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Network charges may penalise uptake of battery storage, as well as PV

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Australian networks are also penalising solar households, now it looks like they will do the same with those that add battery storage.
The trend among some electricity networks to penalise or discourage the uptake of rooftop solar by imposing fixed tariffs or additional fees is now extending to battery storage, with one network accused of trying to lift charges to households with storage even though they are reducing peak demand.
In an analysis of recent tariff proposals by South Australia Power Networks, which included a since-rejected attempt to apply a surcharge to solar households, the Australian PV Institute says SAPN now seems intent on penalising households that install battery storage, despite their obvious network benefits.

“SAPN admit that batteries will reduce network peaks but still wish to charge PV households that install batteries as if they are increasing the peak,” the APVI, an independent institute, says in a newly released discussion paper.
The issue is important in Australia, which leads the world in the adoption of household rooftop solar. South Australia has the highest rate of adoption in Australia, with 28 per cent of available homes adding rooftop solar, which now contributes more than 6 per cent of the state’s electricity demand over a year.
Official forecasts suggest this will increase at least four-fold in the next decade, to the point where rooftop solar will  provide 100 per cent of the state’s electricity demand at certain times.
Hence the importance of battery storage to balance the output, and to ensure some of it used to reduce peak demand. The state government has announced a tender to install battery storage on its buildings, including Parliament House and the key arts precinct, and the City of Adelaide is also providing incentives.
The APVI says its issues with SAPN are applicable to other networks, because they face similar issues in dealing with solar and storage, and their response with tariff design.
The APVI says that SAPN recognises that the next big development is battery storage, and perhaps electric vehicles. SAPN says the “battery storage has the potential to soak up a lot of the excess energy being generated during sunshine and shift that to later in the day when the network peaks”.

But the APVI says: “Given that the most immediate market for batteries is likely to be people who also have PV, will they be charged for increasing network peaks even though, according to SAPN, they will likely be reducing them?”

The APVI criticism extends to SAPN’s proposed “cost reflective” tariffs for rooftop solar, which the APVI argues is not cost reflective at all. That’s because the the proposed demand tariff on household loads shows very little correlation between the costs charged to the customer and the customer’s demand at the time of the network peak.

This means that many households on SAPN’s cost-reflective demand tariff would be paying for augmentation costs at times when their demand was not affecting the cost of augmentation.

The APVI notes that in SAPN’s own pricing proposal, it acknowledges the ability of solar PV – even without battery storage – to delay and reduce peak demand.

The SAPN submissions says: “The network challenges are different today, with problems of low load during days with mild but sunny weather. In summer, the peaks that used to occur between 2pm and 5pm have moved to become slightly lower peaks between 5pm and 8pm.” (APVI’s emphasis added)
Two things can be taken from this, the APVI says. One, that PV delays and reduces demand peaks; and two, that because demand peaks have reduced, there is no need to augment the network and so (from an augmentation cost point of view) whether PV customers increase or decrease their demand peaks is irrelevant, until such time as demand exceeds previously installed grid capacity.
APVI proposes a “real cost-reflective tariff” with a demand charge/reward component that would be applied only over the peak demand months and only for three hours a day – which would create a better incentive for households to implement options that actually reduce their demand during the time of the network peak.
The APVI makes a damning critique of the assumptions used by SAPN, including its claims that solar households have dramatically different load profiles. It says this is not true, and any changes that are evident are probably caused by metering methods than consumption patterns.