Behind all the buzz about Solar PV…


Last Wednesday night I was rewarded for eating into some State-of-Origin watching time by attending a Public Lecture organised by Grattan Institute, International Energy Centre and UQ Energy Initiative entitled “Energy in 2014: more mines than field” .

Speaking at the event were Cameron O’Reilly (from the ERAA), Paul Simshauser (from AGL), Mike Swanston (from Energex) and Tony Wood (from the Grattan Institute) – and the session was chaired by Dr Chris Greig (Director, UQ Energy Initiative).

Each speaker made some points of interest, but it was a couple comments made by Mike Swanston that particularly caught my interest – prompting this post.  The following are my words not Mike’s (though he did lend me his slides) – so please don’t misconstrue, in anything below, that Energex has endorsed (or even read) this post prior to publication.

Given the sensitivity surrounding the debate about solar PV at present, we highlight how we strive to remain technology agnostic in looking at the energy market.

Solar has been successful – in more ways than one

I’d seen this particular chart before, but had not known that the Americans call it a “duck curve”:

2014-05-28-energex-theduckcurve

The eating away of the lunchtime demand is attributed to rapid take-up of solar PV – not just for the houses connected by this feeder, but more generally across the Energex network.  This is one aspect of the solar success story in the Energex distribution area on a particular feeder (I think Mike said it was somewhere down around Currumundi – listen to the podcast here if you really want to be sure).

In addition to the effect that solar has had on reducing the “Scheduled Demand” that has to be met by generators AEMO dispatch into the National Electricity Market, the solar industry that has experienced astronomical growth in recent years has been very successful at garnering a large share of coverage in the news media, associated social media, and other BBQ conversations  ….


… but there’s another story going on at home, that may be even more important…

Though not as sexy (or as contentious) as the massive take-up of solar PV across the NEM, this second chart underlines that there is another (quieter) revolution underway as well:

2014-05-28-energex-consumptiondeclining

It’s my understanding that the chart summarises the average energy consumption of domestic (tariff 11) customers, differentiated by whether the households have solar or not.  Listen to the podcast for Mike’s views.

The chart, to me, clearly indicates two different stories going on:

Story #1)  The average Mr Blue, the solar PV owner, seems to have used solar to achieve (for him, in a step-change) a substantial  reduction in the average consumption for the household:

However we note that the average usage in these households has not really changed significantly after that initial step change.

Story #2)  On the other side of the coin, Ms Green, who has been unable to install solar, seems to have chipped away at their energy usage piece-by-piece (insulation in the ceilings, LED lighting, more efficient appliances, remembering to turn lights off, etc… – see our earlier list of possible reasons why demand is declining)

Why has Ms Green been unable – or unwilling – to install Solar PV to date?

A1)  The first answer that springs to mind is that perhaps Ms Green has not had the disposable income to be able to afford to install solar.  I personally know of people who have – at least to date – been in this position.

For these people, the growing stream of service providers working through the AER process of retail exemption to enable them to install solar systems on a lease-back basis would seem to be one potential solution to their problem.  The upcoming update to our “Power Trading Schematic” will be one way to see how significant this change is becoming.

A2)  Undoubtedly there are also a select group of Ms Green who are renters, and so do not have the incentive to use a capital outlay (for solar) to offset their ongoing expenses.

What can be done to assist people in this situation – particularly as these people, as a group, will be ones affected by what’s become termed as the “death spiral”?

A3)  Perhaps short-stay owners are also part of this group?

A4)  I’m sure that there are other reasons – please do add them in comments below….

Under this simplistic Green –vs– Blue  hypothesis, it does beg the question of why Mr Blue seems to have become lazy about continuing an energy efficiency drive, to the point where their average energy consumption currently is not really any better than it was back in May 2010?

Have the generous returns provided under the 44c feed-in-tariff (particularly for a full-sized 5kW system) meant that these people are less inclined to search further to find other ways of reducing energy consumption around the house?

Or is it that the capital’s been invested on the solar system to the point where there’s not as much loose change lying around to refit lighting to LEDs?

