2018 is an important year in the solar market for two main reasons:
The subsidy will decline in 2018
The subsidy will no longer be available for replacement solar panels
Now is the best time to install solar for the subsidy. Selecting a good quality solar panel is increasingly important because the subsidy will no longer be available if any solar panel needs replaced.
Subsidy Decline in 2018
The total amount of subsidy you can receive for an eligible system is based on the size and location of the system, as well as the “Deeming Period”. In simple terms the Deeming Period value is how many years between the current year and 2031. So, 2031 – 2017 = 14 years, which is the current Deeming Period.
For Perth the calculation may look like the below:
*STC values are subject to fluctuation and subsidies may vary per individual install and depending on processing fees etc.
The Deeming Period will decrease by 1 each year until 2031, which is when the current Small-scale Renewable Energy Scheme will end. In dollar terms this represents a decrease of around $325 per year for a 6.5kW system in the Perth area. Below are indicative subsidies for a 6.5kW system
* The above are general examples only. An accredited desinger should assess the eligible subsidy for your individual system.
The Australian Government’s Clean Energy Regulator has announced they will no longer be issuing STCs for replacement panels installed on existing systems.
The reasons are mostly related to unethical solar companies who:
take chances installing very cheap low-quality panels, knowing that they could claim the subsidies on replacement panels if the original panel started failing DURING the warranty period
2. install cheap panels, knowing that they could claim the subsidies if the panel started failing AFTER the warranty period. (sometimes even making a profit from the owner)
3. convincing owners to replace good quality panels with low quality panels, and taking the “old” panel away and claiming the STCs, then charging another customer for the “old” solar panel and claiming the subsidy again
Eligibility scenarios
The scenario examples below will help you to determine your system’s eligibility for small-scale technology certificates. These scenarios cover the most common types of installations.
Original system installed
Eligible – The system must have a rating of no more than 100 kW. Panels and inverter must be on the Clean Energy Council approved products list at the time of installation. All components (including electrical elements and fixtures) must meet the current relevant standards.
Additional capacity/upgrade
Eligible – The system must have a rating of no more than 100 kW. The new panels and existing inverter must be on the Clean Energy Council approved products list, and the inverter must have sufficient capacity. All components (including electrical elements and fixtures) must meet the current relevant standards.
Additional, separate system
Eligible – The system must have a rating of no more than 100 kW. The new panels and inverter must be on the Clean Energy Council approved products list. All components (including electrical elements and fixtures) must meet the current relevant standards.
Original system replaced
Eligible – The system must have a rating of no more than 100 kW. All system components (i.e. panels and inverter) must be new (no previous claims), recorded on the Clean Energy Council approved products list at the time of installation and meet the current relevant standards (including electrical elements and fixtures).
One, some or all panels replaced
Not eligible – This scenario is ineligible because at least one major component (i.e. panel or inverter) has been used to previously claim small-scale technology certificates in the entitlement period. Applications involving one, some or all panels being replaced will still be considered for small-scale technology certificates for installations up to 31 January 2018, subject to all other requirements being satisfied.
Inverters are a part of nearly all solar panel systems. Inverters convert DC voltage from solar panels to AC voltage for your electrical appliances and equipment.
As simple as this DC to AC conversion function appears, each inverter model and brand is different. As such there are many factors in selecting the right inverter for each situation.
In this article, we discuss one of these factors—the Minimum Voltage Window.
Inverter Minimum Voltage Window
The inverter must be sized so the input voltage from the solar panels doesn’t fall below the inverters Minimum Voltage Window. Otherwise the inverter may not turn on. There is not quite enough power to activate the inverter when the sun first peeks over the horizon in the morning. As the sun rises, the voltage in the solar array increases until there is enough voltage to activate the inverter.
Therefore, an inverter with a lower operating voltage is usually better because the inverter will come on when there is less sun (i.e. earlier in the day or when cloudy), and turn off later in the day.
The operating voltage of some popular inverters is plotted on the graph below.
Inverter Minimum Voltage Graph
Looking at the two 4000W inverters, we can see that one inverter begins to operate at nearly 150V, whilst the other at over 200V. Putting all other factors aside, we would choose the one that operates at 150W (ie the lowest minimum operating voltage). After all, we want to utilize as much sun as possible for as long as possible.
In the two 5000W inverters, and again in the two 3000W inverters, we can see the same situation.
Of course, activation voltage is only one of many factors to consider, some of which we will cover in future articles.
