When is it viable to go off-grid?

New research has compared the long-term costs of energy from a stand-alone power system with the long-term cost of energy from the electricity network. And the results may surprise you.

So, who’s getting tired of their ever increasing electricity bills? Had enough of dealing with your electricity retailer? Ever wondered when the time will come when you can just disconnect from the grid altogether?

The Alternative Technology Association recently considered these and related questions as part of an innovative piece of research comparing the long-term costs of energy from a Stand Alone Power System (SAPS) with the long-term cost of supply energy from the electricity network, where a network upgrade is required, in fringe of grid locations. And they came up with some pretty interesting results.

The research was initiated in response to Royal Commission into the ‘Black Saturday’ bushfires, which prompted the Victorian government to consider ways of mitigating the risk of bushfires started by uninsulated powerlines, including expensive measures such as replacement with insulated cables and undergrounding.

Given their experience both with SAPS and energy markets and networks, the ATA knew that in some circumstances it would be significantly cheaper to supply a household in a rural location with a stand-alone system, as compared with even a few hundred meters of insulated or underground powerlines to a property.

But in what situations, and by how much, would a stand-alone system be a cheaper alternative to a network upgrade – considering not only the up-front cost, but also the different ongoing costs of energy supply from each of these options?

The following graph demonstrates the ‘net present cost’ (that is, the total cost over 20 years, discounted into today’s dollars) of a few of the scenarios modelled as part of the ATA research.

Net Present Cost Comparison – SAPS versus Grid Augmentation

As can be seen by the left-most solar PV scenario, over 20 years, the supply of energy including a $40,000 network augmentation comes in at a higher cost than a fully automated solar, battery and diesel genset back-up SAPS with some energy efficiency improvements.

The upfront cost of the SAPS option is around $65,800, including the cost of some basic energy efficiency improvements such as installing solar hot water and a more efficient fridge and dishwasher.

This particular SAPS scenario supplies an average daily load requirement of 12.1 kWh, representing the baseline of a moderately efficient grid connected household improved to a more efficient off-grid household.

The net cost of a SAPS system for a more efficient household, or another building with low energy demand, such as a shed, would obviously be much lower still, but these figures represent conservative values from which a sound case for SAPS and energy efficiency can be mounted in the policy arena.

The second solar PV scenario represents the same household, only with no efficiency improvements. It represents a ‘like-with-like’ replacement, requiring no changes to the household energy use. The upfront SAPS cost of this scenario is $78,500, and in the longer-term it still works out to be cheaper than a $50,000 network upgrade.

In other words, the cost of a network upgrade need only be in the order of $40,000 to $50,000 for a single home, (and potentially even less if serious energy efficiency improvements are undertaken or for connection points with smaller loads), before SAPS start to become a better economic proposition.

This is significant given the level of investment being contemplated to reduce bushfire risk.

Victoria’s Powerline Bushfire Safety taskforce found that removing or undergrounding about 8,000 kilometres of HV powerlines that supply approximately 18,000 customers in rural areas (that is less than 2 per cent of rural customers), would reduce the fire loss consequence at risk in Victoria by 54 per cent. This works out to approximately 450 metres of powerline per customer.

The Taskforce estimated the cost of undergrounding these powerlines to be $250,000-$650,000 per km, which works out to about $110,000-$290,000 per customer. Due to the cost of finance to build powerlines, this works out to 2.4 to 16 times the cost of a SAPS system for each customer.

In other words, by installing SAPS at 18,000 homes for between about 6 per cent and 42 per cent of the long-term cost of undergrounding their power supply, Victoria’s bushfire losses at risk from electrical assets could be reduced by half.

But this doesn’t just apply to underground powerlines or bushfire prevention either – the costs of replacing aged or damaged powerlines with standard overhead uninsulated powerlines can easily get into the tens or hundreds of thousands of dollars.

Obviously it would not always practical to supply SAPS to all homes, and nor would it be fair to expect homes to move off-grid involuntarily. However there is clearly a place for a scheme to subsidise households at the fringe of the electricity network to voluntarily install SAPS at some homes wherever rural powerlines are being upgraded.

The SAPS systems modelled in the ATA’s research were designed to provide daily electricity loads of between 12 and 14 kWh per day.

The table below describes: each SAPS design, by renewable generation type and proportion of total energy supplied by renewable (70 per cent or 90 per cent, with the remainder from diesel generation); the average daily load requirement; the capital or up-front cost (in 2010 dollars) and net present costs (over 20 years, discounted at 5 per cent [reflective of the consumer value of money]).

The table also includes these figures for the network options, for a $50,000 and $100,000 network upgrade respectively.

SAPS & Network Options Capital & Net Present Costs


This research is most relevant to rural properties, particularly those at the fringe of the grid, and is based on total and permanent disconnection from the network.

However there is growing interest  in the role of battery energy-storage systems that may be connected to the network – with or without renewable energy, to charge the batteries during off-peak times or with surplus PV power  to supply energy at peak times or in the event of a power outage (like a UPS).

When will this become viable? ATA are currently undertaking further research in this space and will have something to report to Climate Spectator readers in early July.

For both a Summary Overview and more details regarding the ATA’s SAPS research outlined above, please go to:

http://www.ata.org.au/projects-and-advocacy/the-economics-of-stand-alone-power-systems/

Damien Moyse is Energy Projects & Policy Manager at the Alternative Technology Association. Craig Memery is Energy Advocate & Projects at the Alternative Technology Association.


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