Alternatives to neighbourhood batteries

Last modified: 15 November 2022

A neighbourhood battery may serve the needs and purposes of your community. However, there are alternatives that may be cheaper, easier, more efficient, or more appropriate, depending on the problems you are trying to solve. They include:

Improved energy efficiency

Improved energy efficiency is the cheapest and easiest way to reduce energy demand and therefore battery storage needs. In Victorian households, energy usage is typically split between heating and cooling (space heating) (38%), water heating (15%), refrigeration (11%), home entertainment (7%), and lighting (6%) (Residential Baseline Study, 2016).  Upgrading your heating system could include upgrading to an electric reverse cycle split system, improving insulation, draught-proofing, installing external blinds for summer or heavy curtains for winter, and replacing single glazed windows with double glazing. If you are renting or live in an apartment complex, it may be time to approach your landlord or body corporate to ask them how they’re addressing energy efficiency. For appliances, cutting energy consumption can be done by buying, or replacing, appliances with newer ones that have a higher energy efficiency rating or by simply replacing fridge seals. Although new appliances are more expensive, in the long-term they can save money by reducing energy usage.

Changing your energy patterns

Changing your energy use patterns can help balance supply and demand in the use and integration of renewable energy and should always be investigated before considering energy storage. A basic approach is to align electricity use with solar generation, for example setting up hot water systems and pool pumps to be powered during the day, when solar power is readily available. See Solar Victoria’s How can I make the most of my new hot water system?. Installation of microinverters instead of one central inverter for your home solar system can also provide real time information about the system’s generation, allowing you to best decide when to run/schedule different appliances. See Solar Victoria’s Making the most of solar through efficiency and timing.

Other forms of storage

Other forms of storage include electric hot water heating, household batteries, electric vehicles (EVs), and pumped hydro. Hot water systems are a form of energy storage and heat-pump hot water units heated during the day with solar power will greatly reduce your need for battery storage, saving money and resources. EVs can potentially provide considerable battery storage capacity, (around 50kWh compared to conventional household batteries of around 11-14kWh) when used as a ‘mobile battery’. In consumption terms, EVs could store up to two to four days of household energy demand. As the typical EV has battery storage capacity greater than that needed for the average daily amount of travel, there is the potential for the additional storage capacity held in EVs to also serve the electricity needs of a household. Households with solar could charge their EV from excess solar generation or when the electricity price is lowest, to then cover their transport needs and help meet their household electricity demand when the electricity price is highest.

It is possible that a community with lots of EVs may not require a neighbourhood battery, with demand and storage requirements already sufficiently met by EVs. If you already have a considerably high penetration of EVs in your community, or of interested parties looking to invest in one soon, then supporting this uptake of EVs may be a more viable alternative than a neighbourhood battery. On the other hand, a neighbourhood battery could also provide a ’fast-charge’ for EVs, meaning the two aren’t mutually exclusive. Because the neighbourhood battery is stationary and a dedicated storage device, it is a more reliable source of backup power.

Household batteries

Household batteries are smaller than neighbourhood batteries (typically around 11-14kWh) and operate behind-the-meter. Household batteries can balance the energy demand and storage needs of your single household. Research suggests that household batteries are likely to be less efficient than neighbourhood batteries (more storage is needed overall for the same number of households).  In addition, neighbourhood batteries can serve and benefit both solar and non-solar users, increasing access to clean energy in the community (at the moment, batteries are not affordable for most householders).

Your choice of investing in your own household battery or advocating for a neighbourhood battery for your community will depend on factors like: how many households are left out from having their own solar, how many households already have their own household batteries, can you afford upfront your own household battery, and what personal or community goals are you trying to achieve.

As we shall see, the feasibility of neighbourhood batteries depends on the number of households in the neighbourhood with rooftop solar, the amount of storage needed, and the part of the network your neighbourhood is on (and whether or not it requires network services). The additional costs of a neighbourhood battery and issues around ownership and governance of this shared infrastructure bring complexities and uncertainties, which may make household batteries worth considering.

If household batteries appear to be more feasible, it is worth considering the technical knowledge you will need to be across to navigate the installation and ongoing maintenance of the solar, inverter and battery system, which will also include a battery management system that requires internet to function properly. Research suggests this set of technologies – together – will require time and effort from householders to ensure that the system is running smoothly. It may be that you have the time to do this now, but it is worth factoring in issues like a change in family circumstances, or a house move that may affect whether or not this technology will be properly maintained and cared for. 

