Solar has come a long way in Australia, from virtual non-existence just a decade ago, to now – a time where questions are being raised about whether we now have too much solar.
You’ve probably found yourself stuck between headlines claiming ‘solar is crashing the grid!’ and the counter narrative claiming solar is the future of cleaner, cheaper and more sustainable energy. So, where exactly does the truth lie?
In this blog, we’re pushing aside all the shock jocks, the headlines and sales hyperbole to take a look at the hard-cold facts. So, let’s begin.
Is it true that solar is destabilising the grid?
Have we seen it happen? Yes. Is it common and a widespread problem? No. Well, not yet. Does it have the potential to be a bigger problem in future? Yes. Is there a solution? Absolutely!
Here’s the thing – when solar first became a ‘thing’ people were incentivised to install panels and pump as much power back to the grid as possible. You might remember the ‘glory days’ when Kevin Rudd introduced a premium solar feed-in tariff for all solar power sent to the grid, at rates around $0.50/kWh or more. At that stage, we needed more power and sourcing it from a sustainable solution like solar was a no-brainer.
This policy resulted in a huge ‘solar boom’. The industry went absolutely gangbusters. 35% of houses in South Australia now have rooftop solar, 30% in Queensland and 15% in Victoria. In these states in particular, there is a huge amount of solar being pumped back to the grid every day. Arguably, too much at times when there is a lot of sun and not a lot of air-cons being used – like on sunny days in the spring or autumn.
In a simple case of supply and demand, the more power that is being sent back to the grid, the more feed-in tariffs decline. In WA, for example, feed in tariffs can be as low $0.03. This is as a direct results of the grid now having excess power on certain days.
This occasional surplus of power on the grid and the subsequent decline in feed-in tariffs was the first step in the inevitable evolution from ‘old school solar’ towards ‘solar 2.0’. Governments are now trying to incentivise households to invest in batteries.
What’s old school solar?
Well, as you’ve probably guessed, it’s not a technical term! ‘Old school solar’ is the term we use to describe that first generation of solar – the time when getting just panels, without a battery was the smart and financially viable thing to do. It’s safe to say we’ve closed the book on that chapter, but some people aren’t up to speed with the narrative yet.
What’s solar 2.0?
Solar 2.0 is the next phase of solar, the inevitable evolution of the industry towards batteries and virtual power plants playing a vital role in powering individual homes while supporting their communities.
How can batteries and virtual power plants (Solar 2.0) help prevent grid destabilisation?
When you have a battery, you’re storing and using your own solar power. So, that solves the issue of too much power being pumped back to the grid. But, beyond that, virtual power plants are a smart solution that allow household batteries to support the grid. When the grid needs more power, a virtual power plant can activate and send some off at the press of a button. When there’s too much power and the grid needs to expel some, household batteries can be charged up from the grid. Best yet, homeowners are financially compensated for playing their part in helping out the whole community.
As you can see, solar 2.0 is much smarter than old school solar. Joining ShineHub’s Community Virtual Power Plant, for example, will make you feel like you’re back in the glory days of Rudd’s premium payments. When this VPP activates, households are paid $0.45/kWh + the solar feed-in tariff for discharging energy to the grid and $0.45/kWh when they charge up their battery from the grid when it’s in surplus.
So, what’s the problem? Why are we even having this conversation?
Governments – sometimes they’re a little slow to catch up. Politicians tend to roll along with the ‘if it ain’t broke, don’t fix it’ approach. So, rather than seeing the inevitable evolution of solar and acting ahead of time, Governments have waited for the cracks to show with old school solar and now they are scrambling to catch up. At the first sign of grid destabilisation, there has been rumbles of panic echoing through the corridors of Parliament House.
Journalists have been quick to jump on board and this is when a whole new narrative begins to write itself. Without understanding the solar industry and what the next generation looks like, the simple solution to ‘too much solar’ seems like it should be ‘shut off the panels!’.
This attitude is very short-sighted and doesn’t address the bigger issue at play here. We need to do more than just occasionally shut off everyone’s panels, we need to accelerate the movement from ‘old school solar’ to ‘solar 2.0’ – and that all begins with batteries.
How do I ensure my solar solution is 2.0, not old school?
First and foremost, you need a battery. Solar feed-in-tariffs have been slashed, so batteries are now more valuable to homeowners than ever. Batteries essentially make the solar feed-in tariff redundant for households, because you use your own power rather than sending it back to the grid. By linking your battery up to a Virtual Power Plant, you will still occasionally be sending power back to the grid, but in return for a far higher premium than the standard feed-in tariff alone.
It’s important to make sure your battery can connect up to virtual power plants without additional costs involved. VPPs can be very different in how they work, how you sign up and what they offer you in return – you can read more about that here.
Joining a VPP means you will be part of the solution, not the problem. That is, if there ever is a surplus of power on the grid causing destabilisation, you can have peace of mind knowing you haven’t contributed to that, in fact, your battery can help solve the issue. Plus, you will get an additional financial kickback from the virtual power plant for your efforts!
But people say batteries aren’t financially viable, is that true?
Here’s the other narrative that grinds our gears – the ‘experts’ who claim household batteries aren’t financially viable. Next time you read an article like that, check the price point they are estimating. Most tend to approximate batteries at a cost of $15,000 or so, when the reality is the vast majority of batteries we sell at ShineHub retail cost around $5,500 to $9,500. Check out the payback of the popular Alpha ESS 13.3 kWh battery here.
Get in touch with us and we will help you crunch the numbers. Most likely, you will find that storing and using your own power is far more financially viable than pumping it back to the grid and getting a depleted feed-in tariff in return. Batteries can slash your power bills by up to 90% and on top of that, you have the added financial benefit of joining a virtual power plant.
That’s all well and good, but what happens in the meantime? If old school solar destabilises the grid, will Big Brother come and take control?
South Australia is the most vulnerable state when it comes to this issue, given the large percentage of houses with rooftop solar. The Government has authorised for rooftop solar systems to be purposely ‘tripped’ on rare occasions as an emergency intervention against the threat of black outs. This will only affect households that go solar after 28 September 2020. It’s also important to know that if you’re in South Australia and you have a battery, this won’t affect you, as you’re already part of the ‘Solar 2.0’ movement and aren’t relying on feed-in-tariffs from the grid.
In all other states, policies remain business as usual. But, the recent announcement from South Australia is a good example for other states to look to – the moral of the story being, ‘if you’re concerned about future policies, grandfather yourself!’ New policy positions generally affected instalments from a future date, rather than being retrospective.
Each state is looking at different solutions to address this issue, but ultimately they all striving towards three goals:
1. Making sure they can intervene to mitigate against black outs when needed
2. Making panel-only systems less attractive by reducing feed-in tariffs and rebates
3. Incentivising a shift towards batteries and virtual power plants
Is this a record – our longest blog ever?
Ok, so we’re conscious that this may have been information overload. This isn’t an easy topic to wrap your head around. So, if you want us to walk you through anything or talk about specifics for your individual circumstances, book a time for a chat with one of our solar experts.