By Tanuj Deora and K Kaufmann
It doesn’t take much to figure out why the Smart Electric Power Alliance (SEPA) is taking a group of utility and solar industry executives on a fact-finding mission to Australia in November. Just do a computer search on “Australia + solar,” and among the more than 64 million hits that pop up in about half a second are a bunch of articles announcing plans to construct 12 new utility-scale plants -- the largest of which will be 110 megawatts (MW) -- that will triple the county’s large-scale solar.
The projects are being supported with $92 million AUD in federal funding, which, according to one article, is expected to unlock more than $1 billion AUD in private investment. They will also provide enough electricity to power 150,000 Australian homes. (The Australian dollar -- AUD -- is now worth about 77 cents in U.S. currency.)
Photo courtesy of the Australian Renewable Energy Agency.
Articles about a range of renewable energy projects -- solar, storage and other distributed energy resources (DERs) -- land in our email boxes and on the SEPA Twitter feed almost daily. And while the Australian energy market differs in many ways from the United States, the changes underway in the country of more than 23 million people clearly show that the technological envelope that is solar, storage and other DERs has expansive room for pushing.
Basically, just way too many cool things solar- and energy-wise are going on down under, and even if you’re not on our fact-finding mission, the U.S. solar industry in general is keeping a close eye on Australia.
To bring us all up to speed, SEPA asked Donald McPhail, program manager for energy services and community solar at Energy Queensland, to give us a quick run-down of key things Americans need to know about energy, solar and the development of distributed technologies in Australia. Energy Queensland is a state-owned utility and a sponsor of the SEPA fact-finding mission.
• The market basics: Australia has what in American terms would be called a deregulated market. Generation is privately owned, and base load power is still very much coal-generated. Utilities such as Energy Queensland, primarily provide transmission and distribution -- but with some exceptions due to the country’s extreme geographic diversity. McPhail said his company provides full generation and distribution for about 38 remote small towns ranging from what he calls “typical outback communities” -- consisting of a police station, school and general store-post office -- and more traditional, aboriginal communities. These systems are, he said, essentially microgrids -- in some cases, a central generation facility serving a few towns.
According to a recent BBC article, at least one of those communities, a town of 300 called Tyalgum, is exploring the possibility of going off the grid and running 100 percent on renewable energy.
• Energy prices: They’re high. Residential rates have two components: a daily network charge, which, depending on the region, varies from 80 cents to $1.50 AUD, plus the energy rate, which can range from 18-30 cents AUD per kilowatt-hour.
• The residential solar market: The combination of high electricity rates and a previous, very generous feed-in tariff -- now being phased out -- has produced a strong residential solar market, with the highest number of installations per capita in the world. Nationally, about one in seven of all homes -- more than 16 percent -- have rooftop installations, while In Queensland, according to McPhail, penetration is at about 25 percent with some areas hitting 35-40 percent. Average installation size is around 5 kilowatts, which was the cap for the feed-in tariff program. The high levels of solar have raised reliability concerns particularly on utility distribution systems; McPhail said Energy Queensland is seeing 10 percent of its feeders essentially running backward at certain times of rooftop solar overproduction. Advanced inverters providing grid support services are being installed on most new systems in Queensland, McPhail said.
• Utility-scale solar: The utility-scale market has lagged behind residential. The 12 new projects just announced will raise national utility-scale solar capacity from 240 MW to 720 MW.
• Policy, and market transformation: Australia has set a target of producing 23.5 percent of its power from renewables, including biomass, by 2020. That said, federal energy support for renewables has been in flux, with current debates focused on a proposed cut of $1.3 billion AUD to the Australian Renewable Energy Agency (Arena).
At the same time, the country has two major market transformation initiatives under way. One, the Power of Choice, is focused on giving consumers greater access to information on their energy consumption -- via smart meters, data and other services -- and greater control of their energy costs through different rate and demand response options. The second, the Electricity Network Transformation Roadmap, is a joint project of Australia’s chief science agency, the Commonwealth Scientific and Industrial Research Organization (CSIRO) and the Energy Networks Association (ENA), representing gas and electricity transmission businesses. The Roadmap is focused on setting out a path for market transformation by 2025.
• Solar plus storage: The phase-out of Australia’s feed-in tariff has resulted in a burst of interest in behind-the-meter battery storage, so that customers can hold excess generation from their rooftop systems to offset evening power consumption. One recent analysis, by GTM Research, predicted the Australian storage market could growth 37-fold by 2020, climbing to an annual rate of new installations totaling 244 MW. Distribution utilities and retailers are becoming proactive players in the market with a number of pilots. For example, Ergon Energy Retail, part of Energy Queensland, is testing out utility-owned solar-plus-storage systems on 33 homes. The project aims to generate multiple benefits -- and revenue streams -- from the systems, reducing customers’ bills as well as the utility’s peak demand and overall market risk.
Behind-the-meter solar-plus-storage has only been commercially available for a short time in Australia. Consequently, early results of market expansion and pilot programs, such as Ergon’s, have yet to provide sufficient data to be evaluated.
SEPA’s fact-finding mission will not only include sessions and site visits where we hear from Australian utility executives and energy experts, but opportunities for their U.S. counterparts on the trip to share their experiences and insights.
Key questions for both Australian and U.S. participants will be:
— Can utilities successfully navigate the solar-plus-storage paradigm shift, competing directly with the DER market alternatives?
— Can the new business models now being tested generate sufficient revenue to support the increased demands on the grid?
— How will electricity customers across all market segments view utilities in this new role?
— What internal cultural and organizational changes will utilities have to make to employ new business models?
— What other value streams for consumers, utilities and third parties might other distribution system investments unlock?
Mark Paterson of CSIRO will be participating in a panel on distribution planning during SEPA’s daylong workshop, “Integrating Distributed Energy Resources onto the Grid,” Monday, Sept. 12 at Solar Power International in Las Vegas.
Tanuj Deora is SEPA’s Executive Vice President and Chief Strategy Officer. He can be reached at firstname.lastname@example.org.
K Kaufmann is SEPA’s Communications Manager. She can be reached at email@example.com.