A major new study by the CSIRO and Australia’s main networks lobby has highlighted the key role consumer-installed and owned distributed renewable energy and battery storage will play in the electricity system of the not-too distant future.
As we reported on RenewEconomy on Tuesday, the Electricity Network Transformation Roadmap report, released on Tuesday by CSIRO and Energy Networks Association, found that a decarbonised energy grid by 2050 – comprising more than 90 per cent renewables, most of which would be distributed wind and solar – would save billions in upfront capital costs and consumer bills, and deliver a secure electricity system.
But the other main message from the network owners and scientists is that the best way to supply reliable and affordable energy is through local generation – the report suggesting that nearly half of all future generation will be on site in homes, business and communities.
Based on the zero carbon by 2050 scenario suggested by the Climate Change Authority as necessary for Australia – and other countries – to meet the Paris climate goals, the report found that between one-third and one-half of the solar component of a 90 per cent renewable energy grid by 2050 would come from the nation’s rooftops.
“We started to look around and see how that viable would be,” Graham told RenewEconomy in an interview. “Frankly, it took a while to convince ourselves. But when we started looking at the falling cost of batteries, and the profiles of variable renewable sources, we could see that it could be done.”
Indeed, the report found that by 2050, more than 10 million customers would own distributed resources like solar, storage, home energy management systems and electric vehicles, which they would be able to use to sell grid support services worth $2.5 billion per year.
Rooftop solar PV was projected to grow six-fold within a decade, and 16-fold by 2050, which is the equivalent of 80GW. Up to half of all electricity generation would be sourced “locally”, mostly on rooftops.
Battery storage uptake would also be significant, accounting for nearly 100GWh at the local level alone. This would be critical in the shaping of the new grid, providing balance of supply and the network services needed, along with centralised storage, which could be from batteries, pumped hydro, solar thermal, or other.
“We think that battery storage is going to be built anyway, by the customer end,” Graham says. And that means that the grid will have to become very interactive, and smart, and need to manage this extraordinary transition.
That need is particularly critical for the networks, with the threat of grid defection still very much alive, and a major concern.
The CSIRO and the ENA want policy makers to act fast – and before it is too late. One of the essentials is to get bipartisan support on climate policies, inlcuding carbon pricing, and the other is to get cost reflective tariffs in place as soon as possible.
By these, the ENA is suggesting demand tariffs, which forces people to think carefully and consider other options at times of peak demand. It also wants a proper roll-out of smart meters, and not the ad hoc distribution that is taking place now.
ENA’s John Bradley hopes to lure those tempted by grid defection with special “stand alone power system tariffs”, that would offer a discount on grid charges, the opportunity to earn money for grid and peak demand services, and an agreement to “stand alone” at times of peak demand.
Bradley speaks of $2.5 billion of payments going to consumers a year in response to “network services” – helping meet critical peak demand, responding to average peaks through demand response and demand management programs, providing security of supply with services such as frequency control.
The ENA is also taking a close look at the New York Reform the Energy Vision program, which is now emerging as a blueprint on how grids can redefine themselves, encourage consumers to take part by generating and storing their electricity, create microgrids, improve reliability, slash emissions and lower costs. What’s not to like?
To do this, the ENA wants to see more trials of the type that SAPN are doing in South Australian on using customer-based storage as an offset against grid upgrades, and of the virtual power plants and peer-to-peer trading being trialled in South Australia, Western Australia and elsewhere.
“We should allow a few of those different frameworks to emerge,” Bradley says. But there is bound to be tension between the networks and the retailers, who want to keep them out of the household market and also protect their ageing centralised generation assets.
Bradley says that if the grid retention strategy works, and rapid policy changes allows networks to evolve, then the savings are tremendous – in what the country can achieve in emissions reductions (zero in the grid by 2050), in terms of renewable penetration (more than 90 per cent by 2050, mostly wind and solar), in reliability, and in cost savings.
He sees $100 billion in overall network expenditure savings by 2050, $16 billion of avoided network infrastructure through household solar and batteries alone, and network costs falling by one-third.
This should, and must, given the technology alternatives and the social benefits of a properly priced and structured grid, translate into energy savings for consumers.
An active family with solar and storage will make $414 in annual savings in average household electricity bills (compared with the roadmap’s counterfactual, business as usual, pathway), while a medium family who cannot take up distributed energy resources is over $600 p.a. better off through removal of cross subsidies.
Here’s how they see it playing out for consumers on business as usual (counterfactual), and the Roadmap.