Arup Thoughts: Solar-powered grid about to become reality?

Australia, a sun-drenched nation, is unsurprisingly a global crèche for new and emerging solar and battery technologies.

08/01/2016


The combination of solar panels and affordable home battery storage is enticing, but are the economics aligned for mass adoption? Courtesy: ArupFor decades, solar power has held out the tantalizing prospect of a plentiful, free power source. But the challenge of power loss on cloudy days has traditionally left us reliant on a carbon-burning power grid and all the costs that go with it. However, affordable storage for solar might be about to make a solar-grid possible after all.

Australia, a sun-drenched nation, is unsurprisingly a global crèche for new and emerging solar and battery technologies. Experience there teaches us a valuable lesson about the interdependency of new technology and the existing economics of the established energy business.

Throughout the 2000s, Australian electricity consumption at both a household and industrial level underwent a meteoric rise, and network service providers embarked on capital programs to meet the rising demand of power-hungry consumers. But consumption growth suddenly fell and continued to taper over the past 5 years. What happened?

The drop resulted from a perfect storm of factors: more efficient home appliances and lighting, widespread insulation and rooftop PV panel installation, improved heating, cooling and water efficiency in new homes, in-home demand-side management systems, and the countrywide shift from manufacturing to service industries—manufacturing requiring greater amounts of energy than services.

We are left with a grid with excess capacity for our current needs, but one whose expansion has had to be paid for through electricity bills. Concerned about the power generators, all the consumer hype is about ending bills entirely through a switch to solar panels and home batteries. In this new self-sufficient world, you simply put a battery system like Tesla PowerWall in your home, pair it with a PV system on your roof, and see an end to electricity bills while possibly even earning money by selling excess power back to the grid.

Does the self-sufficient vision promise a free-power revolution that threatens our entire existing grid? Yes and no. The grid still matters. Indeed, as regions transition to renewable energy generation, the importance of the grid's ability to supply energy between subregions, at different times, will only grow in importance. Renewable energy needs a grid to transport energy from one subregion to another, as some regions will have cloud cover or no wind while others will have both those in high supply.

For now, the economics of solar don't quite add up. The Alternative Energy Association's recent Household Battery Analysis report examined 10 scenarios, finding that household batteries and PV pairings won't be economic for the average household until 2020. The Grattan Institute compared the costs of storage and PV pairings against a fully grid-connected household and found the solar-plus-home-power-battery system to be the significantly more expensive option. Plus, there are diminishing returns to adding solar and leaving the grid: Grattan estimates costs of $34,200 for 95% reliability off-grid, $52,000 for 99%, and $72,200 for a system to supply 99.9% off-grid reliability as compared with $12,910 for a traditional grid connection.

However, engineers, economists, and scientists have a tendency to be pessimistic in their forecasts for existing technologies. The lesson from a solar-soaked Australia, with a population rich enough to afford expensive storage solutions, must surely be that change is coming and probably sooner than many of the pundits might think.

How do you think designers might speed up the transition to a self-sufficient world for energy?

-Bas Simpson is an economic consultant in Arup's Melbourne office and a keen member of the region's management consultant offering. This article originally appeared on Arup. Arup is a CFE Media content partner.



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