularly operate under.

But you know what? It’s all been done before. Most notably in Germany where they launched a storage and self consumption scheme earlier in 2013; so no one needs to re-invent the wheel.

The launch of this new policy proposal in California and a visit to Governor Brown’s office earlier this year by several German industry and policy architects may be no coincidence. The rumour mill was running hot while I was at the Intersolar conference that Brown had “urgently summoned” these highly respected PV industry folk and wanted to have a meeting to work out “how to get California on track for the next round of PV uptake”.

Word is he sat them at his table till the early hours of the morning until they had thrashed out a policy framework; and this may very well be the result. According to industry insiders I know, Brown has an old and notoriously uncomfortable picnic table in his office which incentivises fast thinking and quick results.

While I was at Intersolar this year, the International Battery and Energy Storage Alliance’s chief Markus Hoehner gave a presentation on the topic of storage and highlighted the differences in global markets and prices in the graph at the beginning of this story. What is most telling is that the costs in this graph may well be already approaching the projections in this graph which shows the story for Brown’s home state, perhaps again why things are moving fast there. I have said before that I don’t see storage costs being there yet either but I suspect that this could well be an area where I am hugely surprised. One significant Australian vendor I spoke to recently was adamant that they had a storage product that was “three to six months away” and was less than half current costs. I have a long relationship with “Murphy” in product development and would feel pretty safe suggesting this puts them 12 months out from a market ready product; but that’s still sooner than I thought.

Graph for :

This policy development will be fascinating to watch because arguably our electricity industry is a little more like the US industry than Germany’s. In recent conversations I have had with our electricity industry, they were all very consistent in their views that storage was an absolute game changer – but also that the costs weren’t there yet. I got the distinct impression that policy development was a “hypothetical future discussion point” and a million miles from being on their agenda.

Battery technology, hardware, software and regulations are very, very complex; and we need an electricity industry and government that supports and embodies them to get this happening.

Direct Action? Now that would be a direct action plan.

Nigel Morris is director of SolarBusinessServices.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles