Will solar sales soon go to the dogs without batteries? Image: Adelaide Solar Safe
Australia has seen a decade of explosive growth in renewables, but there’s another big change coming. According to Green Energy Trading chair Ric Brazzale, we’re very close to the peak of new rooftop solar PV.
Speaking to the “Energy Storage: Residential & Commercial” session a couple of weeks ago at the All-Energy 2020 virtual conference, Brazzale was outlining Green Energy Trading’s forecasts for the sector (a replay of the session is available here).
The economics of residential PV are already changing, with high feed-in-tariffs reaching the end of their life and high solar energy production driving down daytime wholesale electricity prices. And as the new economics become the norm, the economics of home batteries will become a vital factor in households’ willingness to invest in new solar PV.
“PV economics will deteriorate until battery economics catch up”, Brazzale told the conference.
The deteriorating economics will soon rob oxygen from what has been a juggernaut of new rooftop solar.
There are still some records yet to tumble, however. Brazzale said 2020 will be another record year for rooftop solar power system installations, following a record year in 2019. He told the conference that last year, 2.3GW of new solar capacity was installed (including both rooftop and utility-scale).
“If we strip out utility-scale solar and just look at the rooftop market, we can see that 2020 will likely be the peak year at 2.1GW. We’re expecting the market to come off next year and probably the following years as well.”
The scale of the market in 2020 is astonishing compared to the last peak (in 2011, when 250,000 rooftop systems were installed). Then, the average size of solar systems installed on rooftops was less than 2kW – Brazzale reckons the 350,000 systems that will be installed this year will average 8kW (7kW for residential installations, and 20kW for commercial installations).
While the market has seen some COVID-19 impacts, growth has been suppressed primarily in Victoria, under that state’s very strict lockdowns. That’s had only a limited impact at the national level, because installation companies diverted resources to other states such as NSW and South Australia.
As well as pushing electricity into the grid at a rate that produces negative wholesale prices, Brazzale said another of the headwinds facing new rooftop solar is the number of markets seeing minimum demand.
“We’re starting to hit minimum demand in most NEM jurisdictions and the NEM as a whole.”
For example, a minimum demand level of 278MW was recorded recently in SA – and Green Energy Trading expects there will be more than 300MW of new solar PV installed in that state this year.
The expected “massive negative demand” is why AEMO recently called for urgent action in South Australia, and why that state is taking actions including imposing new (and unpopular in some quarters) technical regulations on solar inverters.
As Brazzale noted in his presentation, negative demand is hollowing out daytime prices, and lower wholesale prices are being reflected in lower feed-in tariffs.
Past the peak, he said, the residential PV market will fall back to match the rate of new home builds (still a viable market, but no longer the long boom we’ve seen).
Batteries Underpin The Future…
This, he said, is why battery economics are so important: batteries support both the grid by absorbing excess energy production, and provide the best opportunity for the household to recover their investment (shifting consumption away from times of high prices, for example).
However, savings need to be sufficient to cover the investment (eventually with only a minimum of government support) – and we’re a long way from that.
Some market movements are already making batteries more attractive, Brazzale noted. For example, networks are already rolling out time-of-use charges and there are proposals emerging to charge households for solar exports when there’s too much power entering the grid. Even South Australia’s controversial inverter rules have their part to play, since as more inverters are manageable from the network side (for the purposes of curtailment), the more attractive batteries to store excess PV production become.
Brazzale also noted NSW’s green energy zones will drive batteries in that state, and South Australia’s Retailer Energy Productivity Scheme (the proposed replacement for the current Retailer Energy Efficiency Scheme) is to be revised in 2021 to support batteries.
…But Need To Get Smarter
In his presentation, Huon Hoogesteger of Smart Commercial Solar agreed that a strong battery sector is fundamental to Australia having a solar industry in the future.
He contended that today’s passive – “dumb” – batteries will always struggle to pay for themselves in a household setting. What’s needed, he believes, is batteries that can take advantage of every possible opportunity to make or save money from storing and releasing electricity at the right moments.
Hoogesteger said there are five functions batteries can perform that can be a source of value (either by generating a saving or revenue for the owner):
- behind-the-meter energy storage and discharge
- behind-the-meter demand management
- spot market arbitrage (that is, selling electricity to the grid when prices are high)
- FCAS (Frequency Control Ancillary Services)
- and grid backup or UPS functions.
Because dumb batteries can’t fulfill most of those functions, Hoogesteger said their prices will have to fall by half before they offer a good enough proposition for most people.
The sole exception is a business that wants batteries to protect it against losses due to outages: where loss of either produce or productivity is costly, batteries make their own business case.
In the more general sense though, adding intelligence to the battery is key, because it’s the intelligence that can respond to network events that need batteries to either charge or discharge on demand.
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Controllable Dynamic inverters are supposed to allow more export in times where too much solar isn’t a problem. Which could a) remove mandatory export limits and b) make larger systems more attractive
Also, next year is shaping up to be huge for SME rooftop installs with businesses like ALDI, Bunnings, Coles, Office Works etc. setting RE targets
I have heard a rumour things might be happening with HWS load being moved to solar hours in SA too.
