Green Oversite



Batteries in New Subdivisions

Bruce Barbour - March 2022

It is estimated that over 3 million houses and small business in Australia have installed rooftop photovoltaic panels (2021). It is likely that this number will increase into the future, especially on new housing estates. There has even been discussion related to a recent review of building construction codes that rooftop PV could effectively be mandated on all new houses.

In combination with this all electric houses are becoming more prevalent as the all electric house is cheaper to run than a dual fuel house (natural gas and electricity) by many of hundreds of dollars per annum and all electric houses are cheaper to build than dual fuel houses. An all electric house enhances the benefits the homeowner receives from installing a rooftop photovoltaic (PV) system.

This trend towards the all electric house with rooftop PV is likely to be accelerated into the future. In 2017 the Victorian Government passed the Climate Change Act which mandates that Victoria achieves "Net Zero" emissions by 2050. As part of the process to achieve this the Victorian Government is currently finalising the "Gas Substitution Roadmap", a plan which will lay out the way Victoria will cut down or eliminate the consumption of natural gas in Victoria. Preliminary investigation indicates that under all three main scenarios being considered as part of the Roadmap development, natural gas use will decrease by 50% by 2030. The only way that this will be achieved is to drastically decrease the use of natural gas for heating in the home, commercially and industrially. This must correspond with a significant increase in the use of electricity for heating, undoubtedly with the extensive use of heat pumps. (Of course the proposals being considered in the development of the Roadmap have not yet been adopted by Government so may change.)

As a consequence of this it is only logical - though not specifically stated by the Victorian Government as yet - that there will need to be new rules for new subdivisions that will either allow or, hopefully, mandate that new subdivisions be all electric. If this occurs there will be no requirement for a gas distribution system on new residential estates.

However even if this does not come to pass it is without doubt that the amount of rooftop PV will increase into the future.

The increase in rooftop PV systems will be great, and will assist Victoria and Australia to get to net zero fossil fuel generated carbon dioxide emissions in the future (hopefully before 2050). However it does create issues for the electricity grid as the grid might not be able to handle the amount of rooftop PV electricity on some days (as an example, in the middle of the day on sunny weekends). As a consequence of this there has been discussion in the electricity industry from retailers and distributors that they might want the power to turn off rooftop PV systems if there is a risk to the grid. Naturally domestic rooftop PV owners would not be happy with this. And also it is a waste of resources to not fully utilise the resource that is rooftop PV.

One way of ensuring increased use of the resource of rooftop PV is to have sufficient battery storage in system to soak up the electricity when the generation outstrips immediate usage on the localised and overall grid. The electricity can then be used when required - when the amount of solar generation goes below demand. As the costs of batteries decease over time the amount of batteries in the system will naturally occur. However this "natural" increase may not be sufficient by itself to fully address the issues for the electricity grid created by the increasing rooftop PV. Additional batteries may well be required in the system to allow full utilisation of the electricity from the rooftop PV systems.

These additional batteries will cost money to install. For existing housing areas this is a cost that will have to be borne by the distributors who will pass the costs on to existing users. Hopefully the costs will be largely covered by financial returns delivered by the batteries.

However for new housing estates all costs related to the electricity supply should be borne by the developer - who will undoubtedly pass the costs onto the land buyers. It would be unfair to lumber the cost onto the all users on the grid.

It is also likely that if a localised electricity grid does not have sufficient battery (or other) electrical storage capacity the size of the electricity cables into the new estate and associated transformers would need to be larger and therefore more costly. These costs can be avoided by ensuring there is sufficient batteries within the new estate or nearby.

To address these issues this is what I propose should happen. For new estates the developer should be required to ensure that there is a certain amount of battery storage installed as a result of the new subdivision. The optimal amount of battery capacity would have to be determined by the electricity grid experts. This requirement has to be regulated as there is a cost involved so the developers are not going to do it unless required to.

This new estate based battery capacity would be either:

  • batteries installed in many of the new houses in the estate along with their rooftop PV system. Such rooftop PV and battery systems would be connected as part of a virtual power plant - allowing draw off of the power from the batteries into the grid when required - with appropriate payments to the house owner;
  • a neighbourhood battery for the estate installed within the estate by the developer as part of the requirements of subdivision. The neighbourhood battery would then be handed over to a state authority (or to a company jointly owned by local councils) to run;
  • a payment to a state authority (a headworks charge if you like) for the state authority to install a localised battery system up to the required capacity; or
  • any combination of the above three approaches.

Ideally the virtual power plant and/or neighbourhood battery should be operated in a manner that ensures the maximum usage of the rooftop PV rather than the maximum profit for the battery owner/operator. For this reason it would be best for the virtual power plant or neighbourhood battery to be run by a State Government or Local Council controlled organisation with this requirement written into their operating procedures.

What I believe would be likely to happen is the developers would offer the new homeowners really cheap, subsidised and, by regulation, good quality rooftop PV and battery systems as the cheapest way for them to to meet this requirement. However that would be up to the developers to decide.

If, as I hope/expect, the developers will no longer be required to provide natural gas reticulation on the new estate the savings from this should offset any increased cost of installing the battery capacity requirement. To not require them to supply this battery capacity or an additional headworks charge is to provide the developers with a windfall from not having the expense of supply gas reticulation on the estate and increase the costs passed to the State, the electricity distributors and other electricity users for grid upgrades and battery installation.

Even if the developers were still required to install reticulated natural gas they should be required to provide a level of battery storage - to prevent this cost flowing onto all users. This would recognise that a significant quantity of rooftop PV is going to be installed on the estate, even if not mandated, and this PV will have an impact on the grid and the usability of the PV.

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