Networks throw a bomb into rooftop solar market with tariff changes
The emerging market for rooftop solar on commercial business rooftops is in danger of being eroded following changes to network tariffs that could mean consumer bills increase with the addition of rooftop solar, rather than fall.
Networks across the country are trying to defend their revenue base with major switches to tariff structures. In Queensland, the push is on for higher fixed network charges. In NSW, there is a proposal to impose a network charge (a solar tax) on exports from the grid.
In South Australia this week, the local network operator has revealed plans to impose “demand tariffs” – based around the maximum consumption from a user in any 30 minute period over a month – to home and small business consumers.
South Australia Power Networks justifies this on the basis that they are “cost reflective”, but the solar industry is up in arms, saying that such bills must reflect the network peaks, not individual usage peaks, which may occur at completely different times.
SAPN has admitted that its new tariffs could halve the rate of solar installations in the state, although it says that it may encourage battery storage. That appears to be the de-facto policy position – to encourage all new solar installations to come with storage.
CORENA, a volunteer run not for profit community group that uses donated funds to give interest free loans to help other non-profits reduce their bills with rooftop solar (such as this community centre pictured left), says the equation for rooftop solar has gotten a whole lot more complicated.
Any meter change associated with installing solar PV will trigger an automatic switch to a demand tariff for anyone with a small business account and a multi-phase supply, even those with relatively small electricity consumption.
Spokesperson Margaret Hender says CORENA found out by chance, just as they were about to fund a solar installation for a non-profit community organisation.
The new demand tariff meant that the savings – once easily calculated by the reduction of electricity consumed from the grid – were now difficult to quantify.
In some cases, according to SAPN data, it may mean that bills for small business may rise, particularly if they were not able to reduce their maximum grid demand, no matter what time it occurred.
“SAPN modelling shows a wide range of potential outcomes, with some customers having much higher bills and some having lower bills,” Hender says.
“The differences are large enough to suggest that in a worst case scenario, installing solar and the resultant forced switch to demand tariff may result in higher electricity bills than doing nothing.”
Hender says the new “Low Voltage Actual Demand tariff” features low usage charges and high monthly demand charges based on the highest peak in demand in that month.
This makes it difficult to estimate how much electricity bills will be, and even more difficult to estimate the cost-effectiveness and payback time of a solar PV installation, a critical component when assessing loan viability.
“Certainly, the relatively low usage charges suggest payback times will be considerably longer than previously unless installing solar PV happens to also reduce demand at times when demand charges are highest.
“That seems unlikely since the lower ‘shoulder’ demand charges don’t start until 9:00pm.” Hender says the impact is so great, CORENA will have to focus on regions without a demand tariff.
Local installers now report that almost all potential solar customers in the small business sectors are asking about battery storage as a way to ensure savings. This is likely to lead to even less use of the grid.
Steve Blume, the president of the Australian Solar Council, and the Australian Storage Council, says SAPN have made a “big error” by not linking the demand from the user to the real costs to the network of peak demand.
“If the actual demand at any time contributes to a high network peak demand – so requiring resources to meet that peak – then it might be reasonable to send a price signal to the consumer to change their time of use to lower that overall high cost demand,” Blume says.
“But if that link is absent – and the maximum demand of any particular customer in any month could be entirely unrelated to the peak loads needing to be managed by the network.
“If that is the case, then this is simply a price gouge and/or a method to resist adoption of self-consumption technology ie: solar PV and storage.
Blume also says that the added value of solar PV generation – which by SAPN’s own admission has deferred and narrowed the peaks, and helped increase stability at times of extreme demand – have been ignored.
“This is a dumb and simplistic proposal and ultimately self defeating.
“They seem not to realise that consumers now have choice and seem quite willing to pay a higher short term cost to move away from businesses they do not trust.”