See MY FULL DISCLOSURE here about being a Mr Blue – a recipient of a generous 44c feed-in tariff.  Has this also had some effect in making me too lazy to pursue further reductions in energy usage around my home?

Perhaps an alternate interpretation is that these energy savings measures have also been installed by Mr Blue but that, buoyed by the cash-back he is receiving each quarter (and the assured knowledge that his energy bills will not keen increasing, unlike what Ms Green must fear) he is able to go out and buy more gadgets?


Some questions, then, for the Policy Designers:

Q1)  has the average electricity usage of solar PV consumers flatlined, as is implied in the above chart?

Q2)  If so, why have these households not continued to improve their energy efficiency at the same rate as the non-solar households?

Q3)  Is there some (technological, or other) limit to energy efficiency at home?

Q4)  What policy drivers could be put in place (if it was determined that this might be government policy – perhaps as a flow-on from the RET Review) to encourage the ongoing implementation of energy savings initiatives at home.


For those interested in reading further, see these earlier comments in relation to the current RET Review process…

About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

7 Comments on "Behind all the buzz about Solar PV…"

  1. The justification for policies to encourage PV is to reduce CO2 emissions. Therefore, arguably the most important questions that need to be asked are:

    Q5) How much CO2 is being avoided per MWh of PV energy generated? (To work that out we need to know the amount of PV generated at about 10-15 minute intervals in the NEM and the amount of CO2 emitted by each fossil fuel generator unit – as is the case in Ireland, France and other EU countries)

    Q6) What is the CO2 abatement cost with PV? (To calculate this correctly all costs that should be attributed to having PV connected to the grid must be properly attributed to the various generators)

  2. Hi Paul,
    thanks again for another interesting article.
    Let me declare an interest: I have a 5Kw system and I am on the 44c rate for the rebate.

    The following is a series of ‘post project review’ comments on planning and installing panels, off topic I know but bear with me please.

    1. There are enough houses with panels on them now (is it in excess of 1 million?) that the roofing suppliers and the panel installers should be talking to each other about providing wind-rated fixtures so that panels can easily be installed at the optimum angle.

    2. Some installations of panels are just a plain eye-sore, not if’s or but’s allowed. Not only that, they are an inefficient eye-sore, from the generation point of view. The panels industry needs to step up and ensure that people get value for money from properly oriented and installed panels.

    3. Just as all diesel engines should run turbos, all domestic panels should be controlled at the micro inverter level, ie panel by panel, again so people get an output which approximates the nameplate figure. Large commercial panels don’t need this as much.

    4. People on the low Fit’s, 8c and the like, will really appreciate the storage systems which are not really far away, say 5 years max, with the feverish work that is going into improved storage. The widespread use of efficient storage will be another major upset for the generators and the retailers. Storage will certainly decrease the evening peak; it will depend on the efficiency of the storage as to whether the morning peak is flattened as well.

    5. The political response to domestic storage of electricity will be interesting to watch. With conservative governments in place in most jurisdictions, the response to rooftop panels has not demonstrated even an acknowledgement of the facts, let alone an enlightened approach in any sense. Hasn’t electricity reticulated from central generation been a political weapon/football over quite a number of decades? Now, in terms of metropolitan domestic generation, is it coming to an end? What will its death throes be like? To mix even more metaphors, is the ‘domestic panel generation’ tail is going to wag ‘large coal-powered generator’ dog?

    6. There was a beer ad where the blokes built a combined shed where their properties met, and made it a ‘man cave’. What if the boys decided to pool their beer money, get a solar system spread across part of each of their properties, and then each take some of the output. I wonder what (being a Brisbane resident with Energex the local ‘poles and wires’ authority) Energex would say about the boys wanting that connected to the grid?

    Whenever Mike Swanston from Energex contributes to this debate, he is always worth listening to. Thanks for this contribution, Mike.

  3. Many of the people who can’t install solar would live in strata-title properties – even if they own the unit / villa / townhouse they don’t own the a roof. The individual property owner has to negotiate with their strata committee to install any solar panels, making things that much harder.

