Will cheap storage make rooftop solar obsolete?

The addition of storage to rooftop solar (RTS) is becoming more popular as prices fall and more behind-the-meter (BTM) storage systems become available. The reduction in feed-in and net-metering tariffs has shifted applications to own use, but arbitrage and other factors have extended the use of BTM storage beyond that of an adjunct to RTS.

Fast forward twenty years into the future, to around 2040. Let us also assume that many of today’s projected developments have materialised:

  • The cost of storage has dropped dramatically
  • There is a large penetration of renewable energy on the “grid”, resulting in a decrease in the cost of electricity and over-generation on a regular basis. Utility-scale renewable energy (RE) systems have grown in size to >5 GW solar and 20 GW wind farms.
  • The industry has been reformed
  • Consumers have the ability to choose from whom they buy electricity and can access any supplier at any time
  • The generation market has moved from long term fixed- price guaranteed-offtake to a short term (hourly?) market based system. Tariffs are time of use dependant.
  • Most owners of rooftop solar have installed some form of storage and are familiar with the advantages of energy arbitrage, in fact many are using stored own generated energy to offset high tariffs during peak periods.
  • There are a significant number of electric vehicles in use.
  • The value of surplus own generation for sale to the grid is very low because of the large number of rooftop solar installations.

Now consider the situation of a rooftop solar system which is reaching end of life (approx. 20 years) and the decision needs to be taken about replacement. The owner will have 20 years of experience of using the system, not all of which may have been pleasant.

Putting aside the desire to appear to be “green” the main decision factor when the system was installed was the price difference between grid power and own generation. This was based on projected figures and actually saving may not have been what was calculated. The decision to replace should be based on the same criteria, i.e. “green” power at a lower cost than conventional grid power.

But the situation has changed, because grid power is now “green” and the price is based on market demand conditions. Also, because of over-generation, “surplus” renewably sourced energy is available at very low prices during periods of low demand and high generation. The situation may also have developed to where the price of grid energy over the day is actually lower than the cost of own generation. A 5 GW solar plant will produce energy at a much lower cost than a 5 kW rooftop system, and both operate in the same time period.

The consumer is faced with two options. One is to replace the rooftop system and continue operating using stored own energy at a unit price determined by the cost of the solar plant. Solar costs may have dropped, but not nearly as much as storage. The owner will also have knowledge of the costs of operating an RTS system over 20 years.

The second option is to increase the size of the storage plant and use the low-cost surplus green energy from the grid to offset peak consumption (which is the primary purpose of the RTS system at this time). This option satisfies the two basic criteria of green energy at a price lower than peak grid tariffs.  In this case, the storage of grid energy for arbitrage makes more sense than own generation, and shifts the necessity to maintain the system onto the utility. It also benefits the network as peak consumption is reduced, and own generation during the day does not cause havoc with the network.

An interesting example here is the case of Cape Town wanting to buy directly from the IPPs. If this were to succeed and the cost saving is passed onto consumers then the case for rooftop solar in Cape Town becomes very weak.

Send your comments to energize@ee.co.za


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Source: EE plublishers

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