Businesses MIA on rooftop solar and battery revolution
Australian households produce almost four times more solar energy than retailers, manufacturers and other non-residential buildings, and most commercial rooftops are panel-free.
Tapping the vast, untapped generation and storage potential in cities and towns depends on designing incentives that target this “missing middle” and reorganizing the way commercial players interact with the grid, an energy think tank says.
Although it uses more electricity than homes, and much of it is used on days when solar power is produced, the commercial sector lags far behind residential buildings powered by rooftop systems and batteries.
Australia is the world leader in residential rooftop solar, with 22GW installed on more than four million homes, compared to a paltry 5.6GW generated by businesses, according to Institute for Energy Economics and Financial Analysis research.
However, the technical rooftop potential for solar energy in commercial and industrial areas may be close to 40 GW, and even exceed 80 GW if agricultural areas are included.
The same dilemma that deprived tenants of the solar and battery revolution also applies to many businesses that do not own the buildings in which they operate.
Landlords have limited incentives to invest in clean energy infrastructure that would greatly benefit their tenants through cheaper bills, and solar power and batteries typically last longer than rentals.
Innovative models have been tried to solve the “split subsidy” problem, including allowing building owners to repay their loans through council interest, but the think tank says businesses are still struggling to overcome this hurdle.
This is partly because the obstacles don’t end there.
Commercial and industrial facilities are not well served by government incentives and policies that often target households or utility-scale infrastructure.
The headaches of connecting to the power grid and paying for the privilege present another set of challenges.
Businesses operating in more than one state often face a patchwork of different demand charges designed by Australia’s 16 network providers, the organizations responsible for power poles, power cables, transformers and meters.
IEEFA chief electricity analyst Johanna Bowyer said network tariffs, which account for more than 40 percent of business electricity bills, create complexity and cost for commercial and industrial solar and storage providers.
“Network tariffs should be reviewed and standardized,” he said.
The grid connection process also needs to be streamlined, and network regulation needs to be rethought to recognize that on-site solar and battery assets can provide grid services, including supplying stored energy back to the network during surges in demand.
Ms Bowyer said the potential of commercial solar and storage would not be realized if the hurdles were not addressed.
Such a reality carries the risk of higher bills for individual businesses and all users; More generation and on-site storage on urban rooftops leads to less large-scale renewable energy and the accompanying costly poles and cables.
More renewable energy generation and storage will also help pave the way for a timely exit from coal stations, which is key if Australia is to meet emissions reduction targets, including more closely reaching the national renewable energy target of 82 per cent by 2030.
The think tank is calling for an elevated energy infrastructure “warp speed” approach to a National Cabinet priority, similar to the COVID-19 pandemic response.
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