Written by Matthew Warren, former Chief Executive of the Australian Energy Council and author of Blackout - how is energy-rich Australia running out of electricity? Published by Affirm Press.
Rooftop solar PV may be widely popular, but it is only a partial solution. The sun doesn’t always shine when you need electricity. Storing some of the household’s surplus solar electricity to be used later during the evening peaks is a logical answer to this problem. A battery smooths out demand by storing some of the surplus electricity bought from the grid. As welcome as batteries would be, the barrier is price: a 10-kilowatt-hour battery costs more than $10,000. In a perfect world, if a 10-kilowatt-hour battery could recharge and discharge fully every day of the year for 10 years, it could save its owner around $11,000 in total. But the world isn’t perfect. Most batteries can’t fully discharge and they don’t quite reach and hold their rated efficiency. Also, this number doesn’t factor in the value of the surplus PV sold back into the grid, and the fact that there will be cloudy days when there isn’t enough surplus solar to recharge the battery. As a result, home batteries are still below the payback water line: they cost more than they save.
Still, a house with solar and batteries can be configured to isolate from the grid if there is a local blackout – another advantage. This enables the household to keep using the remaining electricity in the battery until mains power is restored. This extra fit-out costs nearly $1000, but early indications suggest it is a popular option with consumers. It also raises important questions about how a more distributed grid will need to work in the future. In particular, it asks us to consider the difference between being grid-connected and the notion of becoming completely electricity independent – going truly ‘off grid’.
In the thrall of the increased electricity independence that solar PV systems can provide, it’s been accompanied by the idea that getting ‘off-grid’ – a suburban household completely cut off from the rest of the grid – is some kind of energy nirvana: the ultimate act of defiance by individuals against big energy companies and governments. But a household with a (large) 5-kilowatt solar PV system and a (current standard) 10-kilowatt-hour battery will not produce and store enough electricity to go it alone. They will still need to buy electricity from the grid. Becoming fully self-sufficient for electricity requires both more generation and more storage to maintain supply at night times, and during extended dark and cloudy periods in winter when the solar PV is producing at a reduced output and during periods of high demand.
If a household wants to go truly off-grid and not incur chronic blackouts and scarcity of electricity for extended periods, it will face the same challenges as the national market, just scaled down. First, it will need enough generation and storage to meet its demand peaks. A 5-kilowatt solar PV plus 10-kilowatt-hour battery combo has no chance of supplying enough electricity for a typical suburban household throughout the year. If a household installed three full days’ storage capacity (which is tight) for average consumption of 16 kilowatt hours a day (low for the average household), it would require a 10-kilowatt solar PV system (requiring double the average roof space of a solar PV system) and around 48 kilowatt hours of battery (and the batteries will need to be stored somewhere too). To run down current costs, let’s call this $60,000.
Even then, this system doesn’t guarantee full supply during periods of sustained cloud or high demand. In these events, off-grid houses will be tempted to run a diesel generator to top up their power. Either that, or they’ll have to occasionally ration their energy use. This system assumes no new major loads – electric cars, for instance. So to qualify for the ‘off-grid club’ a consumer will need to own a large house with room for a shed, and a spare $60,000. At times an off-grid household will over-produce. Sunny, mild spring days will fill the batteries and spill – nowhere. That zero-emissions electricity will be effectively wasted.
This notion for households opting, at a significant cost, to disconnect from the grid also poses existential questions about what the electricity grid is in the 21st century. It is many things: a machine, a market and an essential service. Uniting all these, the provision of electricity is part of the society we live in. A household can be disconnected from the grid at home, but those consumers will still use the grid when they drive down lit streets, go to work and school, shop and eat out. There is a societal element of electricity systems that has always existed, but never been noticed. Until now.
Being connected to and using the grid is not only okay – it’s essential. For distributed generators being part of the electricity machine is a co-dependent relationship. Just as solar-and-battery houses rely on mains power, so the grid will increasingly need to be able to get help from and coordinate these distributed systems at critical times. Being grid-connected enables households with storage to access new revenue streams. There are important mutual benefits.
The societal importance of the grid is most visible during times of peak demand, when every bit of generation is being coordinated to make sure the lights stay on. Not just for houses and air conditioners, but for those neighbourhood services such a traffic lights, hospitals and supermarkets. At these critical times, off-grid consumers won’t be contributing anything. Their banks of batteries combined together could be vital. If there is a blackout for whatever reason, this will be their moment of triumph, when all that excessive spending and virtue signalling finally pays off. They can sit at home with their lights on and air conditioner working, while everyone else is in the dark. Ironically, they could have got the same outcome from just buying a diesel generator.
Going off-grid in remote Australia is a necessity. But cutting the wires while living inside the grid should not be permitted. This is antisocial behaviour in the delivery of a social good. At a critical time, when everyone in the grid needs to pull together, some would prefer to cut and run. It also encourages inefficiency: distributed batteries at scale can deliver real benefit for the grid. They will also more handsomely reward their owners, smooth peaks and, if coordinated, can provide valuable ancillary services. At key parts of the grid that are expensive to service, the development of independent micro-grids and even off-grid households may be more efficient and beneficial. This is a planning decision for the networks that provide this service. The grid is not any one company or government. It is society. Like planning for solar PV, we should think carefully about all the rules for all participants.
The fourth quarter of 2020 saw the NEM reach lowest average demand since Q4 2001 – with SA and Victoria’s spot prices hitting record lows. Are customers benefiting from the price suppression effects of renewable energy generation? Or is the market telling us a different story?
The way 2021 has started, you could be forgiven for thinking it is the year of the big battery. Plans for the “world’s largest battery” were unveiled for the Hunter Valley, while Meridian Energy announced a battery energy storage system to be co-located with the Hume Hydro Power Station. These are just the latest in a series of big battery project announcements.
Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.