As power prices surge, Victorians are embracing solar — and it's causing problems

Updated

Andy McCarthy has been installing rooftop solar panels in Victoria for 18 years, but even he is stunned by the massive recent growth in demand.

Key points: Every minute, on average, six and a half solar panels are installed on Australian rooftops

Return on solar investment is faster as power prices rise and solar costs drop

Energy operators question stability of the grid as households feed back to the network

"It's been crazy," he said.

"We installed our first 100 kilowatt system in 2013. Back then, that was a huge deal.

"Now we are doing three a week."

The rate of growth is astonishing — every minute, on average, six and a half solar panels are installed on Australian rooftops.

Mr McCarthy said the uptake had surprised a lot of people.

"Even two years ago, it wouldn't have made economic sense for a manufacturer in Dandenong to install a large-scale solar system," he said.

"The return [on investment] would have been 10 or 11 years.

"But the fast drop in the cost of solar — and the fact that power costs have gone up faster than anyone could have predicted — means the return is now more like four or five years."

His company, Gippsland Solar, is bracing for even more demand, driven by the Victorian Government's billion-dollar renewable energy package for solar panels, hot-water systems and batteries.

Its target is to put solar panels on an extra 650,000 homes in a decade.

That would triple the amount of photo-voltaic (PV) solar power in Victoria.

And that comes with risks, according to Tony Wood, the director of energy policy at think-tank Grattan Institute.

"The challenge of managing that much PV, particularly where it will be concentrated in some suburbs where there's a lot more flat roofs, for example, is a big deal," he said.

"I don't think it's evident yet that we've properly planned for how that's going to work."

Mr McCarthy agreed.

"I'm very comfortable with the way technology is going — I think at the moment we're suffering from a lack of planning."

Victoria's energy grid simply wasn't designed to cope with a system where each house can feed its own electricity back into the network.

"It actually does hurt the stability of the grid," said Audrey Ziebelman, from the Australian Energy Market Operator (AEMO).

"We've identified already areas that we're worried about," she told the ABC's RN Breakfast program, "particularly in the mid-afternoon where there's very low demand."

Eventually, Mr McCarthy said, smart household batteries will solve many of the problems.

Too much power to handle

The challenge to the grid isn't just from households feeding power back into the network.

Six new wind and solar farms have been backed by Victoria's Government, with an aim they will start generating power by 2020.

But the farms are located in the state's north and west, where transmission lines are thin and can't handle more power coming into the system.

"There is currently insufficient capacity within existing transmission infrastructure in western Victoria to enable the amount of proposed generation," AEMO said in a statement.

"Generators connecting to this part of the network may be heavily constrained to protect the network and maintain electricity supply."

Plans for the state's largest solar farm, at Kiamal, near Mildura, stalled earlier this year because of capacity issues.

But the company behind the project — the French energy giant Total Eren — was able to come up with an engineering solution.

It's added a massive machine, known as a synchronous condenser, to the project. It can balance the energy output and protect the grid.

The downside is it's a hugely expensive piece of equipment.

So expensive, in fact, that its manufacturer offered to absorb some of the cost in order to help the Kiamal project go ahead.

"We've had to go to a lot of lengths, extraordinary lengths, to get this project over the line," Total Eren's Michael Vawser said.

"There's so many renewable energy projects being built, it's just increasing the complexity of every connection in the market, and we've sort of hit the perfect storm, in a way, with our project."

Electric cars and the thirst for power

Opponents of renewable energy have seized on infrastructure issues to criticise the growth in wind and solar.

But Mark Wakeham, from advocacy group Environment Victoria, believes the fears are overstated.

"I think people will start changing the way they use energy and there'll be a lot more use of energy when the sun is shining and the solar resource is really strong," he said.

Matters of State Is the $50-billion rail plan worth it?

Melbourne may soon be the size of London. But while London has the Tube, Melbourne does not. So do tens of billions need to be spent to get everyone around? About



Melbourne may soon be the size of London. But while London has the Tube, Melbourne does not. So dobillions need to be spent to get everyone around?

"We'll see people charging their electric vehicles during the daytime, but we do also need government incentives to ensure that people are storing some of that energy."

Mr Wood agreed electric vehicles would be a game changer, but was less optimistic about how they would fit into the system.

"If tens of thousands of people drive their electric vehicles home in the evening and plug them in, that's an even bigger load than air conditioners," he said.

"So what you need to be able to do is give those people the incentive or structure so that they don't plug all their cars in at the same time to be recharged.

"[These issues] are going to be far more important, in a sense, and I'd be putting my money into that rather than providing subsidies for people to put more PV on their roofs."

Apartment dwellers subsidise solar-powered homes

The question of grid stability also leads to questions about who pays for its maintenance.

The majority of households with solar are still connected to the network and use grid power after dark.

The current charges are based on the amount of energy used, rather than a flat fee for being connected.

This means solar households pay less than regular users to maintain the grid, even though they are still using it during peak times.

Mr Wood said the current pricing structure meant people without solar were effectively subsidising those who have it.

"Because a lot of our charges are based on electricity throughput rather than capacity, we don't pay our proportionate share of that grid," he said.

"That's where there's a lot of discussion or there has been a lot of debate about how we should adjust our payment structures to ensure that people pay their fair share of what they use."

When it comes to costs, social service groups argue that the Solar Victoria subsidies are not benefiting those who need price relief most urgently.

Renters and apartment dwellers are excluded, while people on lower incomes still cannot afford the outlay for solar systems, even with government discounts.

Emma King from the Victorian Council of Social Service said the program needed to be targeted to those who are missing out.

"The reality is for those people who are on very low incomes, it's going to make the biggest difference," she said.

The Victorian Greens have called for transmission lines to be upgraded to allow for increased renewable energy generation.

But it's a tricky issue for state governments.

The grid is a national piece of infrastructure, but it's state governments who feel the heat when the lights go out — as both the Victorian and South Australian governments know.

How governments manage these challenges of infrastructure and access to cheaper electricity will be a politically-charged question for whoever takes power.

Topics: electricity-energy-and-utilities, energy, science-and-technology, solar-energy, environment, states-and-territories, parliament, state-parliament, state-elections, elections, government-and-politics, vic, melbourne-3000, benalla-3673, winton-3673, mortlake-3272, warrnambool-3280, dundonnell-3271, echuca-3564, cohuna-3568, mildura-3500, geelong-3220, dandenong-3175, traralgon-3844

First posted