Battery storage technology is generating a lot of discussion within the energy industry – and for good reason. It’s been hailed as the future of electricity, and as Australia has the highest penetration of roof-top solar panels in the world, we’ve become a focus-market for many retailers.
Concerns over increasing electricity costs have led many Aussie households to turn to renewable energy solutions, such as solar storage, as an alternative to drawing power from the grid. But are they really worth it? Unfortunately there is no black and white answer to this as it entirely depends on your situation. In this article, we take a look at what to consider before installing a solar battery and whether or not it can save you money.
Chances are that you’ve probably never purchased a solar battery before, so you might not be too sure what to expect. If you’re thinking about a solar battery for your home or business, here are some things you need to know.
What solar batteries are available?
Australia is a hotspot for solar storage retailers, so we have plenty of choice when it comes to choosing batteries. One of the most recent well-known and recent additions to the market is the much-hyped Tesla Powerwall, with 6.4 kilowatt hour (kWh) storage capacity. There are many other battery storage systems available however, including Aquion’s AHI batteries, LG’s Lithium-ion batteries, Redback’s Smart Hybrid System, Enphase’s modular AC batteries and Ecoult’s ‘Ultrabattery’ to name just a handful. These storage units vary considerably in size, price and efficiency. Canstar Blue has a more complete list of available solar storage units here.
How much do solar storage units cost?
The biggest factor impeding further growth in the solar storage market is the current cost of the battery devices. Prices for solar batteries largely depend on the storage size, with costs around $1,000 – $2,000 per kWh storage capacity.
If you first need a solar panel system installed, then that can cost anywhere from $2,000 to $12,000 depending on system size. Most households with storage units will opt for a 4kWh solar system, which will cost around $6,000 to $8,000. If you want to know more about installing solar panels, here’s our guide.
You will also need to pay for a compatible inverter as well as installation costs which will usually run in to the thousands of dollars, depending on the complexity of the installation. Nearly all solar companies will request a quote before they can give you some idea of how much this will set you back.
What sized solar battery will I need?
Solar storage systems come in a myriad of sizes to suit a range of needs. Some models, such as the Aquion AHI battery, can even stack upon one another to increase overall storage size to suit your needs. Most solar batteries within a reasonable price bracket will not be able to completely cover your electricity demand. Remember that the larger the battery, the more expensive it will usually be, so only purchase what you think you will need.
Battery efficiency
Efficiency in the context of solar batteries refers to how much energy is successfully stored and converted to useable electricity. It’s currently impossible for a solar battery to be perfectly efficient, but some models come much closer than others. Take for example, Tesla’s Powerwall which has an efficiency of 92.5%, meaning it loses 7.5% of solar generated electricity in the storage process. This is still considerably higher than some models on the market.
How long will the storage battery last?
Solar battery life is measured in cycles, which refers to the process of filling and emptying a battery with electricity. When measuring a life span in years, it’s usually assumed there is one cycle per day. Obviously the more cycles, the more durable the battery.
What is your feed-in tariff?
A feed-in-tariff is a rebate on your energy bill for each kWh of electricity that a household solar system generates but doesn’t actually use, meaning it’s fed back into the energy grid. This raises the question – if you’re getting paid for your excess solar power, why should you store it? It’s a good question, but while some areas of Australia receive high tariff rates (upwards of 20c per kWh), some states have reduced or completely removed their feed-in-tariff subsidies, meaning the rate you’re paid is usually around 4-6c/kWh.
Will a storage battery save me money?
Now for the question everyone is wondering – are home battery units even worth the mammoth cost? They’re marketed as being able to help you cut your electricity bill, and they certainly deliver on that. Earlier this year, the ABC reported that the first Australian household to install the Tesla Powerwall had its electricity bill cut by 90 per cent. Impressive right?
Well, not so fast, remember that solar batteries are quite the financial investment. The household we just mentioned spent $16,000 on the installation of its 7kWh Tesla battery and compatible 4kWh solar system. This means that – despite the incredible savings on ongoing electricity bills – it’s unlikely the entire solar system will pay for itself before the solar battery’s warranty expires.
Let’s take the below case example to illustrate the costs and savings associated with a solar storage system.
Case Study: Solar Battery Storage
Let’s take a Sydney household with a 4kW solar system already installed. The standard four-person Sydney household consumes 20kWh of electricity a day on average, according to Energy Made Easy.
The 4kW solar system should be able to produce 16kWh of electricity each day, if conditions are optimal. Most of this production will be throughout the day, so let’s assume that the household is able to use 8kWh of solar power, while another 8kWh is left unused.