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Giles Parkinson is founder and editor of One Step Off The Grid, and also edits and founded Renew Economy and The Driven. He has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.
my first “solar quote” went along these lines. ie, forget about it, you can not get $$ back for your investment. You consume so little your cabon footprint is smaller using straight coal. I tried to mention that “Of course it is, we need the coal industry to fuel our transition.” but was interrupted. Not once mentioned by him, though, was that you DO get to tap into free, clean, infintie energy once installed (bonus much). Not very impressed with my first (in person) rep from Solar Quotes. Now i read this article. *big sigh.
This article appears to say that we may now be forced to PAY to export excess (clean energy) back to the grid? If so, that’s a bit over the top steep. Grrr. Fair go. 🙁 *expletive .>:(
Please correct my interpretation? :/
Its true we are at the beginning of mass introduction of solar-battery load-shift systems, and many players do not understand how different pieces of kit do their job. We’ve been doing various sorts of solar battery systems for 15 years, and we know it is very much a case of specifying and offering to customers what they need, and no more. Ie its very easy for a supplier to offer a system with (expensive) features/capability not required. If you keep searching (eg online and/or YP book) you may find someone local who can give you a real-world meaningful quote. We are in SA.
The Peak Demand Charges have already been applied to commercial customers for many years. If these charges would be applied to residential customers, it would definitely reduce the competitiveness of residential solar systems~
Hello Anne and Giles,
This is exactly what utilities in Australia, the USA, Spain, and elsewhere are trying to do.
The question is, do you have Public Utilities Commissions in Australia? Are utilities licensed and regulated by public agencies at all? If not, grrr is good, because you have a fight on your hands. Even if the answer is yes, the next question is, are the regulators in the utilities’ pockets? If yes, grrr is good again.
If it really is grrr, then the question is how to organize all the relevant sectors (rooftop and big solar, wind, storage batteries, demand response-like energy management systems, big companies like SunPower and SunEdison, cooperatives, credit unions, community banks, Community Choice Aggregation (CCA) if it’s legal, etc., and find universities like U Tech, Queensland and other progressive schools or departments who can drive the analytical work, using Geographic Information Systems (GIS) to both manage gobs of data and display it in a way ordinary humans can deal with. What analytical work? Lots! This could be a great career path for bright young kids.
Ideally, the design criteria for smart microgrids and nanogrids (perhaps an apartment building) will be programmed to face off with maps of demand in blocks, neighborhoods, suburbs, cities, rural areas, and everywhere. This would also have shortest-route-finding, to figure out where new, private or cooperative- or community-owned connecting lines would best go. Look closely at neighborhoods, and at clusters of buildings and other uses in open spaces. Cover the roofs with solar, put wind turbines on open hilltops and in passes — wherever the wind is funneled through a Venturi and accelerated. (The power in the wind goes up with the cube of its velocity.)
Bring in the energy efficiency, and behavioral conservation, experts and get them to represent what’s possible, and the costs, and subtract that from the loads. Actually, do that first, because it’s the cheapest possible electricity (what you don’t use).
Where this is headed is an energy counter-culture that uses crowd-sourced knowledge and ingenuity to be able to meet your energy needs in as distributed a manner as possible, with clarity about the minimum that each customer can get by with when there is prolonged bad weather, or a major fire, or other abnormal reduction in energy harvest. This is a good time to identify everyone who is frail, disabled, or too young to be able to cope with, say, loss of air conditioning for days at a time, or loss of power to their respirator for minutes at a time. GIS heat maps can help with designing and planning responses to safeguard them.
Once you know how much uninterruptible supply is needed in each place, the solar and battery storage designers can do the larger-scale calculations, and provide detailed apps for everyone to use for the fine details, which then get aggregated into the community maps, then into the regional and province maps, etc.
It’s a social networking, virtual community organization that, over a period of months to a few years, becomes capable of operating a complex system more intelligently than the incumbent system operators are willing to do. With agile design, that can be done in iterations, with very frequent, or constant, feedback on how effective the design is in any circumstances that come up, or that people think are reasonably possible in a time of climate disruption.
