House Batteries Help the Grid & Consumers

Energy provider Ergon Retail is running a trial, with support from the Australian Renewable Energy Agency (ARENA), in 33 Queensland homes in Toowoomba in the south of the state and Townsville and Cannonvale in the north.

In recent months, about 30 country householders have joined a pilot project that provides a glimpse of the future of our energy grid.

For no up-front cost, these homes will get a state-of-the-art rooftop solar and battery system installed in their homes .

Participants will pay a monthly fee to use the battery system, with their electricity bills expected to be significantly reduced because about 75 per cent of their power will be generated by the sun. Their shiny new cabinet-sized battery will allow them to store some of the energy from their solar panels that they then use during peak times – usually in the early evening.

For its part, Ergon will be able to remotely control and monitor these home batteries, and feed power back into the grid when the network is being stretched. The company talks about these in-home batteries as "virtual power plants" that will act to smooth out demand and strengthen the network.

With its twin mandates of helping to reduce the cost and increase the supply of renewable energy in Australia, the ARENA sees great potential in this kind of pilot to help accelerate the penetration of renewable energy into the market.

As we stand on the cusp of an electricity industry revolution in this country, enabled by rapid advances in solar, trials like Ergon's will be one of the main ways we can get ready. They will be essential in discovering which models work best for consumers and, just as importantly, for Australian grids.

It's difficult to overstate just how quickly things are moving in the energy-storage space. Ergon is just one provider eyeing storage as a way to improve its service to customers and find new markets for its products. AGL is offering a solar/battery system for homes (rival Origin also has plans to launch a similar product) and home battery vendors, such as Sunverge and Octillion, are quickly setting up shop in Australia. Within months, every major solar installer will also offer a storage product.

A recent AECOM study, commissioned by ARENA, foreshadows a looming battery "megashift", driven by technological advances and continued price improvements. It predicts that by 2020, the cost of home batteries will drop 40-60 per cent. This aligns with forecasts by Morgan Stanley (MS) that, during the same period, more than a million Australian households could install home battery systems.

With generous state-based solar feed-in tariffs starting to end next year, many of the 1 million-plus Australian households with solar are hungry for an option that lets them store and use the power they generate, rather than being forced to immediately sell it back to power companies for almost nothing.

The much-heralded arrival next year of Tesla's Powerwall home battery, with its sleek design and consumer appeal (some have dubbed it the "iPhone of energy storage"), will also be a significant chapter in this fast-moving story. Although Tesla is just one player in the battery market, it has certainly succeeded in providing price leadership (its announced price tag of $4000 for a 7kWh system was previously not considered achievable until 2020) and making battery storage a major talking point.

At ARENA we're excited by the potential benefits to consumers. But it's the other side of the equation – the upside for the network – that is our real focus. That's because advances in storage hold the promise of removing a key criticism of renewable electricity: its oft-discussed supply variability, driven by the simple reality that the sun isn't always shining and the wind is not always blowing.

Wind and solar power already rival fossil fuels as the lowest-cost forms of newly built electricity generation and comprise the fastest-growing segment of the global energy mix. Just last week the International Energy Agency announced that in 2014, renewables had overtaken natural gas to be the second-largest source of new electricity generation worldwide, in terms of capacity additions.

This onward march of renewables means the role of storage as not just an enabler of clean energy but a driver of jobs and economic growth.

Australia, with the highest rate of residential solar penetration in the world, as well as a large number of communities and industry sitting off the grid, is an ideal laboratory and test market for storage technology. Already, Australian companies are reaping the benefits, exporting off-grid renewable energy, storage and control systems internationally.

At ARENA, we saw this coming long before Tesla put home batteries in everyone's newsfeeds. The Ergon Energy trial is just one of many battery-related pilots we have supported, including a project in Western Australia looking at how centralised storage can reduce connection and energy costs for greenfield residential developments and two solar/battery projects at remote mines in WA and Queensland that will help the resource sector move away from expensive generation powered by trucked-in diesel.

ARENA is also supporting studies to address a lack of real-life data on the performance of energy storage systems on Australian networks and in Australian conditions. The University of Adelaide is building a mobile energy storage test platform and establishing an online database for Australian energy storage expertise. Meanwhile, Canberra-based IT Power is testing the real-world performance of a range of batteries, exposing them to simulated conditions that mirror those found within Australian networks.

The AECOM report stresses the need for industry players such as energy retailers, networks and technology suppliers to see these changes as an opportunity rather than a threat. They can undoubtedly play a role in minimising the cost of maintaining a reliable network and mitigate the gold plating that has occurred in the past.

Australian households with rooftop solar also need to be convinced their newly affordable home battery system shouldn't be seen as an enabler of them leaving the grid. Doing so would, in most situations, cost them and those who stay connected more money, and those who leave will run the risk of having a less reliable energy supply. We have to get the message out to consumers that participating in the grid makes it stronger and, in turn, helps further promote the uptake of renewables.

There is no doubt that, like any major economy-wide change, the storage megashift will carry with it risks and disruptions. The good news is Australia is ideally placed to account for these, and take full advantage of a battery boom that could rival the PV rooftop revolution.

Ivor Frischknecht is the CEO of the Australian Renewable Energy Agency