Australian households are doing their bit to cut the nation’s carbon emissions by adopting solar rooftop panels but not all of them are saving on their energy bills.
There is no denying Australians have a love affair with solar. According to the Clean Energy Australia Report 2019, rooftop solar energy systems added a record-breaking 1.55 GW of new capacity to the electricity market last year, and one in five Australians now have solar on their rooftops.
This trend shows no sign of slowing down. Six solar panels were installed every minute through the first two quarters of 2019. What’s more, the size of the solar systems being installed is growing, with the average size rising consistently from 1.34 kW in 2009 to 7.13 kW in 2018.
This incredible growth in solar adoption is clearly good news for Australia’s emissions reduction ambitions in the electricity sector. In its latest Quarterly Energy Dynamics Report, the Australian Energy Market Operator reports significant declines in both operational grid demand and emissions intensity, with the largest decrease (in emissions intensity) occurring at midday and credited to increased penetration of solar PV.
These record-breaking numbers are starting to generate some interesting dynamics in the energy market. Already in South Australia, the “off-peak” time for the grid (the time of minimum demand) is shifting from the middle of the night when everyone is sleeping, to the middle of the day when solar PV is at its maximum.
In July, wholesale prices fell to zero or negative for the first time in all regions of the National Energy Market as cloudless skies and good breezes – combined with low demand – pushed the share of renewables to more than 43 per cent.
Feed-in tariffs
So all good news then? Well, perhaps not for much longer for those who have invested their hard-earned savings in the rooftop PV systems that are driving this trend.
The problem is that most solar homes use the majority of their energy in the early morning and early evening when their solar system is not generating at its peak. They therefore rely on receiving feed-in tariffs (FiT) for the majority of the benefit from their systems.
This is a strategy that is already yielding poor returns. For example, in NSW since the solar bonus scheme ended in 2017, the FiT has dropped from 60c/kWh at the start of the scheme to an average of just 8c/kWh today. Meanwhile, average electricity prices have risen to around 35c/kWh.
This means that for every kWh of solar energy a household exports to the grid they have to buy it back again at more than three times the price in the evening – likely adding hundreds of dollars to their annual energy bill.
What’s more, with solar PV starting to drive wholesale energy prices down to zero in the middle of the day, it’s not hard to extrapolate the future trend. How much longer will the energy companies continue to pay consumers a FiT for energy that they could purchase from the wholesale market for free? Anyone relying on a continuation of the current FiT arrangements to realise a payback on their solar investment should urgently look at a plan B.
Load shifting
There is another way for solar households to ensure they are gaining the maximum possible benefits from the panels on their roof; they can consume as much of their solar energy as possible at the time it is generated.
In theory, it’s a simple strategy. Just schedule usage of optional, non-time sensitive appliances (dishwashers, pool pumps, white goods, water heaters, etc.) to run during the day rather than in the evening. Even most heating and cooling systems can be run on a timer, allowing homes to be pre-heated and pre-cooled on solar power before their occupants arrive home for the evening. No need for a “smart thermostat”; a simple dumb thermostat with a timer will do.
Some solar homes using this strategy have been able to offset so much of their grid energy with solar power that their FiT credits exceed their charges for imported grid energy, resulting in a situation where their energy retailer pays them a refund every month!
However, many people find that maximising the benefits from “solar shifting” is tricky in practice. The challenge is that electricity is an invisible commodity so it can be hard to know how much energy different appliances need to run and at what time there is sufficient solar output to run them. Get the balance wrong and it may not be apparent until the next quarterly energy bill arrives, by which time hundreds of dollars in potential savings may have been lost.
So, before deciding on a battery as the next step on your solar journey, take a moment to consider whether that $10,000 investment is the wisest move. Solar shifting costs nothing to try and can deliver some amazing results.
Pete Neal, CEO and founder of Powerpal, is an energy data expert who has created a patented energy data acquisition technology to unlock the benefits of digital electricity meters.
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