The continued uptake of solar is a concern for networks as exports cause voltage levels to rise, writes Olivier Lacroix. Only flexible, smarter solutions will enable reliable and affordable energy – and more growth for PV.

Globally, the transition to a low-emissions energy future is well underway, and customers are proving to be a key component of this transformation. Customers are investing in clean energy through the installation of rooftop solar systems and taking a more active role in electricity generation. A common term used to describe this type of customer is the “prosumer”, one that both consumes and produces electricity.    

The rise of the prosumer is particularly prominent in Australia, where sunshine is abundant and rooftop solar has been thoroughly embraced. More than 20% of Australian households have made the decision to install rooftop solar systems. In some parts of the country the percentage of households is significantly higher than the national average. For example, around 40% of dwellings in Queensland and South Australia have rooftop solar.

Across Australia, more than 2.5 million rooftop solar systems have been installed, making the country a global leader in the number of systems per household. This compares to 1.8 million rooftop solar systems in Germany and 2 million rooftop solar systems in the United States (1 million of those are in California). Germany and the United States have fewer systems than Australia overall and per capita even more so: their populations are respectively three times and 13 times that of Australia.  

Customers are not only motivated by environmental reasons but primarily by the ability to reduce their electricity bills and generate a financial return. Looking forward, customers will become increasingly engaged in energy generation and management through the further uptake of rooftop solar and adoption of batteries and electric vehicles.

It is forecast that rooftop solar capacity will double over the next 20 years in Australia, from roughly 10GW in 2020 to 20GW in 2040 (according to AEMO’s Integrated System Plan 2020 central scenario). This outcome would cement Australia’s position as the global leader in decentralised electricity.

Challenges for networks 

Given this momentum, it is important to make sure that Australia’s electricity infrastructure can support the further integration of localised generation. This will help maximise its benefits for all customers.

This can be challenging. Electricity infrastructure has been historically designed for electricity to flow from centralised, large-scale generators to passive customers located on the distribution networks. But now, thanks to rooftop solar systems, customers can export excess solar generation they do not consume to the grid. This is especially so during the middle of the day when the sun is shining and solar generation is highest.

While customers with rooftop solar systems may benefit from a feed-in tariff for such exports, there are other implications to consider. High solar generation exports and low demand can cause electricity to flow in the reverse direction, resulting in a range of technical issues on the distribution networks. The predominant issue is voltage exceeding the regulated limit.

High voltage levels can negatively impact quality of supply, reducing the efficiency of or damaging customer appliances. Thus, a focus of distribution businesses today in Australia, and globally, is to support customers in installing further rooftop solar systems. This must be done without compromising a safe and reliable electricity supply and, of course, in a cost-efficient manner.

Networks’ hosting capacity

An immediate question for distribution businesses is how much rooftop solar their network can support in a particular area, known as the “hosting capacity”. Our Future Grid for Distributed Energy report, delivered in partnership with CitiPower and Powercor,answers this question. This project received funding from the Australian Renewable Energy Agency and used CitiPower’s and Powercor’s networks as a case study.

Nineteen per cent of Powercor’s customers have installed rooftop solar. This is expected to increase to 34% by 2026. Establishing hosting capacity is one of the first steps to understanding the impact of this rise in rooftop solar for both the network and customers. It is also the first step in assessing potential solutions to increase hosting capacity. During our Future Grid for Distributed Energy project, we developed a replicable methodology that other distribution businesses can use to assess the hosting capacity of their networks.

In addition to establishing hosting capacity, we also assessed potential solutions to mitigate voltage rise on the low voltage (LV) portions of distribution networks as more customers install rooftop solar systems.

The technical and economic performance of five solutions, outlined in the figure below, were assessed via simulations. Our study concluded that a suite of solutions is required to address voltage issues caused by increasing electricity generation from rooftop PV systems and increase the distribution networks’ hosting capacity.

Dynamic exports

Our pinnacle recommendation informed by our modelling is that governments consider allowing the application of flexible or dynamic export limits to solar generation. This solution has been gaining attention recently.

Distribution businesses have traditionally applied fixed or static export limits to manage rising voltage levels due to high solar exports. Fixed export limits cap the amount of solar generation that can be exported to the grid. In fact, in some cases, customers are not permitted to export at all!

This is despite the fact that the technical issues caused by high solar exports do not occur constantly and may vary by season, day or hour in the day.

If a customer is unable to export excess solar, the value proposition for investing in rooftop solar is greatly diminished. This can raise equity issues regarding customers’ capacity to maximise their investment in rooftop solar. Static export limits are thus unnecessarily limiting the opportunities offered by the growing uptake of rooftop solar, including more affordable and cleaner electricity.

