Disruptive solar model shaping Australia's energy future

Traditional views of ownership are changing, and if you pay an energy bill, then this is either affecting you now or will very soon.

We see traditional ownership views shifting with the rise of the sharing economy and the likes of Airbnb. In the information economy, this ownership shift is seen with the rise of software as a service (SaaS) models. One theme unites these models: using only what you need creates revolutionary efficiencies that save money and in many cases deliver huge sustainability benefits.

This is now happening with energy and that’s why it’s going to affect everyone. A major disruption is occurring that in the short term is creating headlines about Australian power networks struggling to meet demand, but in the mid to long term will deliver big savings for both personal and business customers, and a huge boost to the environment.

What’s happening is the decentralisation of power generation, and the rise of highly efficient, ultrasustainable localised power creation.

Traditionally, the energy market has relied on big centralised generators that burn ‘something’ to make electricity. The unit cost of creating this energy is referred to as the ‘wholesale cost’, which last month saw NSW wholesale costs go from $140 MWh to $1000 MWh. Furthermore, there are the costs involved in transporting that power.

Investment and generation behind the meter cut costs of wholesale and distribution costs of energy. The cost of energy to businesses is wholesale plus transportation cost of energy.

Here’s where it gets really interesting. In NSW, the average cost of network charges is 5–15c/kWh, which means 10–25c/kWh pricing on average. This means that the largest consumers of energy get the cheapest price, but there’s only a few of these big consumers. The other 80% don’t consume that much energy, but because they pay for the same social infrastructure they’re left with a big tab to pick up.

As a society, we have accepted this condition because in a sense it was just built in, the price we were all willing to pay for the background hum and security of the energy that powered our lives. We also didn’t have a choice because there were no viable energy alternatives.

Now we do. New energy models are emerging in Australia built on the revolutionary economics of solar which has seen an 80% drop in component pricing and a rapid improvement of the monitoring technology and processes that can support stable localised power generation.

Many people are unaware that solar power has reached parity pricing with coal in Australia — this means it costs as much or less to generate power with solar than with coal. And the customer doesn’t have to pay the network charges because the power generator is located on premises.

As a result of these new economics, a group of like-minded innovators and community members have come together and built a commercial solar model that is delivering free solar to businesses while simultaneously producing a healthy 7% return on investment for community funders.

Australian community solar fund ClearSky Solar allows smaller generators to get access to power at rates of the big consumers.

The model is called PayG and it was pioneered by ClearSky Solar planners like Christina Kirche and Smart Commercial Solar founder Huon Hoogesteger.

The reason the model works is because the difference between the cost of the solar being generated and the price charged for the energy it produces (still much lower than utility prices) is so great that people are willing to finance your system. And it’s a comparison rate that makes it look better than a mortgage.

To date ClearSky Solar has pooled nearly $3m in investments for 17 projects installed by Smart Commercial Solar across Australia.  Every single one of its projects is oversubscribed within hours of being announced, and the ABC reported that one solar investor was so pleased with the returns that she was pulling money out of her banking investments to put more into solar.

Businesses from the likes of industrial supply company Blackwoods to the Dudley Hotel are now generating power from solar installations paid for by the community. Energy output and financial returns are carefully monitored and user and investor exist in harmony — it’s a vision of our shared energy future but it’s here today.