This would mean the household would be paying for 12kWh of electricity usage each day. Assuming an electricity usage rate of 24c/kWh, this means the house is spending $2.88 per day on usage charges alone. If the household was eligible for a feed-in tariff of, say 4c/kWh, then it would receive a 32c discount per day for its 8kWh of excess energy. Without factoring in supply charges or other fees, the household would be paying $2.56 per day.
If this household were to add a home storage unit…
To complement its current solar system, let’s say the household decides to purchase the Tesla Powerwall, which Gizmodo estimates will cost around $9,500 for the unit, inverter and installation. The Tesla Powerwall can hold 6.4kWh of electricity.
Remember that this household uses 20kWh of electricity per day and its solar system produces 16kWh a day. Half of its solar electricity is used throughout the day, 6.4kWh will be stored by the Powerwall, and 1.6kWh will feed into the grid. That means the household will now be paying for 5.6kWh of electricity. After again factoring in the feed-in-tariff, they will now be paying $1.28/day for electricity. That happens to mean the house has halved its electricity usage spending and is now saving $1.28/day, so how long will it take those savings to justify the cost of the Powerwall?
The payback time would be slightly over 20 years…
Given that the Powerwall has a 10-year warranty and 15-year life expectancy, this means that the household in this particular situation would be losing money on their purchase. If you don’t currently have a solar system installed and paid off, then you will also need to factor in the costs of solar panels as well as their potential savings.
So what’s the verdict?
A home storage unit will definitely help you reduce your grid energy demands, however it’s unlikely that you will ultimately save money given how expensive storage units currently are.
With that said, nearly anyone with a bit of energy know-how will insist a solar panel system is still a good investment – especially if you’re smart about energy usage. But unfortunately most households usually won’t find any additional value by adding a solar storage unit at this point in time.
Solar batteries may still be worthwhile for certain households however, particularly ones that are ineligible for feed in tariffs or are charged high electricity usage rates. The payback period will vary across different households, so consider your personal situation before deciding if a home battery unit is right for your home. The price of storage units are likely to fall in years to come, so if it’s not right for you now, keep your eye on the market.
Low-cost storage could transform the power landscape. The implications are profound.
Storage prices are dropping much faster than anyone expected, due to the growing market for consumer electronics and demand for electric vehicles (EVs). Major players in Asia, Europe, and the United States are all scaling up lithium-ion manufacturing to serve EV and other power applications. No surprise, then, that battery-pack costs are down to less than $230 per kilowatt-hour in 2016, compared with almost $1,000 per kilowatt-hour in 2010.
McKinsey research has found that storage is already economical for many commercial customers to reduce their peak consumption levels. At today’s lower prices, storage is starting to play a broader role in energy markets, moving from niche uses such as grid balancing to broader ones such as replacing conventional power generators for reliability,1 providing power-quality services, and supporting renewables integration.
Further, given regulatory changes to pare back incentives for solar in many markets, the idea of combining solar with storage to enable households to make and consume their own power on demand, instead of exporting power to the grid, is beginning to be an attractive opportunity for customers (sometimes referred to as partial grid defection). We believe these markets will continue to expand, creating a significant challenge for utilities faced with flat or declining customer demand. Eventually, combining solar with storage and a small electrical generator (known as full grid defection) will make economic sense—in a matter of years, not decades, for some customers in high-cost markets.
In this article we consider, as these trends play out, how storage could transform the operations of grids and power markets, the ways that customers consume and produce power, and the roles of utilities and third parties. Our analysis is directed mostly at developments in Europe and the United States; the evolution of storage could and probably will take a different course in other markets.
Implications for the utility industry
Storage can be deployed both on the grid and at an individual consumer’s home or business. A complex technology, its economics are shaped by customer type, location, grid needs, regulations, customer load shape, rate structure, and nature of the application. It is also uniquely flexible in its ability to stack value streams and change its dispatch to serve different needs over the course of a year or even an hour. These value streams are growing both in value and in market scale (Exhibit 1).
Exhibit 1
Cheap battery storage will pose a challenge for utilities behind the meter (that is, small-scale installations located on-site, such as in a home or business). But it will also present an opportunity for those in front of the meter (large-scale installations used by utilities for a variety of on-grid applications).
Behind the meter
Cheap solar is already proving a challenge to business as usual for utilities in some markets. But cheap storage will be even more disruptive because different combinations of storage and solar will likely be able to arbitrage any variable rate design that utilities create.
