SOLAR PV: REGULATORY CHANGES FOR THE NEXT DEVELOPMENT PHASE. Muriel Watt Chair APVI IT Power (Australia) & UNSW

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1 SOLAR PV: REGULATORY CHANGES FOR THE NEXT DEVELOPMENT PHASE Muriel Watt Chair APVI IT Power (Australia) & UNSW Renewable Energy The Future for Australia 15 April, 2014

2 THE APVI WHO WE ARE Our Objective: To support the increased development and use of PV via research, analysis and information Our Members: Businesses, researchers, government agencies, individuals with an interest in PV. Our Work: Independent, apolitical and widely cited by the PV sector, governments and stakeholders

3 OUTLINE PV market development Implications for Electricity Market Structures

4 GLOBAL PV MARKETS Michelin Factory, Germany IPENZ 2009 Pickering Lecture Series

5 PAST AND PROJECTED ANNUAL PV INSTALLATIONS WORLDWIDE Current production capacity

6 THE AUSTRALIAN PV MARKET 1.22 MWp PV system, Queensland University IPENZ 2009 Pickering Lecture Series

7 Cumulative MW PV UPTAKE OVER THE PAST DECADE (APVA ) Est off-grid domestic off-grid non-domestic grid-connected distributed grid-connected power stations

8 Aud/Wp AUSTRALIAN SYSTEM PRICE TRENDS (APVA ) Balance of System costs now greater than module costs Typical module price Typical small grid system price BOS price

9 STORAGE ALREADY COST EFFECTIVE FOR CERTAIN CUSTOMERS (GOEL & WATT, 2014)

10 THE IMPACT OF STORAGE DEPENDS ON TARIFFS AND REGULATION Customer optimisation Network optimisation Goel & Watt, 2014

11 150kWp Tyree Energy Technology Building, UNSW IMPLICATIONS FOR THE ELECTRICITY MARKET

12 *RE displacing high cost gas - wholesale price may not fall as much without RET & C price ELECTRICITY PRICE COMPONENTS (CPD, 2013) 12% without C price*

13 CONTRIBUTIONS TO THE DECLINE (IES, 2013) Includes Energy Efficiency 13

14 (Kind, 2013) WHAT DOES THE DEATH SPIRAL TEACH US ABOUT MARKET STRUCTURES?

15 CURRENT RESPONSES MAINTAIN STATUS QUO AT ALL COSTS Low / zero PV buy-back rates No export from storage or commercial PV Charges to export proposed (no other generator pays for networks) Gross metering only (proposed) Higher fixed charges / PV customer charge Conflicts with COAG restrictions on discrimination between customer types Restrictions on new connections Restrictions on operation New rules allowing DNSP control Political and regulatory structure favour the incumbents Mobilising anti-renewables lobby groups Dividing haves and have nots Likely to result in perverse outcomes

16 SUGGESTED RESPONSES (PASSEY, WATT & MORRIS, 2013) New regulatory frameworks Renewable Energy (RE) and Distributed Energy (DE = DG, RE H&C, DSM, EE) competes fairly in generation, distribution and retail Generation Ensure value is attributed to economic, social and environmental costs and benefits LCOE Resource value / alternative uses Long term jobs and investment, reduced cross-subsidies Local, regional and global environmental impacts, incl GHG

17 SUGGESTED RESPONSES - 2 (PASSEY, WATT & MORRIS, 2013) Distribution Move to integrated resource planning for networks Transparency 3 rd party access and competition DE considered on equal footing For network upgrade as well as refurbishment Even for smaller levels of expenditure Revenue Caps To reduce opposition by networks (and State governments) to DE Allow Networks to provide DE options Ring fencing to overcome market power issues

18 SUGGESTED RESPONSES 3 (PASSEY & WATT, 2013) Retail Tariff structures to include a demand component, rather than relying on higher access fees for everyone / PV owners This would ensure, for instance, that AC use is appropriately paid for This would protect low income / low demand customers Competitive feed-in tariffs for RE and Storage These could be time stamped

19 MINI & MICRO-GRID OPTIONS Especially in low density / high grid cost areas Cheaper than maintaining past grids Lower cross-subsidies More efficient use of infrastructure More flexibility in energy service provision More market competition Higher reliability, especially during extreme weather Reduced bush fire risk Noone et al, 2014

20 REFERENCES APVA, , National Survey Report of PV Power Applications in Australia , Prepared for the Australian PV Association, June CPD, 2013, Going Solar renewing Australia s electricity options, Eadie, L. and Elliot, C., April 2013 Goel, S. and Watt, M., 2014, Grid connected rooftop PV systems with battery storage an economic feasibility study. In press. Intelligent Energy Systems,, 2013, Update: What is driving the decline in electricity demand?, Insider Issue 14, April, 2013 Kind, 2013, Disruptive Challenges, Report for the Edison Electric Institute Noone, B., MacGill, I., Bruce, A. and Watt, M., 2014, PV Integration on Australian distribution networks: Final Report, Australian PV Institute. Passey, R. and Watt, M., 2013, Impacts of PV, other technologies and tariffs on consumer costs, APVI report for the CPD, Nov 2013 Passey, R., Watt, M. and Morris, N., 2013, The Distributed Energy Market: Consumer & Utility Interest, and the Regulatory Requirements, Australian PV Association