A way forward - How to find direction in the consumer energy market and prevent widespread grid desertion.

The cost of soaring power prices is having a significant detrimental effect on residential, commercial and industrial consumers. The real price of electricity has seen triple digit increases over the past decade. Most recently the energy companies in NSW and Victoria have announced price increases upwards of 20%. It was only government intervention that prevented the same sized rises in Queensland and customers are now supposed to be grateful for price hikes only around three times CPI. These hikes are devastating to industry and residential customers alike. The cost of energy is consuming profit margins in small business, choking off expansion plans and killing investment as well as bringing further financial pressures to already struggling families in a depressed job market.

Despite repeated assurances the energy policy that has emerged from this mess can only be described as confused. Different States have different connection standards and now lithium ion batteries are starting to hit the market at affordable prices. It appears that energy companies are struggling to find a balance between this new technology and desperately trying to retain customers. In regional Queensland there is no competition and the Energy Queensland juggernaut enjoys a monopoly in the energy market. There is a perception among members of the community that this monopoly is taking advantage of the vulnerability of consumers who feel helpless to do anything about the increasing pain caused by their quarterly bills.

The Energy Queensland connection standard was released recently. The most interesting decision in my view was that to include any battery inverter as part of the 10kw limit on single phase systems, regardless of whether the system is zero export or not. I can certainly understand EQ wanting to limit export to the grid and that is a sensible thing to do. Excess power fed into the grid can cause damage to infrastructure buckling to cope with voltage instability, but the question begs "why does it matter if a system is export limited?"

It is decisions like this that leave customers scratching their heads and simply throwing their hands in the air. Over the past three months I have noticed a significant number of customers making inquiries about the cost of residential off-grid systems. Wanting to simply cut the cord turn their back on utility companies and their power bills for good. Residential off-grid systems are now available with instantaneous start generator backup (for peak demand management) for around the $25,000 mark and customers are starting to do the sums. If you can eliminate a $3,000 annual power bill completely and never again have the hassle of having to deal with a utility company and in the process yield a return on equity greater than 10% then why wouldn't you? These are the questions that customers are asking. Their beliefs are being reinforced by what they perceive to be an unfair bureaucracy making decisions to preserve their market share whilst burdening customers with increasing energy prices. This perception with the decreasing price of battery systems may just be the catalyst needed to start seeing wholesale desertion of the grid in Queensland.

In my honest opinion, the transition from baseload grid power to small microgrids backed up by individual or local storage is an irreversible process that will be driven by technological advancement in that technology sector. In my opinion, the best option that EQ could do is to accept this change is coming and simply assist customers to make the transition. By doing so, EQ could use spare capacity in customer's batteries as well as surplus power generated and fed back into the grid to bring stability and price relief to their existing customers. By establishing and assisting customers by developing local storage systems, demand sharing and peak shaving is achievable through new technologies like virtual power stations currently being trialled.

To be clear, this will not happen if customers simply disconnect from the grid and look after themselves independently. Once a customer is disconnected from the grid, they are unlikely to be enticed back willingly into a system they believe to be predatory. They will simply add to their system to meet their own needs incrementally through extra storage modules and PV capacity. Their system will simply mirror their load and their surplus generating capacity and that tiny bit of privately funded infrastructure will be lost for the purpose of grid stabilisation and that would be to the detriment to the community at large.

Please understand that I do not profess to be an expert in electricity management and maybe my analysis is overly simplistic. But I am simply expressing my views as to how I see the future evolution of the energy sector. A wholesale desertion from the grid which would be a large and undesirable situation. Those, for example residents in high density accommodation or heavy industry who will be reliant on the grid which will start to haemorrhage revenue. The alternative is removing the shackles on residential solar PV system design to encourage increased generation and storage on site whist maintaining export limits until suitable local grid level storage sites are established which can harness excess power being fed to the grid. This power could then be used for sharing with business and industry whilst providing cheaper power to those still required to be connected and used for later supply when generation falls off with the setting of the sun.

So what is the first step to achieve this? Simply in my view, expand STC's to include battery storage for commercial and residential customers and remove any regulation in the connection standard with respect to battery storage behind the meter box. This would then see a massive injection of funds into the battery market and a true explosion in local level storage. Couple this with strict regulation on feed-in amounts.

The byproduct is that such a policy would create a significant amount of employment and bring stability to the grid by soaking up excess daytime energy and taking the stress of night time base-load infrastructure. Then the grid can be gradually rolled back. Poles and wires dismantled as the old grid infrastructure becomes redundant and is no longer needed. Overheads fall and the utility companies can earn revenue through service provision and trading energy on the wholesale energy market using virtual power stations rather than through fees and charges imposed on customers. This may not be the final answer, but to me it seems a sensible step forward at least.