Australia's rooftop solar and batteries now the main game as large-scale transition flounders

Australia Broadcast Center

2 days ago

As Australia's energy transition hits turbulence, a quiet but fundamental shift is underway.
Faced with long delays, huge cost blowouts, and staunch opposition from some quarters, the push to build large-scale projects from wind farms to transmission lines is becoming increasingly fraught.
In the past few weeks alone, there's been a series of large-scale setbacks.
Several green hydrogen projects have been binned, the market operator has conceded some high-voltage power lines may not get built because of soaring costs, and developers have walked away from offshore wind proposals.
Such reverses, according to the likes of former Labor adviser Ross Garnaut, are undermining Australia's efforts to hit its climate and energy targets set out under global agreements to limit temperature rises.
"We are for the time being on a path to comprehensive failure," Garnaut said at a conference last month, because of "low investment and output in grid-scale solar and wind".
"Not by a little, but by a big margin," he told the audience.
Note the language — "grid-scale solar and wind". In other words, big projects connected to big power lines.
At the other end of the scale — on the roofs and in the garages of homes across Australia — it's a very different story.
Australian households are now arguably the main game when it comes to efforts to shift away from fossil fuels and decarbonise the electricity system.
It's happening amid the supercharged adoption of rooftop solar and household batteries.
And it's about the only part of Australia's energy transition that's not only hitting targets — but leaving them in its wake.
"In terms of rooftop solar, I mean, we've smashed expectations," says Peter Tickler, the co-founder of energy analytics firm Gridcog.
"If you look back historically on the predictions that everyone had for how much rooftop solar there would be, how popular it would be, I mean, it continually seems to just blow past those expectations."
Indeed, these days, there are more than four million households and businesses across the country with rooftop solar.
It's a figure that amounts to about one in every three small-scale customers in the land.
Tickler notes the outsized performance of rooftop solar has long been true in Australia, but this has not extended to other clean technologies, such as batteries.
But here, too, the story is rapidly changing thanks to government subsidies that have put a rocket under the demand for household batteries.
Last month, after the federal subsidy scheme had been in place for barely a few weeks, registrations for new batteries eclipsed those for solar for the first time.
Just a week later, it emerged the $2.3 billion the Albanese government had set aside for batteries under the program is on track to be spent far sooner than planned.
Australia, Tickler says, is "between stools" and shifting towards small-scale fixes.
"There's an enormous amount of capability there," he says.
"I mean, there are something like 20 gigawatts of rooftop solar and there's less than 10 gigawatts of utility-scale solar.
"That's just an example.
"So, as an asset, there's a huge amount of volume there."
In a sign of this new reality, a major report into Australia's biggest wholesale electricity market this week spent considerable time discussing the effects of — and opportunities presented by — the expanding fleet of household clean tech.
Tim Nelson is a former energy company executive who was picked by energy ministers to lead the review panel.
He says the growing importance of small-scale technologies is undeniable.
But so, too, is the need to better manage them.
At the moment, he notes, the vast majority of solar installations, for example, are all but invisible to the people running the power system because they sit "behind the meter".
And yet, their combined nameplate capacity is similar to all the coal-fired plants put together, and their output floods onto the grid every day in a largely uncontrolled way.
With Australia in the early stages of a boom in the uptake of other clean kit, such as batteries and electric vehicles, Nelson says it's imperative that authorities get a better handle on what these resources are doing.
"The biggest change in the last few years in terms of consumers and the wholesale market is just the nature they now participate in it far more actively," Nelson says.
"With the proliferation of rooftop solar and now the emergence of significant volumes of embedded or behind-the-meter batteries, electric vehicles, home energy management systems … consumers are becoming producers as well.
"And that unlocks enormous potential benefit if those resources are responding to price and are visible to the market operator."
To that end, Nelson and his fellow panel members are recommending changes that make it easier for companies to pool those resources to manage them more efficiently.
Ultimately, however, Nelson stresses that householders participating in these sorts of schemes need to see some real benefits.
Otherwise, he says they're unlikely to take part, setting back efforts to better coordinate small-scale resources and costing everybody more in the long-term.
"By not being observable to the market operator, that over time could result in duplication of investment," he says.
"The market operator is not aware of how they're going to respond dynamically to price.
"And the forecasts in the future are likely to overestimate how many resources are required."
While Nelson is not being drawn on the state of the energy transition at the large-scale end of the development spectrum, other commentators are happy to oblige.
Prominent among them is Bruce Mountain, an energy economist with the Victoria Energy Policy Centre and an ardent backer of the switch away from fossil fuels.
Mountain is a longstanding critic of the central plan drawn up by the Australian Energy Market Operator to guide the country's transition.
That document is known as the integrated system plan, or ISP.
According to Mountain, it "claims to be the plan that determines where you should build what quantity of wind, solar, storage and transmission to get us there".
Crucially, it revolves around big projects such as wind and solar farms, utility-scale batteries and offshore wind.
And all these projects are supposed to be connected to the grid via huge transmission lines linking the country together.
"When it came out, it was dancing in the streets, we are saved," Mountain quips.
"It's a complete nonsense."
At the heart of the ISP is the determination that the national electricity market, which spans Australia's eastern seaboard, needs 10,000km of new transmission lines.
In a major blow to that vision, AEMO recently acknowledged that transmission costs had rocketed by up to 100 per cent on last year's estimates.
AEMO blamed supply chain problems, including labour and material shortages, as well as increased complexity and social engagement costs.
Mountain is having none of it, saying AEMO and successive governments had always downplayed the real costs implied by the ISP.
Such blowouts, Mountain says, are an unacceptable risk to consumers because they would ultimately be on the hook for the whole cost through the regulatory system.
"They had incentives to massively understate the costs and to overstate benefits because that's what ministers wanted to hear," he says.
"Lo and behold, costs are now established or getting increasingly established to be horribly underestimated.
"So ministers are now in the politically untenable position of making these horrific choices."
For its part, AEMO acknowledges the escalations in the costs of transmission projects and says it will "revisit" some projects to see whether they should still go ahead.
"We recognise that higher costs for network development would ultimately affect consumer bills," says Merryn York, AEMO's general manager of system design.
Mountain says the many deep-rooted problems bedevilling the ISP and the large-scale projects that depend on it are unlikely to ease.
In that sense, he says the main game will increasingly be at the small scale, in homes and businesses.
And these customers, he notes, are not directly connected to large, high-voltage power lines but the poles and wires that crisscross Australia's towns and suburbs.
They are connected to the small-scale distribution network.
Mountain doesn't doubt the distribution network — and its customers — can do much of the heavy lifting required for Australia's energy transition.
He says it's likely to be cheaper and quicker than a large-scale undertaking.
What's more, it's happening anyway.
"We have plenty enough roof space in our cities to meet the electrical demand of our cities and towns," Mountain says.
"So we can go along and we will go a long way a lot more quickly with that before we need to worry about the next enormous increments that we will need or the next big plants that we need."
Peter Tickler from Gridcog agrees.
In fact, he goes even further.
"I think it's fundamental," Tickler says.
"You just need to look at all of the … the assumptions of the volume of small-scale flex that will be coming in and lending a hand.
"I mean, if they're wrong on that volume, then that is a gargantuan gap.
"We're not filling it today at the utility scale level at the rates we need.