Smart grid – how soon can it de-carbonise our energy supplies?

Bruce Rowse

In ten years time the bulk of central coal fired generation in Australia will be close to redundancy, provided we regulate to make way for the technological and financial superiority of the smart grid based largely on distributed solar PV generation of electricity and distributed energy storage.

Whilst you pick yourself up off the floor after laughing at this ludicrous prediction, reflect a little on the history of solar PV in Australia.

Whilst solar PV technology has been around since the 1970s, not in 2006, not 2008, but as recently as 2009 less than 1% of Australian dwellings had solar PV systems. It was still uneconomic, and based on the previous 30 years there seemed little likelihood of that changing.

Back in 2008, if I had said to you that by 2012 10% of Australian dwellings would have a PV system on their roof you probably would have laughed, and told me to dream on. And I wouldn’t have believed it either.

But by the end of 2013 14% of Australian dwellings have solar power on their roofs. In South Australia over 20% of households had a solar PV system on their roof. Costs have plummeted, there has been strong policy support for PV, and Australia became one of the most competitive solar markets globally. Over one million householders have been willing to make a significant investments to get their own clean energy powerplant on their roof.

While we aren’t going to see the price drops we have seen in the past,  the costs of solar panels and inverters will continue to drop, and there will be ongoing innovation in gradually reducing the costs of installation.So many would agree with me that by 2024, solar PV as a form of electricity generation will be cheaper than coal based generation, sans subsidies.

Smart Grid Schematic – from

But then we come to storage, the great enabler that enables solar energy to be delivered night and day. The  key barrier however is the cost of storage.

A December 2013 US Department of Energy report on Grid Energy Storage outlines a plan for the US to develop grid energy storage capacity.  Over the period 2009 to 2012 around USD $1.3b was invested in battery and energy storage initiatives and funding obligations.

Lux Research states that the US Senate has now introduced a program to fund $7.5b in energy storage projects. This sort of stimulus will contribute to cost reductions in storage technology.

Navigant Research sees the grid scale battery energy storage market reaching $30b by 2022 , with the market size now under $1b. If the economies of scale are similar to that of PV, where prices drop by 20% for every doubling of capacity, we can expect storage prices to be approaching one quarter of what they are now by 2022.

Shai Aggasi of the now defunct Better Place electrified investors with his vision of electric vehicles, typically only driven for one hour a day, providing storage to the smart grid for part of the other 23 hours a day. The key constraint on the electric vehicle market is the battery, specifically battery costs and capacity (limited range). As battery costs come down and capacity improves, we will see a fuel switch for vehicles to electricity, countering the trend of decreased national electricity consumption. Shai was ahead of his time, but the genie appears to be now out of the bottle.

And as storage costs come down, rapid charging infrastructure will become more prevalent.


So am I really that crazy to be predicting the demise of centralised coal generation?

However to enable this – and the tremendous reduction in carbon emissisons that will result we need appropriate enabling policy. Elements of this may include:

  • Recognising the long time frames associated with distribution network planning, typically in excess of five years, and the need to therefore act now with considerable foresight. Plans made now will only likely be implemented from 2019.So we need to start planning now.
  • Developing tariff regimes that assign value to the network cost savings (avoided investment) provided by solar PV and energy efficiency. Peak demand in the national electricity market in  w the summer of 2014 was similar to that of 2008, and lower in all intervening years. Yet over this period demand should have gone up considerably due to population and economic growth, and indeed was forecast to do so by the Australian Energy Market Operator (AEMO).
  • Developing network tariffs that take into account the benefit provided by distributed generation and storage of decreased loads on inter-connectors.
  • Simplifying the connection arrangements for larger distributed generation systems.
  • Providing open, transparent, fair and reasonable standards and connection arrangements to facilitate the addition of storage and distributed generation and the appropriate monitoring, control and communication networks needed to operate the smart grid. Make no doubt, whilst over the next 20 years we are likely to see large scale fossil fuel centralised generation being relegated to the history books, there is plenty of opportunity for distribution businesses in a decentralised smart grid.
  • Providing stimulus for storage or other demand management solutions that better match demand to varying supply from renewables, with the aim of developing economies of scale and competition in design and installation. Hydro Tasmania has a valuable demonstration of how storage and demand management solutions can greatly increase the availability and utility of intermittent renewables at King Island.
  • Appropriate voltage regulation to both manage an increasing number of PV systems on homes and businesses (PV systems tend to push up network voltages), but also to reduce the variation in network voltages.
  • Metering and control systems that can effectively manage distributed storage systems (such as parked cars), the inflow and outflow of energy from such storage systems and the financial valuation of storage. This could represent valuable Australian IP suited to export.

The Rocky Mountain Institute are also seeing major changes to the grid over the next ten years in a 2014 report entitled “Grid Defection”.

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