By clearing the solar congestion in Australia, the sunshine is being bought each methods
This article originally appeared in SMH.
There are now more than 2.6 million households and small businesses with solar PV on their roofs. By 2030, 6 million households – 50 percent of us – are expected to use a distributed energy source such as solar PV and batteries or electric cars to power our lives.
This is a quick, exciting, and challenging change considering it took Netflix 20 years to replace blockbusters and Spotify about 10 years to dethrone iTunes as the music player of choice.
Combating solar congestion … a pricing system for receiving energy from the grid and selling it back to the grid when it is convenient for you. PETER RAE
The problem is that – unlike Netflix or Spotify – energy flows along real poles and wires and not along the virtual highway. And right now it looks like rush hour.
At the heart of the problem is that the power system was built in a different time. It was set up to bring electricity into your home, not to make your house send electricity back the other way. Now that power is increasingly flowing in both directions, we are seeing new challenges.
If we do not take action against them, households that want to export electricity to the grid via their solar modules may in future see the sign “closed”, as the existing grids will simply be full.
This will be a problem for existing solar owners – the pioneers – and an even bigger problem for newcomers looking to get on this solar highway. In the next ten years this will be another 3 million households that want to generate a return on new solar modules.
Imagine you want to join the solar revolution and your power grid says go right ahead and join the grid, but the amount of energy you can send back is a fraction of your capacity or nothing – because your neighbors got on first and your local poles and wires are at full capacity.
This is a problem now and it's only getting worse. We recently saw reports of Victorian solar owners unable to get power back into the grid, and there are also export restrictions on solar energy in NSW distribution grids. Just last week there was near record breaking minimum demand in South Australia, with the market operator having to remotely shut down thousands of panels to stabilize the network.
The obvious solution is to build more poles and wires to accommodate everyone. But as anyone who lives in or visits an Australian city with toll roads knows, we will all pay for these new infrastructure networks either directly through tolls or indirectly through our taxes. Large infrastructure costs money.
If our common goal is to give anyone who wants solar the opportunity to make a return and access the poles and wires, it is clear that the existing situation is not working. First, if we limit the amount of cheaper renewable energy in the system, all of our energy bills will go up – which would also slow the decarbonization of the sector.
Second, if you spend a lot of money building the network, more solar power will come in. However, there are affordability issues, who pays and what happens to those who cannot access or afford panels? It is not fair to allow some to use the solar road while others are stopped even though everyone is paying to build it.
The Australian Energy Market Commission believes the answer is to look at the problem differently and use the grid more intelligently. Today we published a draft reform package to remove these “congestion” in the network.
We ask for feedback on new measures that will give power grids a greater incentive to offer export services that meet customer needs. The success would look like this: More people send more electricity into the grid more often.
We also suggest that networks be allowed to develop reciprocal pricing schemes. This can result in being rewarded for sending power to the grid when it is needed most, and being charged for sending power when it isn't. This eases the overload by distributing the power consumption over the day. It makes better use of the freeway and minimizes the need to build more.
Each network would create its own pricing plan tailored to its own circumstances and customers. It would probably look like a menu of options for customers to choose from. So you can decide what you value as a customer. You can use the energy you generate to power your air conditioner on a hot day, or you can trade it in for extra income.
Some people fear that this means they will have to pay every time they export electricity. That is not what this reform package is about. Depending on how solar owners react to these incentives, many could actually make more money. Networks could also choose not to charge for exporting electricity.
Protective measures are necessary to protect consumers. Networks need to listen to their customers and work together on pricing solutions that meet a network's physical requirements, customer preferences, and government policies, as these can vary widely. There will be “tariff trials” so that the option networks agreed with their customers can be tested before something is rolled out more widely.
That is why we have not given any price information. We want to enable flexibility. Any new plans the grids develop will need to be approved by the Australian Energy Regulatory Agency to ensure they are made available to consumers.
More solar, batteries and electric vehicles are good things if we get the right settings in place. You can help all of us decarbonize faster.
It will all take time – so we have to start now. We cannot hold back the tide of change in the energy market and we certainly cannot pretend that is not happening.
Benn Barr is executive director of the Australian Energy Market Commission.