Household batteries can be bundled together (“aggregated”) across a series of households to balance supply and demand in the grid at a network level. This is referred to as a Virtual Power Plant (VPP). In a VPP of household batteries, excess solar power would be stored in the batteries and then fed back into the VPP network when demand for electricity is high. This can reduce the need for imported grid electricity and can lead to energy bill savings for participating households. For example, Solar Homes is running a VPP Pilot Program where homeowners with a 5kW or greater capacity solar system can join the trial and receive a solar battery rebate for the upfront costs of a solar battery and its installation. 

In comparing between a neighbourhood battery and forming a VPP with household batteries, there are a couple of things to consider. The household battery VPP could be an easier, more cost-effective option if your community has a number of household batteries already. However, VPPs can be complicated and time consuming. They ideally need the support of an intermediary to guide householders through the process, which can be quite complicated with a number of different interacting parts (solar, inverter, battery and battery management system). VPPs require an external business to aggregate and trade on participating householders’ behalf.  This may potentially raise issues around trust, transparency and benefit sharing, particularly as they rely on households to monitor and maintain their batteries in serviceable condition. They are limited to those with a home solar system, so don’t offer the same social and community values as a neighbourhood battery.

Because VPPs are in the early days, we do not yet have good evidence on whether VPPs provide net benefits for householders. Current models require householders to invest a lot of time and effort in purchasing, monitoring and maintaining the products. But it may be worth considering whether VPPs might meet your community’s goals and finding out what’s available. Pilots and approved VPP programs under Victoria’s Solar Homes will be a helpful resource in coming years.

Power Purchase Agreement (PPA)

A Power Purchase Agreement (PPA) is an agreement between an energy generator and energy consumer for the sale and supply of energy (commonly the supply of renewable energy, e.g. from a solar or wind farm) and are a good way of incentivising renewable generation. PPAs can be a beneficial alternative for communities wanting to decarbonise but held back by a lack of capacity to generate their own renewable energy (e.g. due to lack of appropriate roof space, or poor solar resources). By entering a PPA, community groups or councils can ensure that a certain amount of renewable energy is being generated and used in the energy system. PPAs however, can come with economic risks, with some types of PPAs involving locking in a fixed energy price that may end up being higher than the wholesale energy market price. Read Why “24/7” clean power means more than “100% renewables” to learn more and help you consider how effective a PPA would be in achieving your goals.

Network upgrades

In some cases, it might make more technical and/or economic sense to physically upgrade parts of the distribution network with new poles and wires or with a new transformer to increase solar hosting capacity.

Network demand management

Network demand management platforms can manage customers energy resources e.g. electric hot water systems and pool pumps, and can integrate them into the electricity market through demand response and Virtual Power Plants (VPP), consisting of a cluster of resources such as solar panels connected to a central control system. In practice, network demand management and its success will be dependent on the appetite and trust of the community. If it is done transparently and with ongoing community engagement, community members may be happy to work with DNSPs to manage DER and home assets. However, trust in some DNSPs is currently low, so there are no guarantees. Issues of privacy and cyber security associated with digital platforms using information from households will also have to be resolved. There are also equity issues around who has the capacity to engage with these developments (in terms of assets, time and know-how).

Dynamic operating envelopes

Dynamic operating envelopes (DOEs) are a tool for network-level demand and supply management that can help distribute demand and supply to reduce peaks and increase energy use during times of available solar. Operating envelopes are contractual and operational limits sent out in “envelopes” that define the amount of electricity a customer can import or export from their DER (rooftop solar, EV, or other storage device) to the grid at any given time. In doing so, operating envelopes can help network businesses integrate more renewable electricity into the grid, potentially increasing returns to customers, whilst ensuring protection of network assets and management of operations.

Once again, it is early days for these demand management tools, and not yet clear how they will interact with neighbourhood batteries as the energy system changes.

Pumped hydro

Whilst pumped hydro is on a much larger scale of energy storage than neighbourhood batteries, it can influence the need for a neighbourhood battery. For example, if you are located in an area close to a pumped hydro facility, excess solar exported from your distribution network may already have the ability to be “soaked up” by the pumped hydro plant for use during the evening peak (i.e. pumping up water to the upper reservoir during solar hours and releasing water through a turbine during the evening peak to generate electricity).

Pumped hydro is cheaper than battery storage (per kWh) and can provide much larger amounts of stored energy over a longer period. Although it takes much longer to implement (years compared to months) it has a much longer lifetime (100s of years compared to 10-15 years for a battery). Installation of new pumped hydro has various site-dependent environmental and social implications and impacts that have likely led to its relatively low uptake more recently in Australia.

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