Households drive renewable energy transition as pollies go nuclear at one another
The solar panels on our roofs and EVs in our garages are set to power us into a renewable future. And increasingly, the power is in the hands of consumers with batteries.
This article appears in The Green List: Australia’s Top 100 Green Energy Players, out on Friday.
By 2030 Australia will already have enough battery storage from home systems and electric cars to meet the demands of the renewable energy transition. That’s the assessment of Amber Electric co-founder and co-chief executive Dan Adams and, notably, it excludes the development of any large-scale commercial battery farms.
“That’s pretty remarkable,” Adams says. “There will probably be some role for large-scale batteries, but actually there will be enough battery capacity in our home batteries and electric vehicles to meet nearly all the battery-storage requirements to get us to 100 per cent renewables. The big question is, how do we unlock that battery capacity?”
This is where the tech industry potentially has the answer. Australian households have embraced rooftop solar more than any other country, producing about 1166 watts per person, ahead of The Netherlands with 1040 watts, and Germany with 807 watts. In fact, there is so much solar power sloshing around the grid that, for a brief period of time in 2022, it even matched the amount of power generated by coal. While this can create problems for grid stability, it can also present opportunities – and unlike prawns at Christmas, this power can be stored in people’s batteries for use later.
To capitalise on this, almost every electricity retailer offers a virtual power plant, which allows an energy company to control a household’s battery, buying power from it in times of peak demand such as during the evenings. A person can monitor this activity via a smartphone app.
With so many households buying batteries to power their homes, this seems like a neat solution – making the most of what we already have – to accelerate the renewable energy transition. But like most good things there’s a catch, and to understand what it is, you must first look at why Australians have installed solar and battery systems in the first place.
Our love of solar is partly because we have plenty of sun, but also because Aussies don’t like getting ripped off. We don’t want to pay power companies any more than we have to, particularly as prices have already soared to stratospheric levels.
So why is there a reluctance to surrender control of a battery to a power retailer and make a bit of extra cash on the side? It all comes down to value. The feed-in tariffs for virtual power plants are lower than the price a customer pays to buy power from the grid. You’re lucky to get 20 cents per kilowatt hour, when you’re paying almost double that in peak power prices. Allowing a power company to potentially drain your battery for such low returns flies in the face of creating shared value. And here is where Adams identified a gap in the market with Amber, which counts Commonwealth Bank among its backers.
“The traditional virtual power plant model is automating a consumer’s battery for the utility’s benefit,” he says. “Amber’s approach is to actually automate the consumer’s battery for the consumer’s benefit.”
Confused? Adams, who also worked at Tesla and Boston Consulting Group, created Amber Electric to offer customers wholesale electricity prices, capturing his margin via a monthly $19 subscription fee.
Wholesale pricing is not for the faint-hearted, particularly at times when power demand outstrips supply. This can see the variable rates soar to as high as $20 per kilowatt hour, although there is a maximum price guarantee. On the flip side though, the feed-in tariff is also variable, meaning that in peak periods, customers can make a lot of money by exporting power from their battery to the grid at rates that far exceed the minimum stipulated by authorities.
“We’ve got some customers who are earning between 50 and 60 cents per kilowatt hour on average over a month. Their battery exports, particularly in NSW, are discharging into the grid at times when wholesale prices are really high, and customers are earning a lot more,” Adams says. “What that means is we’re helping customers unlock more value from their batteries, up to an additional $1000 a year. That’s really driving the payback period on a home battery down.”
Amber Electric’s SmartShift smart grid is designed to help householders manage their energy use, whether they are using solar power or batteries for storage or on conventional grid power. The “virtual” system reports current wholesale prices and forecasts upcoming rates every 30 minutes, 24/7.
The fact you don’t need solar or batteries means the smart grid allows any household to access variable wholesale prices and benefit from cheaper energy when there is an influx of renewable energy to the system. It also means that a customer can adapt their own energy use – by installing timers on heavy appliances such as dishwashers and washing machines – to when prices are cheaper.
And power prices are generally cheaper when there are more renewable sources in the grid. But when there’s too much renewable energy, to the point that supply is exceeding demand, it can shock some customers who experience a negative feed-in tariff, meaning they have to either switch off their solar panels or pay to export power to the grid.
Amber has protections to ensure that feed-in tariffs never fall below the minimum regulatory rates and will adjust a bill accordingly to ensure a customer is not left out of pocket.
Despite the potential tech offers via automation and making the grid, solar panels and battery systems more intelligent, some of the wealthiest players advocate centralised baseload power, with Bill Gates and Elon Musk supporting nuclear plants.
Microsoft co-founder Gates created TerraPower, which develops advanced nuclear reactors that take up significantly less space than conventional reactors and use reprocessed nuclear fuel, addressing the pesky, dirty, dangerous and expensive problem of nuclear waste.
“Only one source of carbon-free electricity is economic, reliable 24/7, and proven to work on a large scale: nuclear power,” TerraPower says on its website. “Nuclear power generation is criticised by some … because current reactors produce tons of radioactive waste without a permanent, dedicated storage space in this country.
“However, the volume of the spent nuclear fuel produced by a TWR [travelling wave reactor] will be about 80 per cent less than that produced by the commercial ‘light-water’ reactors in use in the United States today. This is because TerraPower’s TWR burns not only the initial enriched material, but also converts and burns much of the natural or depleted uranium in the fuel without reprocessing, compared with the reactors currently in use that burn just enriched material.”
Meanwhile, Musk – whose company Tesla develops industry-leading home batteries and electric cars, as well as solar panel tiles – has urged the continued use of nuclear plants alongside renewable energy investments. “We should really keep going with the nuclear plants. I know this may be an unpopular view in some quarters. But I think if you have a well-designed nuclear power plant, you should not shut it down, especially right now,” Musk told an energy conference in Stavanger, Norway in 2022.
But in Australia, it’s likely households and companies such as Amber Electric will be doing the heavy lifting via solar and battery systems, at least in the short term.
Climate Change and Energy Minister Chris Bowen fired a new salvo in Australia’s energy wars when he released government costings claiming Opposition Leader Peter Dutton’s proposal to convert coal-fired power sites into nuclear small modular reactors would cost $387 billion. The stage is set for a long political battle.
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