Australians are very aware of the high electricity prices in the country, which affect both homeowners and businesses. However, a less known fact is that power generation actually has low costs; your power bill is high because of network costs and energy retail margins. In many cases, these two items represent more than half of your payment.
Power networks provide the fastest and most efficient way to send electricity across large distances, but they are not perfect systems. Power lines, transformers and other network elements dissipate heat as they carry electricity. As a result, the total kilowatt-hours delivered to consumers are less than the kilowatt-hours supplied to the grid.
Power network components have different responses to load variations, and this also applies for losses. For example, the iron cores of transformers have losses that are approximately constant, while power lines have losses that increase exponentially with load. For example, if you double the current carried by a transmission line, its losses are multiplied by four!
Power network operators are faced with a dilemma when managing transmission and distribution losses:
Energy consumers lose in both cases: they have to bear the cost of high losses in the first scenario, and must pay higher network fees in the second. However, solar power systems can be installed directly on the properties of energy consumers, eliminating the network from the energy delivery process.
When you deploy a rooftop solar system for a residential or commercial property, energy is delivered directly from the photovoltaic array to the building. An inverter conditions the power supplied by solar panels to be just like the network supply, so there is no difference for your appliances. However, there is a significant reduction in your electricity expenses: network operating costs and retailer margins are taken out of the equation.
Assume you are getting power from a network that has losses of 6 percent. If you need to purchase 940 kWh, your power retailer must purchase 1000 kWh from generating companies. This is not the case with rooftop solar systems, where all the electricity supplied at the terminals of the inverter is available for use.
If batteries are added to the system, the burden on power networks can be reduced further. Batteries can be programmed to supply their electricity during peak demand hours, when the network is experiencing its highest load. They can also be used during nighttime, allowing the use of solar generation even when there is no sunshine.
Distributed energy systems such as rooftop solar arrays not only have reduced losses. They also improve reliability because electricity does not come from a central location, and this is why the concept of a “virtual power plant” is so promising. A project of this type is under development in South Australia, using 50,000 residential solar systems with Tesla batteries, adding up 250 MW of generation capacity and 650,000 kWh of storage capacity.