Specifically, net energy metering (NEM) refers to rules that allow excess power to be sold back to the grid at retail rates; and feed-in tariffs, which are guaranteed price adders for renewable power, have played an important role in expanding the global market for renewables. In the US states that have implemented such rules, NEM has proved to be a powerful incentive for consumers to install solar panels.
Although it has been helpful for solar, NEM also has put utilities under pressure. It reduces demand because consumers make their own energy; that increases rates for the rest, as there are fewer bill payors to cover the fixed investment in the grid, which still provides backup reliability for the solar customers. The solar customers are paying for their own energy but not paying for the full reliability of being connected to the grid. The utilities’ response has been to design rates that reduce the incentive to install solar by moving to time-of-use pricing structures, implementing demand charges, or trying to reduce how much they pay customers for the electricity they produce that is exported to the grid.
However, in a low-cost storage environment, these rate structures are unlikely to be effective at mitigating load losses. This is because adding storage allows customers to shift solar generation away from exports to cover more of their own electricity needs; as a result, they continue to receive close to the full retail value of their solar generation. This presents a risk for widespread partial grid defection, in which customers choose to stay connected to the grid in order to have access to 24/7 reliability, but generate 80 to 90 percent of their own energy and use storage to optimize their solar for their own consumption.
We are already seeing this begin to play out in places where electricity costs are high and solar is widely available, such as Australia and Hawaii. On the horizon, it could occur in other solar-friendly markets, such as Arizona, California, Nevada, and New York (Exhibit 2). Many utility executives and industry experts thought the risk of load loss was overblown in the context of solar; the combination of solar plus storage, however, makes it much more difficult to defend against.
Exhibit 2
Full grid defection—that is, completely disconnecting from the centralized electric-power system—is not economical today. At current rates of cost declines, however, it may make sense in some markets earlier than anyone now expects. Of course, economics alone will not dictate how much and when customers choose to disconnect from their utilities. For example, another important factor is confidence in the reliability of their on-site power. But this dynamic will affect business-model and regulatory decisions sooner.
In front of the meter
Storage can also benefit utilities by helping them to address the challenges of planning and operating the grid in markets where loads are expected to be flat or falling. Regulators in some US states, for example, are testing new models of compensation by offering utilities incentives to earn returns by providing contracts for distributed generation. This would, among other things, allow utilities to defer expensive new investments and reduce the risk of long-lived capital projects not being used.
Utilities are also acting to procure storage assets to address both long-term regulatory requirements and short-term needs, such as reliability and deferring the construction of a new substation. As storage costs drop, such projects could lower generating costs—and, thus, consumer electricity rates—by putting further pressure on existing conventional gas and coal-generation fleets, depressing prices in capacity markets and providing load-following services.
What utilities can do
Utilities must start now to understand how low-cost storage is changing the future. In effect, utilities need to disrupt themselves—or others will do it for them. There are two broad categories of action to consider.
Redesign compensation structures and explore new opportunities
Sooner or later—sooner is better—regulators and utilities will need to find new ways to recover their investment in the grid.
The grid is a long-lived asset that is expensive to build and maintain. Fixed fees for grid access are unpopular with consumers, and regulators are therefore not particularly keen on them, either. However, imposing fixed fees could ensure that everyone who uses the grid pays for it. The volumetric or variable rate structure in general use today is a historical construct. People are used to paying for the energy they use. But as more and more customers generate their own energy, the access to the grid for reliability and market access becomes more valuable than the electrons themselves.
Because any rate-design changes will likely be slow and incremental (particularly those transitioning to fixed charges), utilities need to respond to these new market realities by capturing new earnings opportunities from expanded services and new transaction fees. There are already some interesting initiatives along these lines. In Australia, utilities are becoming solar-and-storage installers and providing advisory services2 ; while in the United States, one pilot program is selling advanced analytics and data-management services to consumers to help them manage their energy use.3 Utilities in several states are also exploring new services and investing in grid modernization and electrification.
Rethinking grid-system planning
Utilities must radically change their grid-system planning approaches. This means investing in software and advanced analytics to modernize the grid. It also means changing how traditional system planning is done, by reconsidering codes and standards (some of which have been in place for decades), moving to circuit-by-circuit nodal planning, and employing asset health assessments to ensure the highest priority needs on the system are addressed.
Storage can be a unique tool in support of this. The straight economics of changing grid planning, with respect to return on capital, may not look different at first glance. But, because storage is more modular and can be moved more easily, the risk-adjusted value is likely to be much higher. That will enable utilities to adapt to uncertain needs at the circuit level and also to reduce the risk of overbuilding and stranded investments.
