Storage costs to fall by two-thirds in 10 years, report finds

The CSIRO and the Energy Networks Association (ENA) have partnered to develop a 10-year transition plan for the electricity sector which is focused on customers and developed with stakeholders.

The big shift in Australia’s energy future will be the transfer of power from energy utilities to customers, according to the Interim Report of the Electricity Network Transformation Roadmap project.

“CSIRO’s latest analysis shows more than $224 billion — or more than a quarter — of all electricity system expenditure to 2050 is likely to be made by consumers,” ENA CEO John Bradley said.

CSIRO Energy Chief Economist Paul Graham said, “The CSIRO’s 2013 Future Grid Forum provided a detailed view on Australia’s future electricity system. This 2015 update of four scenarios will act as the baseline for final Roadmap recommendations, due late 2016.

“Solar and storage costs have also become more competitive since 2013, with current costs already 20% lower.

“Storage costs are now expected to fall by around two-thirds in the next 10 years, while solar panel costs are expected to fall by around one-third.

“Falling storage costs can improve the competitiveness of grid-delivered electricity, contributing to lower bills for grid-connected customers by enabling peak demand reduction and more efficient operation of networks.”

Other key findings in the report include:

• There will be stronger incentives to take up solar panels but also the potential for increased cross subsidies among customers if cost-reflective pricing is not addressed.
• The electricity grid has a key enabling role in all scenarios although it may be used very differently — as a ‘platform’ for new energy services.
• The electricity sector could play a significant role in efforts to reduce greenhouse gas emissions with up to 51% abatement in the sector by 2030.
• The outlook for long-term electricity customer bills has improved since 2013 modelling and sees a slightly lower share of income spent on electricity than previously expected — due partly to the benefits of battery storage to the system.

Greenhouse gas reductions

“By 2030, projected electricity sector abatement will range from 29% to 51% compared to 2005,” Graham said. One scenario models near zero emissions from the electricity sector by 2050.

This relies on the grid to connect dispersed large-scale renewables, requiring more network infrastructure than other scenarios — with about 73% of electricity provided by the grid from large-scale renewable generation and the remainder from rooftop solar panels installed by the end user.

“The CSIRO forecasts that electricity retail bill increases will be less than previously forecast, and expect them to remain the same 2–3% share of average household expenditure, as they are today,” Graham said.

Australia’s electricity network business model to evolve

“The CSIRO analysis indicates a modernised electricity grid remains important to even the most decentralised scenarios — but this relies on the value it can provide to customers,” Bradley said.

“The technologies and role of the network are set to change significantly with an increasingly ‘two-way’ network, with some scenarios seeing up to 45% of electricity from on-site generation — such as solar panels on homes,” Bradley said.

Bradley said that the business model of the network could evolve fundamentally to a ‘platform provider’, enabling new energy services and uses, as opposed to the conventional ‘poles and wires’ service.

“Australia has a clear window of opportunity to reshape our electricity system to enable the customer-driven take-up of new services, like renewable and low-emission generation, home automation, battery storage and electric vehicles,” Bradley said.

The Network Transformation Roadmap, to be released in late 2016, will identify specific actions for businesses, policy and regulation as part of an integrated pathway for Australia’s energy transition over the next decade.