Readers from Australia would know about the enormous uptake of rooftop solar panels in the residential sector in the last few years, a movement that has largely been driven by the (now significantly reduced) government rebates that made a significant contribution to the cost of buying the solar panels.
Of course there were a number of other contributing factors, but the end result is what matters – a huge penetration of rooftop solar systems (approximately 22% of all homes in South Australia), and declining electricity demand. All of this came about at a time when Australia’s “gold-plated” electricity networks were ramming through enormous electricity price increases, sometimes up to 18% per annum, based on their antiquated model of being allowed to charge for a rate of return on funds invested.
Now that Australians have had a taste for this whole “let’s save energy, save money and save the planet at the same time” concept, people are looking to the next big thing that can help them, and that next big thing is…
The problem with rooftop solar is that if you aren’t at home to use the power when it is generated (which is during the day time, when most non-FIRE people are at work), you don’t get any benefit. So your solar panels are generating power, but it does nothing for you.
But if you could store the power when it was generated, and then have it ready to use when you need it (e.g. at night time), then you wouldn’t need any government rebates to provide a distorted return on your investment in solar panels and they would genuinely stack up on their own.
And if you had enough storage and enough solar panels, then you could arguably disconnect yourself from the electricity network altogether.
The effect of this could be to eliminate your electricity bills, which for many households are anywhere from $2,000 to $3,500 per year.
I’m sure you’re wondering why now why people haven’t installed batteries already? Well, the answer is because no one has invented batteries that can do the job, aren’t enormous, and don’t cost so much that they actually make financial sense to buy. You might also recall that only a few years ago rooftop solar panel systems were very expensive to buy and install, but with volume came competition, production efficiencies and price reductions to the point where they are quite cheap. With the level of interest that is building for batteries I am predicting that the issue of cost will be solved very soon and batteries will start being installed all over the country as well.
So what does it mean for our electricity networks?
Our state and federal governments are in a tricky position when it comes to energy companies – the voters want a more environmentally-friendly economy and lower energy costs, but if the voters get what they want then the quasi-state-owned energy companies will go broke.
You see, the recent rooftop solar experiment (fuelled by now reduced/eliminated government rebates) actually reduced energy demand for the first time in modern history. And this happened at a time when energy networks had just spent a stack of cash on upgrading their networks.
The only option that the networks had was to then charge more per unit of electricity, further infuriating the voters. It’s almost like the government and the electricity companies are saying “Use less electricity to reduce your power bills, but then when all of your power bills go down, we’ll just jack up the price again. We need to get paid after all”.
All of this will continue of course, and you don’t need a telescope to see that if the electricity companies don’t do something different then they will go broke in no time.
But what if electricity networks actually embraced the change?
If the electricity companies were run like private businesses that knew they needed to adapt or die, they would look to find ways to incorporate battery storage in their networks to bring down their prices and the cost of generating electricity.
This could be done by reducing peak demand on the networks, as peak periods could be supplemented by additional power that had been stored during off-peak periods.
The electricity companies would probably argue that nothing exists that can store electricity on such a scale, and while they might be right today, they aren’t really doing enough to find a solution. Unfortunately it takes greater minds to develop solutions to problems like these…
Not only are organisations like Group Sadoway developing this technology, but giants like Tesla (the electric car company) are also taking an interest. And I’m sure that others will join them as momentum builds.
What does all of this mean for the end users?
This could have huge implications for many people, for example:
- As an aspiring early retiree, I would like to eliminate my reliance on the electricity grid and have no power bill ever again. Battery storage would make this a real possibility.
- Traditional businesses that operate from physical premises could reduce or eliminate their electricity costs and also have backup power supplies to cover them in the event of an outage.
- People running their own illegal hydroponics setups from their ceiling cavities could now generate all of their own power and reduce their costs of supplying drugs to local dealers.
While I hope you’re not that excited about point number three above, you will surely at least see the relevance of points one and two.
I personally look forward to being able to eliminate or significantly reduce my ~$2,500 per annum electricity bill, and therefore can’t wait for this technology to become a reality. I wouldn’t want to be running an electricity company in the future though!