New economic research has highlighted the significant benefits of solar equipped customers keeping their electricity grid connection.
While recent advances in solar and storage technology mean customers could choose to leave the grid entirely, the independent analysis by Oakley Greenwood shows it is unlikely to deliver better financial outcomes or services.
Energy Networks Association CEO, John Bradley, said the study quantifies the often ‘hidden’ services that customers receive from the grid, and how much it would cost a customer to supply themselves.
“This research shows that, to provide a nearly equivalent service, a standalone power system would cost $596 to $850 per month, or 5 to 6 times the cost of grid supply,” Mr Bradley said.
“Do-It-Yourself is unlikely to be the best outcome – over the course of a year, the connected customer is up to $8,700 better off than they would be with a standalone power system providing a nearly equivalent service.”
“A disconnected customer would also lose grid benefits like the ability to sell surplus energy or participate in new markets which may emerge using distributed energy resources like battery storage. “
“The grid will be the gateway for better, more efficient energy services – so quitting the grid is like turning off WiFi.”
Mr Bradley said the study demonstrated the shared benefits for both the grid and solar customers in maintaining grid connection.
“The report estimates a connected solar customer provides benefits of up to $10 per month by assisting in deferring network investment.”
“However, the same solar customer also receives $69 per month in value by staying connected to the grid because they retain a backup supply ($61 per month) and are able to sell surplus energy ($8 per month).“
Mr Bradley said the Oakley Greenwood report also highlighted the need to reform current electricity network tariffs based on volume charges, which don’t reflect network cost drivers.
“Oakley Greenwood estimates a grid-connected customer with solar is effectively receiving a cross subsidy of $98 to $163 per year under current tariffs from other customers.”
“This follows similar analysis for the Australian Energy Market Commission which also found outdated tariffs allow customers using air-conditioning at peak times to receive a cross-subsidy of up to $700 per year from customers who do not.”
“Australians continue to install solar panels at world leading rates of penetration and in many parts of the network we are seeing energy flows reverse during the day as surplus energy floods the grid.”
“This more dynamic, interactive environment will require fundamental changes in network planning, operations, and pricing, but our grid provides a unique platform enabling consumer benefits.”
Mr Bradley outlined the range of services that are often ‘hidden’ but which consumers benefit from, including:
- Start-up power services, supporting appliances like air-conditioners that temporarily increase required energy load by 4 to 5 times when starting up;
- Balancing services, instantaneously adapting to the customers changing demand throughout the day (which can be difficult for solar PV systems alone); and
- Power quality services that protect the safe operation of home appliances.
“In the future, electricity users will have more choices about the source of their energy supply. Customers might take supply from the grid, a combination of onsite sources and the grid – or they may consider leaving the grid entirely.
“It’s important these choices are supported by good information about the costs and benefits of their supply options,” Mr Bradley said.