Tesla’s new generation of 4680 batteries might assist in driving battery economics once production ramps up sufficiently:
https://evannex.com/blogs/news/tesla-s-4680-cell-is-a-stroke-of-genius-sandy-munro
https://cleantechnica.com/2020/09/22/everything-you-need-to-know-about-teslas-new-4680-battery-cell/
Yes, assuming they (and others) are driving and can deliver the kind of “step change” in cost and production volume described at “battery day” it cd be a big decade for batteries.
Brazzale: ““PV economics will deteriorate until battery economics catch up…”
We agree. Having fitted almost all our rentals with solar, we’re now asking ourselves if it’s worth providing solar electricity to the final tenant who lacks a SES.
It was our plan to provide her with a solar electricity system if/when her solar hot water system failed. It appears that 10 y.o. HWS has now failed… BUT… the W A Gov’t has recently bled the value out of FiT rebates.*
Why reward our cash-cow monopoly electricity supplier by providing power they’ll buy at 3c…and then on-sell for more than seven times that?
Looks like we’ll be replacing her dead solar HWS with a superior, larger HWS system with a l-o-n-g warranty.
Our own plans to install a large solar electricity system at our rural property are on-hold, until Tesla equips its newest PowerWall with superior batteries; enhancing both longevity and warranties… .
* Six tenant families are still waiting for full-payment of their contracted Solar Fit rebates. Perhaps a future Green/Labor coalition may help WA get back-on-track(?)
Can this be true? I thought the max domestic residential solar install is about 6.6kW on single phase.
How then can the average this year be 8kW? 3phase installs may increase that but I would imagine they are relatively rare and wouldn’t bring the average up to 8kW?
Brazzale “reckons the 350,000 systems that will be installed this year will average 8kW (7kW for residential installations, and 20kW for commercial installations).”
From what I am aware the max size of your solar system is up to whether you have single or multiphase, roof space, inverter model and budget. Its the inverter that limits the amount of energy that can be sent to the grid, not the number of panels. eg. 5kw max on single phase here in QLD. If you have an energy hungry home, running multiple aircons, pool pump and a lunchtime roast in the oven your free to suck up 6.6kw+ in your own home if you want.
You can go up to 10kW inverter capacity on single phase in most areas with a 5kW exportation cap. 6.6kW is kind of a starting size these days.
There’s one shiny new domestic installation in NSW with 20 kW of panels and 10 kWh of batteries on single phase. The old induction meter is spinning backwards at a merry rate. Until a smartmeter turns up, that would seem to make import and export the same price, I guess.
As I understand it, that’s not the way it’s done here in Victoria.
I see no indication of the expected “massive negative demand”
Look at AEMO https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/data-nem/data-dashboard-nem
Even South Australia over the last three months has 4% of generation from solar,
Victoria yesterday had 3% solar for the day, and that was a sunny day but cool enough for no air conditioning demand.
At yesterday’s peak solar was maybe 9%. Hardly “massive negative demand”.
Wind is 18% for the day and up to 21%. Why does solar need to be curtailed but not wind?
Brown coal was 73% for the day.
Where are these stories coming from?
Hey David, it looks like AEMO isn’t counting behind-the-meter solar (rooftop solar). This makes sense from their perspective – they can’t directly see or control what is being produced in ppls roofs.
Total rooftop solar is far bigger than commercial solar farm output, hence the low figures.
I think that you are correct. Rooftop solar counts as reduced deamnd, not generation.
None the less for the NEM at midday yesterday, 67% of generation came from coal.
For Victoria it was 80%, on a cool but sunny day, the very kind of day that is supposedly ideal for negative demand.
Does not every inverter shut down on over voltage anyway?
Part of the problem is the difference in FIT compared with retail cost, for example I have a 13.2 kw (split on two sides of the roof) system with battery so I get plenty of generating time. However for every 1 kWh I draw from the grid costs me approx $5.00, yet I have to return 50 kWh to get back approx $5.00 so the electricity companies are making a 50 to 1 rate of return which when they can resell my electricity to customers means they make a massive profit. Even if their costs are half it is still an excellent return. If they weren’t so profit driven they might realise that a return on solar would still give a good profit and would help cut the reliance on fossil fuels.
Bruce: “If they weren’t so profit driven they might realise that a return on solar would still give a good profit and would help cut the reliance on fossil fuels.”
You’ve nailed it, Bruce. That’s precisely the situation… that _and_ mining royalties. We’re disgusted with our fracking, g(r)as(p)ing, coaled WA Labor government. Union member 52 years… and I’ll be voting Green 13th March… .
“The sole exception is a business that wants batteries to protect it against losses due to outages: where loss of either produce or productivity is costly, batteries make their own business case.”
Perhaps but that business case also needs to consider other backup power solutions, e.g. a generator with a cut over system. And when you do that you’ll find that for similar power output and energy supply capacity over time, battery costs suck compared with generator backup. Plus business are more likely to have multiphase supply.