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Author: Giles Parkinson
Date: 22nd of January 2016

In an ideal world everyone would be on the power network, but Australians have been saddled with what is undoubtedly the most expensive grid in the world.

Last year, some friends moved into the new three-bedroom home they had built on semi-rural block of land in northern NSW. Despite being within three kilometres of a large town, and with the power network running along the local road, they chose not to connect to the grid.

The local government-owned network operator wanted $30,000 to run a wire about 50m to the house. My friends decided they were better off spending that money on solar panels and a battery array.

They won’t have another electricity bill, and probably won’t need to spend anything more until the batteries need replacing in at least 10 years time, by which time battery storage costs might be a fraction of what they are now. They also bought a small generator, but despite moving in to the house in late autumn, they have yet to switch it on.

Theirs is a story being shared by thousands of people around the country, including Greens leader Senator Richard Natale, who lives in a rural block outside Melbourne, also unconnected to the electricity grid for the same reason.

It’s not just new and rural homes that are eschewing the traditional network for cheaper options. New suburbs and sub-divisions are being proposed that will not be connected at all, preferring instead micro-grids that rely mostly on renewable energy and storage. Retirement communities – keen to lock in and control costs – are considering doing the same.

Property developer LWP is teaming up with Canadian giants Brookfield and Flow Systems to develop an off-grid community called Huntlee near Newcastle. Leading economist Ross Garnaut is chairing a new company called Zen Energy that is looking to do similar things in South Australia.

“Households, businesses and entire communities can now become genuinely self-powered completely or substantially depending on their circumstances and preference. Australia’s energy transformation has begun,” Garnaut told the ABC last year. And that means existing homes and townships too. In northern NSW, such as Tyalgum and the whole Byron Bay shire, are considering proposals to “buy back” the grid.

Network operators – such South Australian Power Networks, Ergon Energy, and Western Australia’s Western Power and Horizon Energy, admit that taking regional towns off the grid is not such a bad idea. It avoids the immense cost of extended power lines, and increases energy security and saves money.

Indeed, if they had to build the grid from the ground up now, it would look a lot different. But the grid has already been built, and what really scares the network owners – both private and government – is the potential of a mass exodus by home owners in the city from the established grid as the cost of rooftop solar and battery storage technologies continue to fall.

Firms such as UBS have suggested that such a move would be economically viable for households before 2020. Debate rages about the payback times for going off grid or just installing battery storage, and whether it makes economic sense. But do people really care? What is the payback of your car, or your sofa, or your swimming pool? Most people don’t know or don’t care. If they want something badly enough, they will buy it. And for many, the idea of energy independence – or energy democracy – is an appealing one.

Needless to say, the networks are not happy. Paul Adams, the head of Jemena, owned by Chinese and Singapore interests and which owns a transmission network in Victoria, accused households wanting to quit the grid of being “greedy and selfish.”

“The grid is of so much value here, why don’t you want to share your energy with your neighbours,” he is reported to have said.

Adams later apologized for his comments, saying that people had the right to do what they want. But he had and has a point: if the grid is there, then why wouldn’t you want people to use it?

The answer lies in the greed of the network operators themselves. For the past decade, they have been unfettered by strong regulatory review, and have been delivered a perverse incentive scheme that encouraged them to build bigger, longer and dumber networks.

The networks have been warned of the consequences. A report by CSIRO, prepared in conjunction with the industry, warned that one third of all consumers could quit the grid in the next decade or two unless the networks did something about costs, and changed their business models.

But despite talking about the push to green energy, and sounding supportive about solar and battery storage, most have done very little. In fact, they have been mostly focused on protecting their revenue scheme, proposing a range of rule changes – including higher fixed tariffs, extra charges for solar households, and rules designed to prevent the installation of battery storage – to make it less attractive for households to install new technologies.

The networks lobby – while lauding the advent of new technology on one hand – has refused to admit that too much money has been spent building a grid unsuited for the digital age, or that its members should write down the value of the assets. Yet it has even proposed to hit households with a fine or compulsory fees if they quit the grid. Or they’ll do what? Disconnect them?

There is no doubt the more efficient outcome is for people to remain on the grid. It’s a social benefit and it should be shared. It would be the most economically efficient option, but as Garnaut points out, they are pricing themselves out of the market.

To survive, the networks have to adapt and they have to change. Kodak ignored its own development of digital photography. Australia Post is trying to charge $1 a letter now in face of competition from email and other social media. Many houses have already dumped their telephone landline. The same thing will happen with the electricity grid. And the more they load up cost on to remaining households to protect their revenues, the more opportunities there will be for alternative technologies and alternative business models, to service that market. And the networks will have no one to blame but themselves.

Read the article at The Guardian.