Adjunct Professor Bill Grace from the University of WA has developed a model for plausible uptake of solar PV systems that makes for a series of confronting charts for power sector executives and also government policymakers.
His model is built around some not implausible assumptions for the likely uptake of solar PV which, when followed through to their logical conclusion, come up with some astounding results. These see a level of solar PV installed by 2026 that would result in several hours during the day where demand from centralised generators in WA’s main grid would fall to zero.
This hinges on tariff structures remaining on a relatively simple model of charging for electricity based on a peak and an off-peak time period, and system prices declining from $2200 per kilowatt today (without rebate) to about $1300 by 2025. Given it is already possible (although not widespread) to buy systems fully installed for as low as $1650 per kilowatt (without rebate) and module manufacturers project further reductions in their production costs as well as gains in module efficiency, $1300 by 2025 could be a reasonable possibility.
His projections for penetration of solar PV in households and businesses are illustrated below. He expects that by 2024 there could be 3000MW of solar installed instead of the 1000MW currently forecast by WA’s Independent Market Operator. This then climbs to 9000MW by 2035.
Figure 1: Projected penetration of solar PV systems in the WA SWIS
The end result on power demand of this forecast level of solar PV uptake is earth shattering. The chart below illustrates Grace’s estimates of how hourly power demand from centralised generators on a typical March day would evolve over the next few years.
Figure 2: Hourly profile of demand for WA centralised grid-supplied power over time – 2015 to 2026
Such an outcome would utterly destroy financial returns for existing large power generators.
This is not a bad thing per se – if solar is a cheaper option then so be it and Grace’s analysis assumes no government rebate. But in addition it poses some serious challenges for being able to meet the gaps in demand not met by solar by ramping conventional power generators’ output up and down.
Interestingly Grace also expects battery storage uptake to rapidly rise as well. However it doesn’t remove this ramping problem, at least in the short term, because batteries aren’t expected to become financially attractive until well after the solar horse has bolted. The chart below illustrates that solar reaches quite high levels of penetration before battery storage begins to become popular in around 2025.
Figure 3: Projection of penetration of solar systems with and without energy storage in WA grid
So according to Grace’s modelling, by 2034 this lag in the uptake of batteries means it only manages to shift the period of zero grid demand to 12pm-4pm instead of 10am-4pm.
Figure 4: Hourly profile of demand for WA centralised grid-supplied power in 2034 with and without storage (typical January day)
How realistic is this projection?
In the end it’s extremely unlikely, but not because Grace’s assumptions about the economics of solar PV installation costs are wildly optimistic.
Instead it all comes down to his assumption that tariff structures would be based on a simple peak and off peak rate per kilowatt-hour consumed.
Thanks in part to studies such as Grace’s scaring the life out of power companies, regulators and politicians, such a tariff structure is unlikely to continue – indeed a large proportion of businesses already see a large proportion of their power charges detached from their total consumption of kilowatt-hours.
Now if things go badly, tariffs will be shifted heavily towards unavoidable fixed charges unrelated to a consumer’s power demand. This will mean even if you install solar, batteries or become more energy efficient, you’ll still pay.
If done more sensibly then the charges will be designed in such a way that they can be readily avoided if consumers can reduce demand during the short periods of the year when demand is at its highest. To do this will require a lot more than just slapping a few kilowatts of solar on your roof. Instead it will necessitate either:
- passing-up on air conditioning (most will say no); or
- using a suite of options including better insulated buildings, energy efficient appliances, solar (possibly oriented more towards the west), batteries, and shifting the time at which some equipment is used out of the peak period.