  4. Paul

    A late comment: you may want to check on how the “Mr Blue” and “Ms Green” data series were compiled by Energex.

    Obviously there has been very strong uptake of solar PV across the period shown in the second chart. So lots of Ms Greens transformed themselves into Mr Blues over the period by installing PV.

    If the average annual usage data at each time point on the chart is based on all those in each segment (ie PV vs no PV) at that time, then the changing averages could in theory be driven solely by the diffusion of customers from one segment to the other over time, not by changes in the actual usage of individual customers across time.

    If (hypothetically) the average usage of those who left the no-PV segment was:

    a) higher than average for that segment – quite plausible as higher users with larger bills may be more motivated to install PV, and

    b) roughly equal to the average of those already on PV (less clear why this would be the case)

    then that could explain both the (apparently) falling average usage in the green segment and the static average usage in the blue segment, without necessarily implying any changes in the “underlying” usage patterns of individual customers. If the customers installing PV were tending over time to be increasingly large users, then that could even mask a declining usage trend for customers already within the segment.

    I guess my main point is that it is very difficult to hypothesise about what charts like this one really show – let alone any underlying reasons – without fully understanding how they are constructed.

    • Thanks Allan

      Another great question.

      I inferred, from what Mike had said on the night, that there was a change in the underlying consumption – but will see if I can find out more.

      Cheers

      Paul

  5. Here is one answer, and an obvious one. I am unable to buy roof-top mounted solar panels as I live in a flat, currently rented, by the way. (Refer the correct comment by Edward Boyce, above. ) Strata title buildings must secure unanimous agreement to make a move. It strikes me as inequitable, indeed, a failure of democracy, that government provides incentives not equally available to the entire population. These solar rooftop incentive schemes represent a transfer of wealth to the better-off. There are other reasons, some architectural, that inhibit the take-up. You do not broach some other complex issues about sunshine accessibility in built-up areas,. e.g. If a high-rise building or tree overshadows someone’s’ collection area, is there just cause for complaint? While the installation of roof-top solar circumvents network distribution costs – the larger part of a consumer bill – the more equitable alternative is large-scale solar (e.g. AGL’s NSW power plants) providing the asset owner is prepared to accept the commercial risks of wholesale competition. Your comments make the assumption that the network utilities remain dangerously asleep and are unable or unwilling to improve their efficiency. Maybe, union-dominated bureaucracies will prove too lazy to save themselves, but I do not buy the death spiral story yet.

  6. Postulate a distribution of eleven household energy consumption groups around the mean shown in the graph for years 2009 – 2013. Annual kWh :-
    11250
    10500
    9750

    3750

    Year 2009 average 7500 kWh.
    Remove the greatest household energy group and recalculate the average for 2010. Result 7125kW.
    Remove the next greatest group and recalculate for 2011. Result 6750 kWh
    For 2012 result 6375 kWh
    For 2013 result 6000 kWh
    The ‘Average Annual Domestic Consumption (kWh)’ graph is generated.

    Now take the removed groups to form the ‘Domestic (with solar)’ average.
    For 2009, the greatest group without solar was 11250 kWh but 7000 kWh with solar, so solar average generation for this group was 4250 kWh.
    For 2010, the next greatest group was at 10500 kWh without solar but the consumption with solar was 5000 kWh. This requires a 5500 kWh solar generation.
    The average consumption of the two greatest groups (7000+5000) with solar is then 6000 kWh.
    Solar generation in 2011 of 3500 kWh for the third group and solar generation of the fourth group in 2012 is also 3500 kWh and the final group requires 2500 kWh solar generation.
    The ‘Domestic (with solar)’ graph is generated.

    The hypothesis is that the highest electricity consumption groups in the first years buy full sized (5kWh?) panels, presumably off-setting the air-conditioning load in large houses. The third and later groups buy smaller panels or fit in less favourable orientations. The falling graph for those without solar is a statistical trick caused by the largest consuming groups leaving this group. The remainers do not have to change their behaviour at all.

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