Governments must urgently speed up the adoption of household renewable energy sources if Australia is to decarbonise

Rooftop solar has emerged as Australia’s fastest-growing source of power.

Now a new report from the Institute for Energy Economics and Financial Analysis (IEEFA) has urged state and federal energy ministers to accelerate Australia’s decarbonisation by speeding up the adoption and integration of more household renewable energy resources.

This is especially urgent given the delays with large-scale wind and solar investment and the construction of new transmission infrastructure.

“The true champion of the energy transition in Australia so far is rooftop solar, and the future champions are smart electrified hot water systems, smart demand-responsive appliances, behind-the-meter (BTM) storage and electrified, efficient businesses and industry,” says distributed energy expert, Dr Gabrielle Kuiper and author of the report, Growing the sharing energy economy.

“We’ve seen in recent weeks the whole of South Australia was powered by household solar for a few minutes. This is a phenomenal milestone, and we can do even more to make the most of our abundant sunshine.”

The IEEFA report found that consumer purchases of distributed energy resources (DER), such as rooftop solar, battery storage and demand-responsive appliances, can unlock faster decarbonisation and lower energy bills.

Australian consumers have already purchased $25 billion worth of DER. IEEFA estimates a further $250 billion will be spent over the next 20 years if five million households invest an average $50,000 in solar, electric vehicles and smart electric appliances.

However, Kuiper argues the policies and regulations for distributed energy resources (DER) have not had the attention they deserve.

“At present DER are already benefiting the people who purchased them and the broader grid, but those benefits could be so much greater if we get the technical, regulatory and market integration right.”

More solar, batteries and flexible demand in the grid can put downward pressure on wholesale and network costs, but it will need action from energy ministers to unlock those benefits.

Kuiper details policy changes that could unlock the potential powerhouse of these behind-the-meter energy assets in a way that further benefits consumers, while also boosting Australia’s chances of hitting its climate and renewable energy targets.

Among her recommendations are a review of energy market governance to support the integration of small and large-scale renewables, and establish “a sharing economy for energy”, and the establishment of a distributed energy authority which would be responsible for technical standards, and optimise the value of DER, including electric vehicles.

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Wasted years

Earlier this month Kuiper wrote a frustrated editorial for RenewEconomy outlining how Australia has wasted years by having DER equipment such as air conditioners and hot water systems built to allow them to interact with the grid – making them a shared resource - but are prevented from doing so because of a lack of regulation.

“The National Electricity Rules (NER) weren’t written with Distributed Energy Resources (DER), such as air conditioners or solar panels, in mind, but as DER become a more and more important part of the energy system, we need to make sure they are designed to smart standards and are included in the NER,” she said.

“Without these standards in place, DER can’t participate in energy markets on an equal footing with large wind and solar farms.”

The Energy Security Board, the Australian Energy Market Commission, the Australian Energy Market Operator (AEMO) and the Australian Energy Regulator have been trying and failing to create rules to bring DER into the fold since 2019.

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Distributed energy resources the best way to reach 82%

Australia is struggling to reach the federal target of 82 per cent renewables in the grid by 2030. In 2022 the grid was 37.7 per cent renewable, but new large-scale wind and solar projects have stalled in the face of supply chain risk and dense bureaucracies.

Just 400 megawatts (MW) of new renewables investment was financed in the first six months of 2023 when the country needs 5 gigawatts (GW) by 2030, according to Clean Energy Council statistics.

Yet for the last three years almost 3GW of rooftop solar has been added annually to total more than 22GW in the National Electricity Market (NEM) today.

The benefits of rooftop solar as a player in the NEM have been quantified. A report by ITP Renewables this year, based on 70 per cent of households having rooftop solar, found the dreaded midday ‘duck curve’ is vastly mitigated by having behind-the-meter devices able to actively trade in the market.

Behind-the-meter resources also co-locate generation and load, reducing the reliance on transmission and distribution networks. If managed well, they also reduce extra spending on building additional poles and wires which puts pressure on energy bills.

Modelling shows that home batteries that are optimised to participate in energy markets can also deliver grid stability, says Stephen Pritchard, Evergen principal and VPP solutions engineer.