Microgrids and standalone power systems could reduce costs

The Energy Networks Association (ENA) recently engaged consultancy company Energeia and CSIRO to assess the role microgrids and standalone power systems could play as alternatives to traditional grid infrastructure. Their analysis found that grid companies could save customers over $1.7 billion in costs and provide more reliable service to rural customers if they can make smarter use of off-grid technology.

“This analysis to 2050 finds a physical grid connection provides a better service at lower cost for most customers, but the cost and quality of standalone systems is improving rapidly,” said ENA CEO John Bradley, speaking at the Re-Powering NSW energy conference this week.

“At the grid edge, almost $700 million could be saved by supplying 27,000 future rural farm customers with a standalone power system, rather than building more poles and wires.

“By 2050, these customers could be supplied more cheaply and reliably with standalone systems using 2 GW of solar PV, or more than twice Victoria’s solar PV capacity today, and 7.5 GWh of battery storage.”

Bradley said that if networks connected these customers with standalone power systems, the lower costs would reduce the bills of other customers who cross-subsidise rural connections.

“These rural customers are supplied at the uniform network tariff, which makes it unlikely they will have a financial incentive to install their own standalone system.

“However, their network provider can support customers at the grid edge in smarter ways with savings to all customers and often a more reliable service for the rural customer.

“Australia needs modern rules for this to happen, as most customers are effectively required to be connected to ‘poles and wires’.”

Bradley said the analysis also assesses the scope for general customers to ‘leave the grid’, finding it could be economic in the 2030s for some customers.

“By 2050, the analysis shows up to 10% of customers could leave the grid using a standalone system and that would result in higher costs for other customers,” Bradley said.

“Customers with the ability to self-supply could be offered win-win incentives to stay on grid while operating in island mode during peak demand events.

“The analysis finds that incentivising customers with on-site resources to stay grid-connected could save all customers over $1 billion in network charges between 2030 and 2050 — equivalent to 4% per annum on average network bills.”

The analysis can be found here.