Will the grid beat off solar storage?

CORRECTED VERSION 26 NOVEMBER. Details of correction below.

Within the clean energy movement there is a sub-cult that holds onto a vision that humanity will retreat into small, self-sufficient community units that will stick it to the big utility man and disconnect from the grid (Grid separatists: Lessons from an energy uprising, November 19).

The huge rise in network charges since 2007 plus the plunging cost of solar PV have helped to popularise this idea.

At the same time, the solar industry confronts a situation where households pay something like 25 to 52 cents to purchase electricity from the grid, yet they only get paid 8 cents for electricity they export. This has focused the industry on how households might minimise their use of the grid for both imports and exports and maximise use of electricity from their own power system.

Solar businesses also realise that the power companies and their state government owners aren’t too happy about solar eating their lunch and are looking to retaliate. Importantly, they’re worried regulators seem happy to oblige the suppliers. One example feeding this fear is that the Queensland government’s utility regulator has as its chairman, Malcolm Roberts, the former CEO of the Energy Networks Association and the National Generators Forum (lobby groups representing electricity networks and generators respectively). While the QCA recommended special fixed charges just for owners of solar systems prior to Roberts' appointment, his background is disconcerting to solar businesses.

These fears are further reinforced by the ACCC’s Rod Sims (who ultimately controls the Australian Energy Regulator) who when asked recently on Radio National why electricity prices are going up beyond the carbon price, thinks to cite solar PV first and increased network charges second – yet network cost increases have completely dwarfed the costs imposed from solar PV. Furthermore, increases in retailer costs are on par with solar PV, according to analysis from the Australian Energy Market Commission.

So one can understand the considerable focus and hopes the solar sector is placing on use of technologies, particularly batteries, for minimising households’ reliance on the grid.

Yet there are lots of good reasons for having everyone connected up to a large, geographically spread-out grid. In the interview video below with Professor Michael Weinhold, Siemens Energy chief technology officer, we chat about how the rise of solar is challenging existing electricity market structures, advancements in energy storage and whether we might see a disintegration towards household self-sufficiency using solar in conjunction with batteries. 

Nowhere is this more stark than in Germany, Prof Weinhold's home country.

In his own state of Bavaria, solar PV capacity is almost equal to overall system peak demand. But this large amount of solar generation, which receives a guaranteed tariff detached from broader electricity market supply and demand, is creating major challenges for managing the wider electricity market.

Weinhold is excited about the prospects for advances in energy storage. Indeed, he thinks there’s still room for significant advances in the old lead-acid battery. But he also thinks economies of scale and the greater diversity and reliability of large grids mean that retreating to self-contained household power plants will be sub-optimal.

The logic behind this is pretty straightforward. In your house, if you add up all the appliances you could conceivably have on all at once it comes to quite a bit of power. During preparation of dinner you could have the fridge, TV, toaster, microwave, kettle, lights, oven and even air-conditioner all going at once. Maybe just for a short period, but it could easily add-up to 8 kilowatts. Meanwhile, your next door neighbour had dinner an hour ago, and they’ve gone out to the movies, switching everything off in the house except the fridge. They’re drawing maybe 300 watts peak. But an hour ago they had everything on while you were still to get home from work.

If we try to meet you and your neighbour’s needs so both could be self-contained we might need 16 kilowatts of generating capacity, but across both we can get away with 10. Now, multiply this out across an entire city, and even a nation, and you start to see how interconnecting a range of demand points can level out peaks in demand, reducing the amount of expensive generating capacity we might need. 

Also, think about the weather. As a single household you’ll see times when it isn’t sunny and your solar system will produce little generation. But somewhere else it is sunny and in another place it’s really windy. Being able to draw on these distant resources helps us reduce the amount of expensive energy storage and generating capacity we might need while often requiring little additional network infrastructure.

It seems likely that for some time to come we’ll be better off sharing the load of meeting our electricity needs across large numbers of premises and generators, rather than going for household or community self-sufficiency. 

Still, while the grid is a very useful thing and consumers should pay for the capacity they use, it doesn’t mean that electricity suppliers are owed a living. Consumers that reduce their overall demand as well as their peak demand are doing exactly what society needs – they are improving economic efficiency and reducing the risks of climate change.

Consumers shouldn’t have to pay for suppliers' misjudgments on technological change and investments that have proven to have showed flagrant disregard for the harm caused by carbon emissions.

CORRECTION: An earlier version of this article stated that the head of the Queensland utility regulator, the Queensland Competition Authority (QCA), left to become the head of the lobby group for electricity networks, the Energy Networks Association, subsequent to the QCA recommending that solar system owners be subject to special fixed charge to recover electricity network costs. This is not correct. Instead the CEO of the Energy Networks Association left this organisation to become the Chairman of the QCA. The error was based on misinterpreting information and concerns provided by a member of the solar industry that the QCA was too close to electricity supply businesses. Climate Spectator apologises for any confusion or misinterpretations this may have caused about the nature of the QCA's advice to the Queensland Government.