About costs: battery costs, especially, are very high now. They have their own, perhaps as yet undocumented, equivalent of Moore’s Law, so the more are sold, the more the cost, and hence price, will fall.
The above is all about designing, identifying the foundations that need to be laid, and putting in the solutions that sit on them, sufficiently to get to a point where you can all shout together, Paradigm Shift! — and flip the switch that disconnects you from the incumbents’ grid. That big splashing sound would be the belly-flops of incumbents who are too greedy.
Of course while you are at it, you might choose to talk and plan about a lot of other subjects, too. After all, you now would be a self-aware aggregation of some enormous percentage of the population, and anything good is truly possible.
Besides the people in UQ, I think Giles could be an ideal person to help make all this happen, as he is extremely knowledgable and connected (or how would he write so much great stuff?), and a very effective articulator of the complex, so people can grasp the meaning and the impact. And passionately devoted to what’s right and just!
By the way, if you decide to do this, please share about it, and share the software, globally!
So, Australia is following other backward thinking countries?
http://www.philipsmithlawrence.com/
To address the points in the article above in order we can:
1) It is true we can’t do anything about Fixed Charges except go off grid. However apart from really poor people, the bulk of most peoples electricity account is usage charges not fixed charges and solar can easily and cost effectively reduce usage charges,
2) A solar tax on exports to the grid can be avoided by configuring a hybrid solar system to not feed back power to the grid and instead focus upon maximising self consumption. Such a system needs a few batteries and an intelligent inverter that can manage batteries,
3) A demand tariff on the highest 30 minute peak usage in a month can be avoided by a hybrid inverter, by limiting the Current (Amps) or Power (Watts) the system draws from the grid at any time, and instead drawing peaks of electricity usage from the batteries,
4) Meter Changes triggering automatic changes in electricity charging for solar installs can be avoided by installing all equipment behind the meter instead of changing meters. Hybrid solar systems configured to not feed back power to the grid, only use grid electricity for purposes like trickle charging batteries over night in winter. The grid doesn’t know what is happening behind the meter and what electrical appliance is using electricity. In this way the hybrid inverter configured to not feed back power to the grid functions the same as any other electrical appliance in the household,
5) Payback time of a hybrid solar system remains the same. The system is configured to recover its investment by reducing usage charges and load shifting any shortfall’s in winter power generation by trickle charging batteries during off peak electricity rates. The PV pays for itself by reducing usage charges. The modest amount of batteries pay for themselves by load shifting,
6) The main thrust of this article appears to be a concern that a demand tariff could catch solar systems out, as solar only trickles power into the system, hence an assumption solar will not substantially reduce the peak electricity consumption in any given 30 minute period, however a hybrid inverter can do this, by drawing power from batteries during periods of peak onsite demand and delaying accessing the grid to recharge batteries slowly at night when household electricity use is otherwise low.
In summary, if a solar system is configured skilfully, there is nothing electricity networks can do to slow solar uptake, as solar reduces electricity consumption behind the meter.
Good thoughts, but in SA the utility (SAPN) demands a meter change once you install an inverter that requires their approval – which is any inverter capable of “interacting with the mains” (my paraphrase), which includes matching inverter export to cancel import to give net zero export, behind the meter. Full standalone systems avoid this…..
Perhaps a way out of that is not buying an inverter capable of interacting with the mains. I think my inverter is currently listed as a “remote inverter with charger only facility”. It’s a Victron 3000 Volt Amp 2500Watt inverter/charger with a 50A transfer ability from the grid – which can be used to charge the batteries in winter or top up the 2500Watt peak output power of the inverter if I switch too many appliances on at once. In terms of the current limiter on the grid input, which was originally designed for boats hooking up to a weak onshore grid, it can be set between 5.3 Amps and 50 Amps. This means I can predetermine my “peak demand” by turning a dial or setting the inverters config settings.
