The Future of Living is Electric – What does that mean for Australia, Australian Households, Home Buyers and Builders Today?
From the desk of Redback CEO, Patrick Matweew.
As I am writing these lines, a few megatrends (I dislike the term, but I don’t have anything better on offer) are converging and they will have a profound impact on the way we all live and work. Widespread digitalisation that includes the availability of more and more data and the ability to process and analyse such data is one trend. Decarbonisation is another. It has become evident, that we cannot continue to exploit our natural resources as we do right now and that continued CO2 emissions into our planet’s atmosphere will ultimately lead to catastrophic outcomes for humanities ability to live on this planet. Switching our way of life to a zero-carbon system has started and will continue to play a huge role in everyone’s lives. Third and very closely linked to the first and second trend is electrification. Everything is becoming connected and automated and this needs to be powered. The easiest way is to do this with electricity. It is the one power source that can be used in almost unlimited ways. This makes electric power the choice for an ever-increasing number of use cases.
What does this mean to Australians looking to buy, build or renovate a house?
First, electricity is viewed by most people as the cost of living. Few people fully understand the electric ecosystem that we are all connected to. We also do not appreciate how much energy our appliances use and how our behaviour in the household impacts our electricity use. What we do know is that moment of fear when our electricity bill arrives and we check the cost, mentally preparing for how our budget will be affected that month. It also seems that electricity continues to become more expensive with every bill. Many of us feel emotional or angry for a few moments and then forget about it until the next bill arrives. Recent research commissioned by Energy Consumers Australia confirmed, that energy is not “top of mind” for consumers, but at the same time, we feel we are not getting a good deal. The research confirmed that consumers look for both simplicities as well as affordability when it comes to their preferences for energy solutions. At the same time, consumers express very low levels of trust in the current market stakeholders. Herein lies a grand opportunity for the industry. Empowering households with their own electricity solution based on solar PV and storage that provides for every day is the first step. Then integrating them into the system by making them engaged stakeholders helps to build trust. That trust allows all stakeholders to engage in delivering the much-needed energy transition.
Unfortunately, the cost of electricity has a significant impact on many Australian families. Increasing electricity costs can have a massive impact not only on the family budget but on our quality of life. Many Australians continue to live with ever-increasing electricity bills due to poor understanding of their options, their own consumption habits and a lack of alternatives.
What many do not realise is that the way we build our houses and live our lives has a huge impact on our electricity costs as well as our quality of life and that small changes can make a huge difference. There are a few options to reduce our electricity bills, but none have proven as powerful and effective as the installation of a solar PV system on the roof of our homes. More than 2 million households have already done exactly that. You can read their testimonials everywhere online.
Going solar for your home is a great idea, but the massive bill savings that people speak about are not coming from the actual use of their solar electricity generated on their roofs. The largest proportion comes from the feed-in-tariff that households are paid from their energy retailer for the excess PV generation that they feedback into the grid. Most households only use 30% of their electricity generated on their roofs. The remaining 70% is exported to the grid. ii Initially, the prices that were paid for such exports were quite generous and often guaranteed for a specific number of years. Today, the amount homeowners receive for each kWh of electricity they feed into the grid is, in most cases, at the sole discretion of the energy retailers. With more than 2 million solar PV systems installed in Australia there now is so much export power in the grid from private rooftops, that export limits or even limitations to installations of new rooftop PV systems are already a reality in many parts of Australia. We simply use too little of that low-cost rooftop-generated electricity in our homes at the point of time when it is generated by our PV system.
The shift that is happening is from a focus on export to self-consumption.
In the beginning, the most common recommendation was to move more of our electrical loads (electric appliances are loads in electrical engineering speak) into the “solar PV window” (the solar PV window is the time when the sun shines and your rooftop PV system produces electricity). That does work for a few appliances like pool pumps and electric hot water systems, but many of our other appliances are used in accordance with our daily routines. It is simply not practical to plan things like our dishwashers or washing machine use in advance and put timers on them during the day.
Rather than moving our life into the solar PV window, it is more practical to move our solar PV window to match our daily routines. We cannot change the time the sun shines, but we can store the excess electricity our solar PV system generates during the day and use it when the sun is not shining. Battery technology has improved dramatically in recent years driven by the need to decarbonise the mobility sector (remember the megatrend we spoke about before). Billions are invested in research to make modern battery technology safe, compact, efficient and affordable. Spearheaded by the car industry, the home battery sector is profiting from these developments as well, making battery storage options available and affordable for more and more households.
Important to note here is that both PV systems and many of the available battery systems for homes are scalable. This means we can right-size the system to the needs or budget of the household. Currently, the accepted rule for PV system sizing is “the bigger the better”, because of the additional income opportunity from feed-in-tariffs. With the market value of PV export expected to be zero or even negative in more and more instances, the future will prioritise cost/benefit analysis that takes the household’s consumption into account.
Consequently, households with a combined solar PV and battery storage system will have a significantly increased control over one of our key expenses – the cost of electricity – without sacrificing the quality of life or the need to adapt our behaviour.