However, our study also shows that unlocking 100% of customers’ solar exports across the entire distribution network would be economically inefficient. This means that the cost of upgrading the network to support all customers exporting their solar generation in the middle of the day does not outweigh the benefits. Doing so can create unnecessary upward pressure on electricity prices.

This is where dynamic export limits can provide the right balance for the customers. Rather than a blanket rule, dynamic export limits mean that a customer’s solar generation is only curtailed when the grid requires it. Dynamically managing the networks means that, for most of the time, customers will be able to export their surplus solar.

The role for smart inverters

Smart inverters can enable dynamic exports by autonomously sensing grid conditions and limiting the power injected into the grid only when necessary. In such cases, customers’ solar exports are automatically constrained. This can be achieved at a negligible additional cost for customers compared to standard inverters that are installed alongside rooftop solar systems.

Our study found that in many cases through dynamic export smart inverters can mitigate extreme voltage rise efficiently as more customers install rooftop solar systems. Thus, we recommend that governments follow the example of Victoria by mandating the installation of smart inverters with new rooftop solar installations. Alternatively, distribution businesses could include this requirement in their connection agreements with customers.

However, although smart inverters can be used as a safety net to prevent voltage levels rising to excessive levels, they are not a silver bullet. This is because as the number of rooftop solar systems increases, smart inverters will curtail high amounts of solar exports without other solutions in place.

For instance, at 100% penetration, in some cases, up to 80% of solar exports could be curtailed. This is not an optimal outcome for the customers. Our study showed that additional solutions will complement the deployment of smart inverters. This means that distribution businesses should expect to deploy a range of measures including targeted network upgrades.

What about batteries?

As costs decline, customer interest in batteries is increasing, and a growing number are being installed alongside rooftop solar systems. In 2019, eight per cent of new rooftop solar systems were installed with a battery in Australia.

Intuitively, it is expected that customers will charge their batteries rather than export their excess solar generation, mitigating the voltage issues on the grid. However, actual grid benefits will depend on how the batteries are operated.

In the Future Grid for Distributed Energy project, we assumed a simple (and typical) operation mode in which a customer would operate their battery to maximise their self-consumption. In this case, the batteries were often fully charged before solar export peaked and thus had no impact on increasing the networks’ ability to host additional solar systems.

Alternatively, batteries could be operated to target grid services that positively impact voltage levels by ensuring they are charged during periods of maximum solar export. However, the impact of this was not assessed in our study. We recommended that the benefits of operating “batteries as a fleet” to provide grid services be investigated further and compared to other options. The findings of these future studies could help inform policies as governments seek to incentivise batteries – such as through the Solar Victoria battery rebate scheme.

In addition to batteries, demand for electric vehicles (EVs) is also growing in Australia as well as overseas. Without proper management, EVs may increase electricity consumption during peak demand periods. This could create local network issues. On the other hand, EVs may help mitigate rising voltage levels due to growing solar exports by charging in the middle of the day.

Although EVs were outside the scope of our study, we recommended distribution networks and governments investigate the role of EVs in enabling further uptake of distributed energy resources.

Networks take the wheel

Given Australia is at the forefront of uptake of distributed energy resources, Australian distribution businesses are exploring ways to manage this energy transition. In particular, South Australia is leading the way with some new initiatives.

For example, distribution business SA Power Networks is demonstrating the provision of “dynamic operating envelopes” to a virtual power plant. Dynamic operating envelopes can coordinate the use of rooftop solar and batteries to maximise capacity without breaching network constraints. They provide upper and lower limits for power import and export, enabling a controlled dynamic export function. They may be updated throughout the day to reflect network conditions and communicated in real-time from the distribution business to the virtual power plant operator.

Also, SA Power Networks is now offering a new “solar sponge” tariff to incentivise batteries to manage high solar exports. The new tariff aims to encourage customers to shift demand from the evening peak to the middle of the day to “soak” up rooftop solar generation. It does this by increasing rates in the morning and evenings and offering cheap rates in the middle of the day.

Insights from these initiatives, and those being undertaken elsewhere in the energy industry, will contribute to solving the challenges of transitioning to a more distributed grid. Indeed, knowledge sharing across distribution businesses will help progress strategies to mitigate rising voltage levels as the penetration of distributed energy resources increases.

We hope the learnings from our Future Grid for Distributed Energy project can support distribution businesses by providing a replicable methodology for assessing baseline hosting capacity. This is an important first step to accurately quantifying the size of the issue and identifying most suited mitigation options.

Australians will continue to install rooftop solar systems and batteries and EVs are also becoming popular. Distribution businesses must help facilitate this transition by increasing their capacity to host distributed energy resources. This should be done cost efficiently to reduce potential burden on customers through higher electricity bills. Distribution businesses should continue to investigate more flexible and smarter solutions that ensure customers benefit from cleaner electricity that is both safe, reliable and affordable.

Olivier Lacroix is CEO of ENEA Consulting Australia.