One in three homes in South Australia have solar power. But what happens when the minority becomes the majority and those with solar vastly outnumber those who are 100% reliant on the grid?
There will be a tipping point, when energy retailers will be looking to recoup lost income from those who remain.
From 2016 to 2017, there was a 41 per cent increase of installed renewable energy capacity across Australia, equating to more than 9500 panels installed every day.1 Current penetration rates average one in four households with solar; in some states, like South Australia where more than 210,000 households are connected, the average is much higher.
The popularity of solar panels began with low to middle income households, seeking refuge from increasing prices. However, with improvements in panel performance and electricity prices now biting into upper middle to wealthy households, even they are turning to solar, but this time with batteries included.
Meanwhile, falling feed-in tariff prices are stimulating a further exodus from the grid: early solar adopters are also turning to batteries to go off-grid and regain lost savings.
As the penetration of solar increases, retail energy providers are losing their customer base. The real fear for many, including some politicians,2 is that those who remain 100% reliant on the grid will be shouldering a burden they really can’t afford.
While new Prime Minister, Scott Morrison, and his government have promised an energy policy focused on affordability and reliability, these benefits will take to time to materialise. There is more action being taken now by developers, councils and individuals to protect themselves, their customers and citizens from energy pricing.
Recently, business installations soared by 60% over an 18-month period, taking the number of solar-powered Australian commercial and industrial premises to more than 40,700.3 With a better understanding of their energy use than householders, their individual energy production and use is more closely aligned, with a smaller percentage of excess power going back into the grid. Given energy retailers make good profits from paying low feed-in tariffs and selling at high prices, this will provide another blow to their profits and those remaining on-grid.
So, this begs the question, when there are eventually more customers on solar than 100% reliant on the grid, how will energy retailers make up the shortfall?
It stands to reason that the 20% or so remaining fully grid-reliant are going to be slugged with almighty bills – encouraging more customers to move to solar and batteries with the situation continuing to spiral. Even if the wholesale costs eventually come down, thanks to green energy production costs falling, there will still be the costs of the regulated network, which will be shared by fewer and fewer consumers.
Solving this issue now, is the model of distributed electricity network, where energy is shared across a virtual network. As well as providing affordable access to solar power and battery storage for householders and small businesses, these groups provide reassurance against retail electricity price hikes by charging only a small monthly access fee for a generous allocation of additional power from the grid should customers need it.
An example of this is the Community Power Network, which has just launched in South Australia and will soon be operating Australia-wide.
Community Power Network promises $0 retail electricity bills for up to ten years while also offering low cost finance for panels and batteries. For some people, the savings are enough to add cash back into the weekly household budget, even when payments for the panels and battery are taken into account. However, the biggest benefit is the protection against future retail electricity prices.
Those joining the community can use their existing panels but need a sonnenBatterie. In addition to storage, it incorporates a self-learning algorithm to understand each individual's energy use patterns and taking meteorological weather data into account, maximises solar panel returns and the charging of the battery for nighttime use.
Glenn Morelli, founder of the Community Power Network, says the virtual network brings greater fairness and transparency to the electricity market.
“There’s no question we should be moving to a clean energy future with solar panels on every home and business,” says Mr Morelli. “But when the goal posts keep moving – whether that’s from shrinking feed-in tariffs or deliberately confusing retail energy contracts – even those who did the right thing by installing solar panels can find themselves disadvantaged.
“We want battery-connected solar systems to be affordable for everyone and for people to receive financial benefits in addition to saving the environment.
“If we can make it an easy decision to connect to our Community Power Network, and to stay connected, we can help to put money back into local communities. And that’s got to be a good thing for everyone.”
Clean Energy Regulator, 2018 ‘Household solar capacity through the roof in 2017’, Clean Energy Regulator, March 6, 2018.
Sandell, E, 2017, ‘The great solar power scam’, The Sydney Morning Herald, February 8, 2017.
Diss, K 2017, 'The solar boom started in our suburbs, but now it's moved out of home’, Australian Broadcasting Corporation, September 28, 2017.