Stand-alone system means the user has to really know their loads, otherwise they can blow their inverter. We’d love to sell stand-alone to everyone who can manage their loads! ;o)
And yes, the 50A transfer certainly makes it easier, but some houses may push the limit even on that, leading to contactor failure given enough years, perhaps. Comes down to correct design in the first place, as you allude to.
That’s true, that’s an issue of learning to live with solar by not turning on too many appliances at once, buying low Wattage energy efficient appliances and appliances with motors that have a “soft start” feature. Otherwise the inverter output rating may be exceeded, producing firstly a high temperature alarm and then secondly, system shutdown with the inverter protecting itself from the user damaging it.
I can’t imagine anyone would need the approval of SAPN unless an inverter is setup to feed back power to the grid. Why not just setup all your installs as a remote solar system and provide people with a battery charger. No utility can charge an additional fee if a person wishes to connect an AC battery charger to a power point and charge their car battery over night. It is no one’s business what I use my power for. It is the same process as a remote inverter that happens to have a battery charger to throw out a cord and charge batteries for a deficit in winter, thus preventing the need for expensive over sized solar systems, just to get us through cloudy days or winter.
Yes I agree with you, and in the case of the inverter/charger-only, no problem. But it remains that SAPN wants permission if you connect an inverter capable of export, even if it set not to.
Why tell them? Is it that the inverter has to be listed to get the Solar Trading Credits?
STCs have their own requirements that narrows the models of equipment that can be installed. As an installation company of 15 years reputation we can only recommend complying with statutory requirements! ;o)
So what your saying is the authority will change its fee paying structure based upon the theoretical capability of an inverter – even if it is not configured to interact with their grid, that is, feed electricity back to their grid. If they can really charge for theoretical possibilities, then I guess your stuck with a fallback option of only using “inverters with charger only capability”. For the record, I’m not suggesting people act against the law. I’m asking what acting behind the meter has to do with the power companies and clarifying if they can charge customers differently, based upon theoretical possibilities. That doesn’t sound legal or ethical to me.
Yes – its very murky. The (their?) background position would be that there is a legal liability/responsibility for the network, on anyone who plugs *any* appliance into their network!
As far as I can see, electrical safety is a different issue to changing a fee paying structure based upon a theoretical capability of an inverter feedback back power to the grid. Inverters listed to feed back power to the grid have already complied with electrical safety standards, ensuring the inverter cannot feed back power to grid in the event of a grid failure.
That’s what a boat does. It has a remote solar system and at certain times of the year, it cruises into a port and throws out a cord to charge its batteries. Campervan’s traveling around the country do the same thing. No utility says heh, that boat or van has a solar panel up there!
Install a large battery system with a plug. Plug it into the grid when you need to charge it. Unplug it and connect it to the house when you need to use it. Keep the two electrical systems completely isolated apart from that.
SAPN can’t say anything about that. You have a grid connection which does nothing but recharge your portable battery, which is legal.
I just glanced the SA power network website and their guidelines http://www.sapowernetworks.com.au/public/download.jsp?id=23869
Appears as if they are doing their best to kill off or make it hard for the Grid-Connect Paradigm. As if a low export tariff isn’t enough, there is a journey into how many fees can be imposed to those households or businesses who wish to feed electricity back to the grid. This raises the question about why we persist in wishing to???
At least until there is a royal commission into fair relations with the grid, I suggest we chose inverters which do not feed electricity back to the grid. We can purchase remote inverters with a battery charger, to merely maintain a grid connection for assistance in winter and during cloudy days. As far as I can see. all we need to do to escape SA networks contract, is ensure the solar system is a passive recipient of the grid and not an exporter.
Excellent criticism.
SAPN are idiots because this is going to lead to massive off-gridding. Encouraging customers to install batteries — well, they *will* install batteries. Solar is massively cheaper than grid in Australia; with the new tariffs and battery prices dropping, solar + batteries will be cheaper than grid too. Once batteries and solar are cheaper than grid, people will start pulling the plug. Or setting up microgrids.