While Australian Virtual Power Plants (VPPs) are in their early stages, the industry is gradually realising the immense potential concealed within behind-the-meter batteries to bolster energy distribution.
However, a puzzling question emerges: why does AEMO’s (Australian Energy Market Operator) projection indicate that only a fraction of solar installations will feature VPPenabled batteries by 2030? This article will delve into the three key reasons behind this projection and present a groundbreaking solution to this challenge.
The Australian energy landscape is at a crossroads. With sustainability and power resiliency taking centre stage, the need for innovative solutions has never been greater.
The Challenge: AEMO’s Forecast As we peer into the future, AEMO’s (Australian Energy Market Operator) forecast raises intriguing questions. By 2030, only a small percentage of solar installations are projected to incorporate VPP-enabled batteries. This forecast hints at three pivotal challenges that need addressing.
1.
The Cost Barrier: CAPEX Concerns
The first challenge concerns the significant capital expenditure (CAPEX) required for battery installations. While solar systems have become more accessible, batteries with substantial kWh capacity still come at a premium. The cost gap between a standard 5 kW solar system and a highcapacity battery is substantial. The cost-of-living crisis further compounds the issue. Alarmingly, we’ve witnessed a decline in potential customers willing to invest in solar and battery systems, particularly among young families grappling with budget constraints, despite often being the ones who could benefit the most.
While property owners may express their willingness, the significant upfront investment may deter them from taking action
2.
Rental Properties: The Incentive Dilemma
The second challenge lies in the realm of rental properties. Installing solar and battery systems in these homes often presents a classic dilemma. Property owners possess the authority to make such installations, but the tenants primarily accrue the financial benefits. While property owners may express their willingness, the significant upfront investment may deter them from taking action. This predicament affects a substantial portion of the housing market, resulting in lower adoption rates for solar and batteries. That’s 31% of the housing stock with significantly lower solar and battery installation rates.
3. Complexity and Trust: AEMO’s Expectations
Even among those who successfully integrate batteries with their solar systems, AEMO’s conservative forecast regarding VPP adoption prevails—AEMO expects 14% of distributed small-scale batteries to be part of a VPP by 2030. This hesitancy is closely tied to the perceived complexity of VPP plans and the required technical literacy. The term “virtual power plant” may discourage potential customers who have been accustomed to traditional energy billing methods for decades. Coupled with the erosion of trust in the energy industry over the years, skepticism regarding this new paradigm shift is understandable.
The NRN Solution: Third-Party Ownership
NRN presents a groundbreaking solution that perfectly aligns with Australian consumers’ preferences and simplifies their engagement with the solar battery revolution—third-party ownership. While this concept is still taking root in Australia, it has proven successful on the global stage. For instance, California boasts widespread adoption of solar VPPs, and millions of Canadians already lease hot water systems through their energy bills.
Third-party ownership alleviates the upfront cost burden on customers, making participation in VPPs effortless. Retailers gain access to battery capacity and can offer consumers straightforward and well-priced energy plans that align with their existing preferences. Imagine “all you can eat” fixed-cost energy or traditional $/kWh plans at reduced rates. Simplicity is the cornerstone of building customer trust.
This model extends seamlessly to rental properties, where property owners can benefit from having solar panels installed at no upfront cost, and renters can enjoy the advantages of a solar-battery-backed energy plan in their homes. It’s a win-winwin scenario.
Benefits for Retailers:
• Access to previously untapped market segments, including renters
• Elimination of regulatory concerns related to asset ownership, promoting healthy competition
• Simplified solar-battery-backed energy plans lead to increased VPP capacity
• Complete control of the battery, unlocking additional value to share with customers
• Need not fund millions of dollars worth of solar and battery equipment.
