25.9 C
Byron Shire
April 11, 2021

Unfair power utilities face mass defections from grid

Latest News

A win for the roughy

The battle for the 'roughy had been a tough road for conservationists and hopefully this win will be the last fight.

Other News

Northern Rivers COVID restrictions lifting at midnight

NSW Health has confirmed that COVID-related restrictions for the Northern Rivers will be lifted at midnight tonight (Monday 5 April).

Lilac house bound by red tape

Mullumbimby resident Nicole Haberecht is facing a $3,000 fine and the prospect of repainting her house after Council made a demand that she change the colour after it was painted a shade of lilac.

Wooing the discerning gin drinker with Husk Botanic

Husk founder, Paul Messenger, introduces his new Husk Botanic – a fresh cane spirit, designed to be mixed with...

Council crews working hard to repair potholes

Tweed Shire Council road maintenance crews are out across the Tweed's road network repairing potholes and other damage caused by the recent prolonged rainfall and previous flood events.

West Bank apartheid

Palestine Liberation Centre, Byron Bay The ABC’s Religion and Ethics Report this week featured an interview with former Israeli cabinet...

inGrained Foundation grants program returns

In its third year, the inGrained Foundation’s Northern Rivers Large Grants Program returns with a $100,000 funding pool, ready to support a diverse range of local not-for-profits.

By Giles Parkinson, reneweconomy.com.au

Australia’s major utilities are being advised they need to give fair treatment to local energy generation – such as rooftop solar and battery storage – if they are to avoid the so-called death spiral that threatens their business models.

A new report from the Institute of Sustainable Futures (ISF) at the University of Technology in Sydney suggests local generation needs to be adequately rewarded to prevent mass defection from the grid from consumers unhappy about their treatment from utilities.

The ISF is proposing two possible tariff alternatives which they plan to test in 2015 – one is a local generation charge, and another is a ‘virtual private wire’, a bit like ‘virtual net metering’, where a group of consumers share the output of a single generator.

The proposal by the ISF is significant because there has been a massive pushback against the utility response to solar and storage, which has been based around lifting fixed tariffs, accusations that solar households are ‘free-riding’ on the grid, and paying minimal amounts for electricity exported back to the grid.

This latter issue has been the most contentious. Despite numerous attempts to obtain a ‘fair value’ for solar, the desultory tariffs now on offer have caused solar advocates and other analysts to say they will simply accelerate what the networks are presumably trying to avoid – mass defection from the grid.

Solar households currently get paid little for any excess electricity they generate – 5.5c/kWh in some areas, a voluntary payment in others.

This means that consumers are now motivated to consume much of their solar power as they can on site, or to install batteries to store it for use later.

This is expected to accelerate dramatically when gross feed-in tariffs expire in NSW and Victoria, and there is concern that when battery storage costs fall far enough, and/or consumers get irate or motivated enough, they will simply disconnect.

The response by utilities to hike fixed charges might address some of their short-term revenue problems, but ISF warns that it could accelerate grid defection and so make matters worse in the long run.

High daily access charges also raise equity issues as low use, because low income households pay a disproportionate amount compared to the services they receive.

Most of the problem lies in the cost of delivery of Australia’s supposedly ‘cheap’ coal-based generation. Huge network costs – driven by massive investments of $45 billion in the last five years, means the cost of delivery accounts for more than half household bills, and just the network costs are being undercut by rooftop solar.

The ISF says up to one-third of the $45 billion network investment was to meet peak demand growth forecasts that have not eventuated (see graph below) and the current charging structure does not produce optimal outcomes.

isf-peak-590x339It says there is little incentive to reduce peak loads, there is no flexibility to cater for partial use of the distribution system, and the potential benefits of local energy and use are not rewarded.

‘Electricity consumption from the grid, once thought to have an inevitably upward trajectory, has been going down for more than five years,’ the ISF writes in a new proposal.

‘If grid defection becomes a reality, it could precipitate an untenable situation for network operators, where rising prices push customers to reduce consumption or even disconnect from the grid, which increases prices and further drives down consumption.

‘Those customers who remain grid-connected face higher and higher prices as they pay for legacy infrastructure, built to serve a larger customer base and meet now out-dated demand forecasts.’

To try to address this, ISF is proposing two new possible tariff systems that could provide a solution, and which will properly reflect the value of local generation to the network.

Under the ‘local generation credit’ system, a credit is paid according to how and when a generator exports back to the grid.

Under the ‘virtual private wire’, the calculation of the credit is only carried out on the portion of electricity exports that are used by local customers.

The export is ‘netted off’ at the customer’s site on a time-of- use basis, and the amount used at the customer’s site forms the basis for the calculations.

It has various methodologies to calculate those tariffs – based around volume or current network tariffs- which it is discussing at workshops to be held this week.

The ISF says network charges need to be restructured to ‘recognise the value of local energy’ and to recognise the actual proportion of network utilised. This, it says, will reduce the incentive to maximise ‘behind the meter’ generation or actually disconnect from the grid.

Providing a level playing field for local energy may also prevent customers from disconnecting from the grid, which has multiple benefits.

Firstly, it will prevent the upward pressure on electricity prices for customers remaining on the grid.

Secondly, grid electricity services are likely to be more reliable than stand-alone systems in terms of maintenance down time, voltage, and power quality.

Finally, grid connection allows customers the ability to sell exported energy (‘local exports’) or provide other services such as voltage regulation.

ISF says that local generation needs to be valued for the benefits it can bring to the network in providing energy when it is most needed, and to reduce the peaks. It sees the networks evolving into something like this (click to enlarge).

isf-grid-590x359Developing appropriate local charges and payments will enable network operators to start ‘shaping’ local energy to deliver effective network support.

But it notes: ‘The most important benefits for network operators from enabling local energy are likely to be in the medium to long term, in ‘future proofing’ their business model.’

Support The Echo

Keeping the community together and the community voice loud and clear is what The Echo is about. More than ever we need your help to keep this voice alive and thriving in the community.

Like all businesses we are struggling to keep food on the table of all our local and hard working journalists, artists, sales, delivery and drudges who keep the news coming out to you both in the newspaper and online. If you can spare a few dollars a week – or maybe more – we would appreciate all the support you are able to give to keep the voice of independent, local journalism alive.


Please enter your comment!
Please enter your name here

Maybe Canberra needs a bit of distraction biff

Mick breathed in but his Cronulla Sharks football jersey struggled to contain his well-insulated six-pack and he held up his hand as he approached Bazza in the front bar of the Top Pub.

Council crews working hard to repair potholes

Tweed Shire Council road maintenance crews are out across the Tweed's road network repairing potholes and other damage caused by the recent prolonged rainfall and previous flood events.

Poor Pauline

Bob Vinnicombe, Sefton A lot of hypocrisy from Labor and The Greens about respect for women. Look at the treatment they dished out to Pauline...

New film celebrates getting back outside

'Free From Lockdown: Back Out in Nature' is a new short film in which a group of disabled and non-disabled performers from the Northern Rivers celebrate being in nature after COVID lockdown.