Rooftop solar and household batteries to take centre stage in rapid energy transition

The solar and storage resources of Australian households and businesses will have the capacity to meet nearly one-fifth of national electricity market demand by 2050, and rooftop solar alone could provide twice as much generation as coal in a decade.

The new report from the market operator, its 30-year blueprint, says distributed resources will play a central role in providing power and the “firming” capacity needed to support a grid with high levels of renewables, up to nearly 100 per cent.

The predictions come in the final version of the Australian Energy Market Operator’s 2022 Integrated System Plan, its roadmap to a rapid transition to a grid dominated by renewables, featuring two-way energy flows and technologies that will draw on cheap, green power rather than coal, gas and oil.

The ISP focuses much of its 600-odd pages – the main report and its appendices – on the monumental planning and development efforts required to accommodate nine times as much large-scale renewable generation capacity and three times as much “firming” capacity on the NEM by 2050.

But AEMO also stresses the huge influence of the generation and feed-in capability of “millions of individual consumer-owned solar PV systems,” not to mention the batteries – either installed as part of the solar system or parked in  driveways as part of an electric vehicle – that are expected to be added to them.

“Today, ~30% of detached homes in the NEM have rooftop PV, their ~15 GW capacity meeting their owners’ energy needs and exporting surplus back into the grid,” the report says.

“By 2032, over half of the homes in the NEM are likely to do so, rising to 65% with 69GW capacity by 2050, with most systems complemented by battery energy storage.”

And while the projections of five-fold rooftop solar growth are perhaps no surprise – Australia’s world-leading uptake of the technology is, AEMO says, already “radically influencing” the NEM operational demand profile – the forecasts for distributed energy storage are quite staggering.

The ISP modelling suggests that batteries installed in homes or connected to homes via EVs will – through virtual power plants (VPP), vehicle-to-grid (V2G) services and other emerging technologies – provide approximately 31GW of dispatchable storage capacity, by 2050; almost double the amount expected to come from utility-scale batteries and pumped hydro storage (16GW).

“Supporting rooftop PV, behind-the-meter domestic and commercial batteries are expected to grow strongly in
the late 2020s and early 2030s as costs decline, with most domestic systems complemented by battery
energy storage by 2050,” the report says.

“EV ownership is also expected to surge from the late 2020s, driven by falling costs, greater model choice and availability, and more charging infrastructure. By 2050, between 92% (Progressive Change) and 99% (Step Change) of all vehicles are expected to be battery EVs.

AEMO says the integration of all this DER, including EVs, into the NEM will depend on how well the interface with the energy system is planned, and the effectiveness of economic incentives, technology and communication standards, and customer preferences.

“This balance of grid- and household-connected storage solutions reinforces the need for close collaboration between AEMO, network service providers (NSPs) and investors to ensure investments are synchronised to optimise benefits for consumers,” the report says.

AEMO says that the integration and management of DER to maintain the reliability and security of the grid will be an extension of the current evolution of market signals and technological developments, such as smart controls, changing standards for inverters, and evolving retail and wholesale market rules and mechanisms.

But the market operator warns that the effective use of such resources as virtual power plants (VPPs) – aggregated distributed solar and battery storage systems – will require a step change in engagement to ensure they deliver benefits to all participants.

To that end, AEMO says the Energy Security Board’s Post 2025 DER Implementation Plan provides a three-year roadmap towards the effective integration of DER, including the technical, market, system, consumer protections and governance reforms required.

“AEMO is progressing a range of these reforms in collaboration with the ESB and other market bodies,” the report says.

AEMO says it is also working to strengthen the links between the ISP and distribution network planning processes, establishing a working group with Distribution Network Service Providers (DNSPs) and Energy Networks Australia (ENA).

“The group recognises the complex dynamics that arise as technologies such as PV, batteries and EVs grow in
popularity, with constraints existing behind the meter, and across distribution, sub-transmission and transmission networks,” it says.

“These dynamics need to be well understood and planned for to support the long-term vitality of the wider power system and the electricity market.”