RenewEconomy - Giles Parkinson
Leading energy analyst Bruce Mountain says if governments were
serious about lowering electricity prices for consumers, they would
focus more on supporting rooftop solar and battery storage than seeking
to subsidise ageing coal-fired power generators like Liddell.
Mountain, the director of Carbon + Energy Markets CEM says the
combination of solar and battery storage is already cheaper than grid
prices for most consumers in South Australia, and it would not take much
effort or expense to make it so in other states too.
The federal government has claimed that forcing AGL to keep open the
ageing and decrepit Liddell power station will lead to more reliability
and cheaper prices, despite most analysts and energy companies saying it
would do the exact opposite.
“If the federal government is determined to deliver lower electricity
prices, it might focus its effort on ensuring that demand is more
responsive to short-term price signals, and on making up the narrowing
shortfall needed to encourage widespread uptake of distributed
batteries,” Mountain says in a presentation to an energy forum in
Melbourne.
“Such policies will not be difficult to develop or implement, they
will require outlays many times smaller than those needed to build
baseload coal plants, and will show results during the term of a
government.”
The idea of using rooftop solar and battery storage (part of what is
known as “distributed energy”) has been raised in numerous studies – by
the CSIRO, by energy networks, and most recently by the Australian
Energy Market Operator, which sees 40 per cent of all demand being
serviced by localised generation and storage.
AEMO boss Audrey Zibelman sees such resources as critical to not just
lowering prices, but also creating a smarter, cleaner and more reliable
grid than the system which now relies heavily on centralised generation
and extended networks, and is vulnerable to catastrophic failure of
equipment, storms and bushfires.
The government knows only too well the benefits of rooftop solar, and
battery storage. Many politicians have rooftop solar in their homes and
some like
Malcolm Turnbull have battery storage. Yet none have ever chosen to champion this, instead promoting the technologies deployed by large corporations.
“One of the few constants in Australia’s energy debate is the fervour
of politicians’ and administrators’ homage to the idea that electricity
prices should be lower than they are,” Mountain says.
“That electricity prices have reached the level they have, suggests
the homage has all too often been a camouflage for other agendas.
“For too long ideology and the protection of vested interests has
lurked behind the apparent pursuit of “lower electricity prices”. The
obsession with coal-fired “baseload” generation is an enduring
manifestation of this malaise.”
He notes that the technology limits of the era required oversized and
poorly insulated water heaters to be operated at night to keep
inflexible baseload coal generators operating in the dead of night, when
there was little demand.
But the viability of the coal fleet relies on its ability to operate
continuously, but this is being threatened by the emergence of new
cheaper technologies, such as rooftop solar, which cost around one sixth
the cost of grid supplied electricity.
“It is no surprise that photovoltaics are now being installed at
record rates not just on household roofs but also on farms and in
businesses.”
This is now being accompanied by the plunging cost of battery
storage, particularly those with lithium chemistries, whose cost curve
is even more dramatic than that of solar PV.
"Rooftop solar PV is clearly much cheaper than the grid, but solar PV
typically only displaces around 30 per cent of grid consumption for a
typical house,” Mountain notes (see graph above). “Rooftop PV pays for
itself in almost all cases with north or west-facing roof. There is also
rapid growth in the commercial sector.”
The combination of battery and photovoltaics installed behind
customers’ meters now promises to meet customers’ needs more cheaply
than grid-only supply.
In South Australia, which suffers from concentrated electricity
markets, dependency on expensive gas and structurally high network
charges, this is already the case,
This estimate is supported by the local network operator SA Power
Networks, which predicts the cost of solar and storage to fall to just
15c/kWh within five years – less than half the current grid cost.
The combination of solar PV and Battery storage allows
grid-independence for 70-100 per cent of consumption,” he says, although
the optimal sizing of the two technologies would depend on many
factors.
And Mountain argues that it soon will be in other states. This graph
above compares the cost of a rooftop solar installation with battery
storage, and grid only prices. With the costs of battery storage falling
quickly, this equation will quickly change.
“The combination of solar PV and Battery storage allows
grid-independence for 70-100 per cent of consumption,” he says, although
the optimal sizing of the two technologies would depend on many
factors.
The issue with a growing uptake of rooftop solar and storage has
implications for the grid operators, who have built a network on the
assumption of growing demand and “many years of wasteful gold plating”,
Mountain says.
They may have no choice but to contemplate write downs. “The biggest
adjustment is needed where the networks are partially or fully
government-owned,” he says.
“The challenge is not insurmountable but requires governments to take
responsibility for their past mistakes. For the privately owned
networks, asset write-downs raise legitimate worries about political
expropriation and these would need to be resolved.
“If the federal government is really concerned to do something about
electricity prices, yesterday’s heroes must be put out to pasture. Those
calling the shots must drop the ideology and find the gumption to put
the customer first in deed, not just in word.”
Links
