Solar is so popular and powerful that owners will have to accept some give-and-take, says SwitchDin CEO Andrew Mears, as South Australia moves to manage grid stability with its Smarter Homes Program.
For a long time, PV system owners have been taught to think of the value their investments deliver “behind the meter”, where self-consumption and revenue from exported solar can lead to deep savings on electricity bills.
That may be a great way to explain solar to prospective customers but it overlooks what’s happening on the other side of their picket fences. As more rooftops are topped with rows of deep-blue panels, demand on the grid around midday is falling to levels that make network operators anxious.
South Australia’s government and AEMO have made a move by demanding inverters on new and upgraded systems can be switched off when the grid is in stress. In Western Australia, Horizon Power has announced a new tariff structure that discourages solar exports in favour of self-consumption.
EcoGeneration asked SwitchDin CEO Andrew Mears, a long-time proponent of introducing smarts to optimise connected distributed energy resources, about the outlook for residential PV now that the balance is shifting.
The high penetration of solar in South Australia and Western Australia has led to PV owners losing some control of their systems. What are the positives and negatives for PV system owners?
The overarching story here is a good one. It’s great that solar is affordable and accessible to so many Australians but this is causing real strain for network operators, whose mandate is to ensure the stability and reliability of the grid.
There’s a bit of a false dichotomy in this discussion. The dominant discourse has been that networks must choose to either: a) spend a lot of money to upgrade the poles and wires, or; b) limit the amount of solar a customer can install or impose a “speed limit” so that the solar can’t export to the grid at its full potential – thereby losing valuable feed-in income. In many states, these constraints have been applied. Neither of these options are desirable as they limit customer choice and lead to inefficiency in the system. In all cases this ultimately leads to higher than necessary electricity prices.
The new changes coming in from South Australia and Western Australia are examples of the network operators and state governments looking for new ways to solve this problem. It is not so much about rooftop solar system owners “losing control” as it is about the system striving to maximise the benefits of solar energy production while minimising the risks to grid stability. The best way to achieve this win-win scenario is by explicitly coordinating rooftop solar to make it part of the workings of the grid. SwitchDin is working with network operators around the country to find a “middle way” that works best for everyone who is connected to the grid – whether they have solar or not.
One danger is that the story could be sidelined by simplistic media coverage. The scaremongering about how “the government is going to switch off your solar” might deter people away from having solar installed. On the other side, it could feed into the dialogue that renewables are inherently unfit to play a large role in the electricity system, which is patently untrue. Neither of these are outcomes the industry wants.
What are the positives and negatives for everyone else?
The biggest impact of the South Australian Smarter Homes initiative will be felt by hardware manufacturers. Only a small number of inverter manufacturers have equipment that could easily comply when the new remote-control requirements were announced, and the hard deadline to start on September 28 meant many inverter manufacturers had little time to respond.
Manufacturers were concerned they were potentially being locked out from the South Australian market with inverters that they could not sell. This also placed pressure on installers who had specified inverters for installations to be carried out and had to go back to the drawing board to find a replacement if they had to comply with the installation deadline.
The requirements of the Smarter Homes initiative actually present an unequivocal opportunity for SwitchDin – for us, it’s a positive. We have envisioned an energy system where rooftop solar works in smooth conjunction with the traditional grid. SwitchDin was made for this, and we are already delivering similar solutions for our clients elsewhere in Australia, including for Horizon Power and Energy Queensland. We can deliver them here virtually out-of-the-box, via either direct integration with inverters, cloud API integrations or – looking forward – with the international smart grid standard IEEE 2030.5.
Do you have any comment on the timing of the program in South Australia? Have you been expecting something like this for some time?
It would have only been a question of time, especially with renewables potentially supplying about 90% of the state’s grid electricity in the near future. The Smarter Homes initiative has undoubtedly been in progress for a while behind the scenes, but this really hit hard in an already tough year with covid-19 impacting businesses.
What we’re seeing in South Australia with the remote disconnect/reconnect requirement is that it actually only requires a small investment to find the solution. We believe the disconnection of rooftop solar plants can facilitate an increase in aggregate demand and so can the coordinated control of distributed energy loads. This is a far more viable and potentially palatable option to respond to grid incidents instead of using an “inverter off switch”. Software also demonstrates a better capability to future proof technology over hard-wired or hardware solutions.
There are different approaches to managing solar exports and we don’t believe in being too prescriptive about how the rules should be implemented. We’ve already seen the potential for dynamic export connection agreements for DER and we have been involved in several projects that explore the application and business case.
What’s your view on how this will scale out across the country and your forecast for uptake of batteries and demand for residential PV?
The lessons we’ve learnt from South Australia and Western Australia have shown other governments we need to find a strategic approach towards managing the growth of DER. This has to be addressed in close partnership with manufacturers, networks, regulators and installers for inverters and home batteries.
Home battery schemes in Victoria, the ACT, NSW and the Northern Territory are helpful in encouraging the adoption of energy storage by offering a financial incentive. However, we can do more by offering a greater incentive, for example, through energy trading or open virtual power plants so households can realise the full potential for their investment in home batteries. I believe 2021 will be another year where we will continue to see the growth in residential rooftop solar, and hopefully this will drive further demand for energy storage.
How can owners get the best value out of their PV under tighter export controls and falling feed-in tariffs?
It is a big job for solar installers to sell a system to homeowners and it is even more complicated to educate homeowners on how they can manage and control their DERs. For a long time, we’ve become so focused on hardware that we’ve undervalued or forgotten there is an opportunity to educate and sell households into investing in smart software that will future proof their outlay for rooftop solar and home batteries.
Many homeowners are caught up in the upfront cost but if we were to bring them into the broader awareness piece on the returns they can get from exporting at the right time to the grid, charging their home batteries when the tariff is right to optimising their usage patterns to fit with the appropriate tariff structure, there is immense value beyond a hardware investment.
What are your plans in the commercial and industrial solar market? What are some energy solutions business owners may not be aware of?
We’re having more and more conversations with C&I customers and prospects around the use of SwitchDin’s technology. Where we’ve seen the most potential for C&I is from the retail, energy and local government sectors.
For example, one of our customers is Centennial Coal, who have rolled out SwitchDin’s monitoring technology for one of their mine sites in Airly, NSW, which has a solar farm. The project helps to manage their energy costs and to optimise the use of solar for their energy requirements. In the retail sector, a client with large mall has used rooftop solar and SwitchDin’s technology to reduce their reliance on grid electricity.
Many businesses think about monitoring as the sole purpose for a software platform like SwitchDin. However, smarter businesses are using SwitchDin to monitor their consumption and leverage this to find ways to optimise their solar production or to develop PPAs with their energy retailer for their peak energy requirements.