Australian Renewable Energy Agency (ARENA) CEO, Ivor Frischknecht, explains the revolution that is taking place in the energy sector.
If millions of Australian households and businesses continue to invest in their own solar and battery systems, this vast array of small scale energy assets known as Distributed Energy Resources (DER) could create enormous disruption to the electricity system.
While this creates opportunities for consumers, it also creates challenges for incumbents – the market, its operator, regulator, generators, retailers and networks.
If utilised to our collective advantage, DER could make the system more resilient and affordable, but it could also make the system more unstable and expensive.
With forecasts that up to 45 per cent of our electricity will be generated by consumers within two decades, DER is set to transform our energy system… for better or worse.
A revolution is underway in the energy sector. The transformation is not just happening at grid scale, but also on the “customer side of the meter” in households and businesses.
In the decades to come, it is increasingly clear that as well as being renewable, the future of Australia’s energy generation is going to be small-scale and highly distributed.
While much of our current energy debate is focused on the transition of grid scale generation from coal to wind and solar farms stretching across the countryside, and on grid scale storage like big batteries and pumped hydro, Australian households and businesses have been busily changing the way they use energy.
Ten years ago, there were just 14,000 rooftop solar units across Australia.
Today, 1.8 million Australian households have solar panels on their roofs.
In the last decade, Australians have embraced rooftop solar so enthusiastically that we are now the biggest rooftop solar adopters per capita in the world.
And that is only increasing. Rooftop solar installations hit a new record in the March quarter with a monthly average of 127MW installed, up 56 per cent from the same time last year.
Rooftop solar installations are running at an annualised rate of more than 1300MW.
An estimated 1 GW of rooftop solar was installed across Australia last year. For the first time, rooftop solar throughout Australia generated over 1000 GWh in a month – December last year.
The uptake of rooftop solar PV among commercial and industrial customers is also increasing apace with business volume recently outstripping residential customer capacity.
At present, rooftop solar generation accounts for just over 3 per cent of our generation.
By 2050, it is estimated up to 45 per cent of Australia’s electricity will be generated from solar PV on rooftops. According to AEMO’s forecasts, 25 to 40 per cent will be coming from rooftops by 2040.
A growing number of Australians are also adding home batteries.
In 2017, the number of residential battery systems installed trebled from the previous year. Almost 21,000 battery systems were installed in Australian homes in 2017.
These small scale assets would reduce the need for network infrastructure, and consequently cut our electricity bills. It could displace the need for grid scale power stations.
In a future where the customer side of the equation has a bigger role to play in delivering supply and managing demand, our current industry-centric view of the system has to change.
Instead, we need to think about the energy system holistically – and that includes finding ways for household solar, batteries and appliances to be utilised for the benefit of the system as a whole.