Global Insight 11 – 4th July 2017

Global Insight 11: 04-07017

Australia

Sonnen to enter into battle Australian storage market

Sonnen is to enter into the market for Australian storage with an offering of £9,800 for a combined solar and storage deal. This would include the customer entered on to the ‘SonnenFlat’ deal which promises them no electricity costs for electricity drawn from the grid, although the standing charge (c$1 per day) would still need to be paid. In return Sonnen will take control of the storage systems and offer their grid balancing services to networks as a Virtual Power Plant (VPP). Although comparable in price to the Powerwall 2.0, it would mean customers having to be grid connected, and there is no mention of whether this also affects feed-in-tariffs which would normally cover grid and electricity charges.

New regulation needed to move to a smarter grid

The Australian Renewable Energy Agency (ARENA) findings in a recent report, Demand Management Incentives Review highlights the need for network regulatory reform. The current regulations still value the traditional asset base – ‘poles and wires’. In order to move forward to a smarter system the report highlights the need to add value for demand management services as currently it is more profitable for network business to invest in the traditional assets, even though economic modelling shows an increase in demand management would reduce bills for consumers.

Europe

EVs and PHEVs markets continue to mushroom – are networks ready?

The European plug-in car market (comprising both fully electric vehicles and plug-in hybrids) grew by 48% in the year to June. Tesla is poised to bring out its Model 3 mass market car in the US, and there is huge investment going into battery production capacity. It seems increasingly likely that battery costs will continue to come down, and an inflexion point in EV/PHEV growth will be upon us. All of this is reminiscent of solar PV about 5 years ago. Networks and regulators were not ready then. Will they be ready this time?

Make Power Clean is a gas, gas, gas…

On the face of it, a new coalition calling for the European Commission to Make Power Clean looks great. The initiative is calling for the EC to impose a cap of 550g of CO₂ per kWh on which generators would be eligible for capacity payments across Europe. This would exclude coal-fired power generation. But it would crucially include modern combined-cycle gas turbine (CCGT) generation. The membership of the coalition, which includes Eurogas, Shell, Eni, Total, Iberdrola, and Siemens adds to the suspicion that this is partly a gas-industry pitch, as does the realisation that the cap would choke off their newly emerged competitor, i.e. decentralised diesel generation. Still, a carbon cap makes more sense than does the response of the regulator in Britain to small-scale diesel, which was to slash the payments it offers for benefits to distribution networks.

Wider Globe

Chinese Province Goes 100 Percent Renewable for a Week

In the week of 17 to 23^rd June, the Chinese Province of Qinghai managed to generate all its power needs from renewable energy from the first time. The province, located in Central China, with a population of 5.5 million people, generated three quarters of it electricity from hydro power and the rest from solar and wind. The province now has one of the largest solar farms in the world, with a 27 square km park, called, Longyangxia Dam Solar Park, with 4 million solar panel it has a nameplate capacity of 850 MW(p). The solar plant is next to a hydro electric power station, which enables smooth integration of the solar electricity into the grid.

Irena Evaluates Renewable Auctions

In June the International Renewable Energy Agency, published an assessment of renewable energy auctions. The report notes the growth in renewable auctions and notes that that the ‘price results for solar and wind auctions have been decreasing’, for solar the global price average in 2010 was USD 250/MWh, down to USD50/MWh in 2016, with wind falling from 80 to 40 USD/MWh over the same period. The report credits some of this cost fall to the introduction of auctions – as well as the fall in technology costs – and notes that in particular auctions can set an expectation for future prices helping to drive down the price. However, the report also notes that the is ‘a risk associated with the fierce competition in the market and it is important to consider whether the drop in prices is sustainable from an industry point of view’.