IEEE Power & Energy Magazine - July/August 2015 - 58

is effectively recovered in
higher network prices.

(Billions of Australian Dollars per Year)

1.6
1.4
1.2

1.47
1.24

1.0

1.15

Qld

NSW

Vic

Tas

ACT

Grid-Based Electricity
Retailers and
Generators

What impact has household
PVs had on reducing whole0.8
sale electricity prices? We
0.6
estimate that the 1.36 mil0.46
lion rooftop PV systems
0.39
0.4
installed by the end of 2014
0.2
will produce around 5.8
TWh per annum. This is
$just 3.5% of Australia's cen2010
2011
2012
2013
2014
trally dispatched electricity
figure 6. Renewable energy certificates created through the installation of household PVs
production. At first sight, a
in billions of Australian dollars (2014).
3.5% reduction in average
Network costs in Australia are extraordinarily high by inter- demand is unlikely to have a significant or lasting impact on
national standards. Regulated network service providers in Aus- wholesale market prices. However, 90% of PV production
tralia have been provided with regulated expenditure allowances occurs in just six hours, from 10 a.m. to 4 p.m., so the PV
that average AU$3 million per megawatt of capacity added on share of consumption is more appropriately stated as a perdistribution networks and AU$1.3 million per megawatt of centage of consumption during this time, in which case the
capacity added on transmission networks. On the assumption PV share of the market (half-hourly demand) rises to around
that the 1.36 million PV units were effective in avoiding aug- 5%. This is just a national average, and again the assessment
mentation on both distribution and transmission networks, the is made more meaningful by looking at individual regions.
In South Australia, where PV systems are installed on
value of the avoided expenditure might therefore be estimated at
between AU$1.3 billion (1,000 MW multiplied by AU$1.3 mil- 21% of households, the PV share of South Australia's cenlion per megawatt) and AU$3 billion (1,000 MW multiplied by trally dispatched electricity production between 10 a.m. and
4 p.m. is around 18%. Furthermore, this PV production is
AU$3 million per megawatt).
However, the extent to which PVs actually avoid the at the time when the supply cost curve is most likely to be
need for augmentation of much of the distribution network relatively steep, which implies that an effective reduction
is not clear. Residential maximum demands occur around in residual demand, total demand minus PV production,
or after sunset, and so the ability of PVs to defer augmen- can be expected to have a reasonably significant impact on
tation of residential feeders and other bits of the network wholesale market prices.
The conclusion from this preliminary analysis is that
dominated by residential load is likely to be small. Load
flow and statistical studies would be useful in understand- household PV system can be expected to have already had a
ing with greater certainty how asset utilization is affected reasonably significant impact on wholesale electricity prices,
by PVs at or near the times of peak demand at different at least in some of Australia's regional electricity markets. The
points on the network, from the local reticulation lines all benefit of this should be calculated and counted as part of the
the way to zone and bulk supply substations, subtransmis- assessment of PV subsidies. According to McConnell et al.,
retrospective modeling of the merit-order effect on wholesale
sion and the extra-high-voltage transmission lines.
The income for electricity distributors from households with prices from PVs in the Australian energy market found for 5
installed rooftop PV systems is much lower than for households GW of capacity the reduction in wholesale prices would have
without PV systems. The effect around Australia varies for many been worth in excess of AU$1.8 billion over two years. This
reasons, including system size, network tariffs, and the correla- area is amenable to rigorous analysis, and it would be valuable
tion between household consumption and PV production. We to undertake such analysis to quantify the possible value of
estimate annual revenues are reduced by between AU$240 per such wholesale market price effects.
household per year for households with rooftop PVs in Victoria
to AU$450 per household per year in Tasmania. This reduced Challenges and Opportunities
the income that network service providers collected from households with rooftop PVs in 2014 by around AU$414 million. Death Spiral for the Centrally
Under the Australian regulatory arrangements, network service Dispatched Model?
providers effectively cover this shortfall by raising their prices, The uptake of PVs in Australia, even as subsidies have
and so the network revenue reduction from households with PVs declined, has led to a debate on whether the economics of
58

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july/august 2015

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