...and solar hot water, of course.

John,

as I understand it, this is pretty much how the NSW system now works (with the other eastern states heading the same way) except that the regulator has unfortunately made the pricing voluntary.

This is an attractive arrangement for the retailers as they buy distributed generation for the same or slightly lower cost than from major generators but (since the energy is not visible to the transmission system, it is generated and sold within the local distribution system) they do not get charged transmission fees.

Also, think not in terms of fossil generators "throttling back" but rather expensive to run gas turbines not having to start up. Some of the fossil generators will always be run at less than full output, to provide regulation services. A degree of distributed generation does not change this.

People love the idea of going off the grid, but seem to have no idea of the cost, so we crunched the numbers:
http://www.climatespectator.com.au/commentary/when-it-viable-go-grid
The day when it's cost effective - especially in urban areas - to forego an existing grid connection for a stand alone power supply with the same reliability is a time to go yet. Based on current averages (and 2010 electricity prices) you'd be about $40 or 50K worse off in the long run for doing so.

On batteries, I fully support battery development and can't wait for a breakthrough, but I've been hearing that "very efficient, cheap, long-lived non-toxic batteries will start to hit the market over the next 12-18 months..." for years now ... aspiring manufacturers and inventors make all sorts of claims :)

Actually it does make sense.

In most locations, solar HWSs need some back-up heat source; usually electric. In winter this (and the water pump for the panels) can take significant amounts of electricity to run and they are not necessarily off-peak.

Instead, if you use an air source heat pump you avoid the pump losses, get better value from the backup energy consumed (maybe 2X) AND if you install a small PV system to offset the electricity consumed, you avoid the wasted energy which is over produced on sunny days (eg. all summer long) with a thermal system, since it can be fed into the grid.

Because of the COP being much better than 100% most of the time, it requires a smaller PV array than you might think. The only disappointment is that in winter the COP of many systems is pretty poor (because of the low air temperature at night) and some of them give-up and rely on resistive heating.

@ David Jones

I understand what you say, but in almost all areas of Australia it is possible to approach almost all hotwater needs using a modern system (like Apricus) and then only a marginal inline boost at use (rather than into storage).

In effect what you are explaining is that any PV system is oversized. The expense would create a better energy return by having a larger solar hot water collector area. Per unit of expense for energy capture/abatement it's actually extraordinarily difficult to beat solar hot water.

In fact, our advice to government has long been to accelerate solar hot water ahead of feed in PV. I see house after house with a gleaming set of PV panels but no solar hot water. Not sure what those people think they're doing - it's another dud policy outcome from our fossil conflicted Liblabs.

I agree that solar generation often offsets peak generation requirements and definitely impacts aggregate demand.

My comment regarding load at 10 pm is purely to highlight a time of a potential local grid peak load that is not coincident with PV generation. This difference is precisely the point, NEM peak demand for generation is often at a time highly coincident with peak solar generation, but that doesn't have any correlation with peak load of any specific part of the distribution infrastructure.

A dormitory residential area with a low school-age demographic certainly won't be participating in the peak generation load between 3-4pm on some late January summer's hot day, rather its local grid peak load is likely to occur between 6-8pm as the local population returns home from work, turns on the air conditioning, opens and closes the fridge door, runs the washing machine and recharges their devices (one day potentially including an electric car).

The issue is that the grid can not be engineered to a lower capacity on the back of distributed renewable energy. I agree wind is less coincident, but solar is no better in terms of infrastructure design. The afternoon thunderstorm breaking a heat wave while cooling, kills the PV generation far faster than it reduces the heat soak load in the buildings.

In reference to the voltage regulation. It appears this is a focus of the Ausgrid project. The update to the public provided last week noted that it was actually one of the major problems - apparently even just 20% local solar generation creates voltage control issues.

The key is time-shifting the local demand so to contain the peak load - in most cases this means storage of off-peak load (not necessarily peak price) for use to serve the consumption that occurs as the local grid experiences peak load.

Neil

I wasn't advocating for this approach as it isn't legal here (district off-grid networks for heat energy are common overseas and more rarely power + Qatar for cooling). Assuming it was legal, the neighbour is already paying the even more exorbitant rate for power the retailers are selling inclusive of the transmission, distribution and other non-generation costs. So the offered price can be a 50% discount against the retail price while still being 20% higher for the seller against the feed-in tariff.

On the social equity issue, while I hope your prediction regarding the mortality rates in the aged are incorrect, the differing price elasticity for electricity consumption between low-income and high-income households definitely makes time-of-day charging very regressive.

Neil, it's a bit funny that you demean other people's lack of power system experience and then go on to demonstrate that you don't really understand how the energy market works.

1. There isn't any substance to your claim that "If there is to be a feed-in rate it should be the same as the generators get - currently about 5c/Kwh"

For starters, at the time that solar is generating the average wholesale energy price is higher than that, probably around 8c; but because of how solar interacts with the market, what it is actually displacing is the most expensive generator dispatched on the NEM price stack at given time, and this generator is what sets the spot price. This is known as the merit order effect, and represents a benefit to all consumers through driving down wholesale prices, and modelling by MEI, Roam, SKM as well as the overseas experience all points to that benefit to all consumers being much higher

2. "It is ironic that those paying the exorbitant rates have already actually paid taxes to subsidise the panels which are ripping them off."

