Prices will rise unless there’s investment in integrating solar and batteries, says Australian Energy Market Commission
We’ll all pay higher prices unless the electricity grid is opened up to homeowners with solar panels and batteries having a better chance to make a quid, the electricity market rule setter says.
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Everyone will pay more for electricity and homeowners with solar panels and batteries will miss out on the full benefits of their investment unless reforms are made to better integrate the technologies in the grid, the nation’s rule-setting organisation says.
As part of a major review, the Australian Energy Market Commission calls for urgent action because investment decisions now will have effects for decades ahead.
Already, solar panel owners were being prevented from selling energy into the grid at certain times and places because it was congested, the commission said.
“The electricity sector is undergoing a major transformation,” commission chairman John Pierce said.
“Distributed energy resources — such as solar panels, battery storage and electric cars — are fundamentally changing the way consumers engage with energy markets.
“They can help to deliver clean, secure, reliable and low cost power for everyone on the grid.
“It is very costly to invest in generation and network infrastructure when it is only used for a few hours each year to service peak demand.
“By more efficiently using the energy produced by distributed energy resources, and by encouraging consumption and storage of energy when it is cheapest, both power bills and demand on the electricity network can be reduced.”
South Australia’s distribution business, SA Power Networks “is probably the leading business” in pursuing the changes recommended by the commission, he said.
This included plans for a cheap “solar sponge” tariff in the middle of the day and facilitating virtual power plants of linked up home batteries.
SAPN spokesman Paul Roberts said consultation on further changes were underway.
“Plans include implementing a flexible limit on how much customers feed into the grid,” Mr Roberts said.
“Currently, there is a fixed export limit of 5kW, but under a flexible system we are planning for the near future this could be removed for most of the time and an export limit applied on only a few afternoons on a few days a year.”
Energy and Mining Minister Dan van Holst Pellekaan also said SA was ahead of other states with the home battery program and other initiatives.
“We welcome this greater focus from national bodies,” he said.
AGL on Thursday said it had achieved its target of connecting 1000 households in SA with home batteries into a virtual power plant.
“We are proud to have reached the milestone of having 1000 batteries in the virtual power plant, which was a world first when announced, and is now the largest VPP of its kind operating in Australia,” AGL general manager distributed energy Dominique Van Den Berg said.
AGL’s project is one of five virtual power plant schemes in SA, supported by the State Government’s subsidy of up to $6000 per household.
The Australian Energy Market Commission forecasts that the uptake of solar and batteries will continue to grow and expects two thirds of consumers to have installations by 2050.
At the moment, more than two million Australian homes have solar power.
The commission also expects 25 per cent of vehicles will be electric by 2039.
Its report, Integrating Distributed Energy Resources for the Grid of the Future, says potential benefits for all customers are “substantial”.
“Conversely, consumers will bear the cost of distributed energy resources not being integrated into the electricity system efficiently,” it says.
“A system that does not provide consumers with choice or reward supportive behaviours could drive up costs.
“Electric vehicles could add to peak demand instead of smoothing it, zero marginal cost solar generation could be inefficiently constrained, prices could become more volatile instead of less, and consumers could be driven into supply arrangements where developers or local monopolies control their supply and appropriate their distributed energy resources benefits.”
Mr Pierce said price structures needed to be reconsidered.
“How much energy you consume in kilowatt hours you consume is not the main driver of network costs,” he said.
“If we can get prices structured around the things that actually drive network costs and things which provide benefits to the network then we can have more confidence that the infrastructure that is put on the ground is the minimum necessary to then minimise the overall cost.”