The role of third parties
As for third parties—meaning distributed-energy-resource (DER) companies, technology manufacturers, and finance players—there is tremendous potential for growth. But they must be nimble to take advantage of these opportunities.
Distributed-energy-resource companies can devise new combinations of solar and storage, tailored to specific uses. While storage could eventually provide more customer value and lower bills, new rate structures will be more complex and policy is unlikely to lock in rates for long periods. But shorter periods of defined rates and more complex rate schedules will make it more difficult for DER providers to add new customers, who don’t like complexity and want to be sure their investment will pay off. New product offerings and financing creativity could solve these challenges and tempt customers currently sitting on the fence.
Technology players will need to understand how and where to play along the storage value chain, and adapt their offerings to meet customer needs as the technology and use cases quickly evolve.
Financing players, such as banks and institutional investors, will need to create options that adapt and match the investment horizon of the customer. As the market grows more confident of the underlying economics and performance of storage, they will develop financial products adapted to the technology’s specific needs. When that happens, financing costs will fall, further expanding the market’s potential, creating a virtuous cycle akin to what has happened to solar this past decade.
Battery storage is entering a dynamic and uncertain period. There will be big winners and losers, and the sources of value will constantly evolve depending on four factors: how quickly storage costs fall; how utilities adapt by improving services, incorporating new distributed energy alternatives, and reducing grid-system cost; how nimble third parties are; and whether regulators can strike the right balance between encouraging a healthy market for storage (and solar) and ensuring sustainable economics for the utilities. All this will be treacherous territory to navigate, and there will no doubt be missteps along the way. But there is also no doubt that storage’s time is coming.
The Energy Efficiency Council (EEC) has launched a new guide that will help Australia’s manufacturers and commercial building owners take control of their energy costs.
The new Quick Reference Guide to Energy Auditing gives businesses the information they need to work with energy efficiency experts to find ways of slashing their gas and electricity bills.
The EEC’s CEO, Luke Menzel, said the launch of the Guide is timely. “Businesses are grappling with massive energy price hikes, reliability issues, and huge volatility in gas and electricity markets.”
“These price shocks pose an existential threat to energy intensive industries, and the market needs to be fixed. But in the meantime, taking advantage of cost effective energy productivity opportunities can give energy users some breathing space.”
The Guide, launched at the Energy Users Association of Australia National Conference in Brisbane this week, was developed in partnership with the NSW Office of Environment and Heritage. It is the first guide to step energy users though Australia’s new energy audit standard, released by Standards Australia in 2014.
Mr. Menzel said energy users had welcomed the Guide.
“Businesses understand that getting more out of every unit of energy behind the meter is a way of reducing their exposure to the craziness playing out on the other side.”
“The Quick Reference Guide to Energy Auditing will help them get the information they need to assess and invest in measures that quickly cut energy costs, and mitigate the risk of future price rises,” concluded Luke Menzel.
Click here to download the Quick Reference Guide to Energy Auditing.
The speed with which the renewable energy industry has fired up to meet the national 2020 Renewable Energy Target (RET) almost makes Usain Bolt look tame by comparison.
By Clean Energy Council Chief Executive Kane Thornton
If you wind the clock back to this time last year, analysis by both the Clean Energy Council and the Clean Energy Regulator showed that we were off to a slow start and needed to pick up the pace.
Right now, we are flying. We are not even at the mid-point of 2017, but it is shaping up to be an unprecedented year for renewable energy in Australia. It feels like every week there is a new announcement about a project that has reached financial close and will start construction soon.
Figures released by the Clean Energy Council this month show that more than 30 projects are either under construction, will start this year or have already been completed in 2017. If you tally up the benefits that these projects will deliver, they include $7.5 billion worth of investment, more than 4100 direct jobs and more than 3500 MW of new power capacity. This is almost as much power capacity as the iconic Snowy Hydro scheme, which took decades to complete. Our industry will build most of these projects in just a few years.
So far, the projects in play are almost evenly split between wind and solar power plants. A huge part of this story has been the rapid fall in price of renewable energy. Large-scale solar has almost halved in cost over just the last couple of years. Federal Government support through the Australian Renewable Energy Agency (ARENA), finance packages developed by the Clean Energy Finance Corporation (CEFC) and state government support programs have all played their role in this success story.
This is an incredibly exciting time to be a part of the renewable energy industry. A lot of hard work by our members over many years has made this possible, creating the conditions that are now helping these projects to thrive. As always, there is a lot of hard work to do and many problems to solve, but the wind is finally at our backs.