Actually there has been no taxpayer subsidy for solar PV since John Howard's $8,000 solar rebate was ended by the current government a few years ago. Since then - in the time that most PV systems are installed - STCs and and FiTs in Australia have all been funded through the energy market, ie any costs are borne by other energy users, not taxpayers (except for the adjustment to the NSW state budget for their - admittedly highly overgenerous - previous 60c gross FiT)

3. "solar panel owners are not paying toward distribution costs as the electricity retailers do and therefore should not charge for it" is misguided on two counts:

First, solar owners do pay distribution costs, for the energy they consume from the grid (which for a typical solar home is still a larger portion than what they export), as well as the same fixed costs that other users pay.

Second, it is conventional for any generator connected to the distribution network - be it gas, wind, hydro powered, whatever - to have it's payment adjusted to account for any avoided network losses (ie where the DLF/TLF is not equal to one), which balances the cost so other energy users in the area do not pay more or less than they should. Can you explain why solar should be treated differently? Or are you saying that the National Energy Rules are wrong regarding the calculation of loss factors for generators?

4. You say "base load generators losing daytime load will simply increase their prices to achieve a profit which they need to survive".

Guess what - it's a competitive market, so if the 'base load generators' simply increase their prices, they will not be dispatched.

Guess what else - with decreasing demand, partly brought about by more solar on the market, the opposite is happening - baseload generators are charging less, and consumers are benefiting. This is why no-one wants to invest in them at the moment.

5. Finally, on equity: with how feed in tariffs are set today, the 'drastic changes' you call for have already happened, and the only cross subsidy experienced by a new solar customer today is them cross-subsidising other consumers.

Neil,

I don't work for the wind industry. I work for a non-for-profit consumer based organisation, and my role with them representing Australian energy consumers is funded by the consumer advocacy panel. Check your facts.

1. Last week in Victoria the spot price hit the market cap of $12,900 per MWh. They vary: that's why the average is higher than that the spot prices you have quoted above. A lot is also sold through hedge contracts that are not reflected in the spot price. Check your facts.

2. "Federal government forces generators to subsidise solar and wind".... What are you talking about? If you are talking about the Renewable Energy Target, that is funded through retailers, not generators.

"...those generators charge the taxpayer" this is utter nonsense. What are taxpayers charged for by generators? Check your facts.

3. What does the mechanism for settlement of differences (ie cheques from retailers) have to do with whether the distribution is equitable or not? Are you now saying people should not be paid at all for exporting to the grid?

4. Sure, we can build more big generators to meet the very occasional high peaks in demand, but there is a trade off: it will add huge costs to consumers bills. Already about a quarter of the cost of bills currently goes towards meeting the energy needs of about 0.5% of the time. According to AEMO and we are entering a period of oversupply of generation capacity, as many current investments were made based on excessive demand forecasts, and some are being mothballed. So the emotive comparison with people in the UK freezing in the dark is not relevant here.

5. "The fact that conservative state governments have scrapped stupid feed-in tariffs does not mean that the poor will not be paying for 25 years" Would you like to explain why this is, given that former premium FiT schemes across Australia only lock in payments for 7 to 15 years? Once again, check your facts.

When fair prices for PV generation are not available, due to protectionism of utility profits, people are better off with battery storage and self sufficiency. As the article states, it is cheaper to use batteries than grid backup. The best way to deal with extortion is to replace the utility with batteries, and remove the utility control.

Neil, I don't disagree with the QCA's view.

It's the points you've made on the subject - that a. households that get most of their energy from the grid are still avoiding all or most network costs, b. "solar panel owners are not paying toward distribution costs as the electricity retailers do" and c. "paying little or nothing for their power or network connection" - that are unfounded and incorrect.

The actual distribution costs being avoided are specifically those smeared across the portion of generation on site that avoids import from the grid so it's not even directly related to the issue of feed in tariff amounts.

I agree with the QCA that fixed fees are the solution - with the caveat that they should be based on a demand charge (ie, the actual maximum peak demand drawn by a PV customer in a given year).

Neil, I reckon the list of things we furiously agree on (equity issues, specific need for protection of vulnerable consumers, need for cost reflexivity in charges, need to remove cross subsidy, possible need to rationalise incentives...) is probably 10 times longer than those we disagree on!

The issue for me here is that a lot of people demonise renewables with oversimplistic or incorrect arguments, and it detracts from the focus that I and other consumer advocates have of achieving a balanced outcome that is in the long term interest of consumers (not retailers, or DBs, or generators). It's no wonder policy makers can't get it right when they hear so many divergent views from within the consumer movement, and in my experience about 80 or 90% of the divergence disappears when the sort of nonsense put forward by some media outlets and some political parties is replaced with facts.

On demand charges - installing interval meters is standard with PV (in most states if not all), so it should be straight forward to determine the max half hourly demand for each year. As you would know some meters will also record a peak over a shorter duration, even 'instantaneously' (the 'quotes' because this means different things to different people), but personally I think half hourly peak is adequate for determining demand charges for a small (sub 100, 150 or 160 MWh/year depending on which state you are in) and a vast improvement on what we have now.