Household solar uptake meant demand on Australia’s grid in summer peak fell to five-year low

Pressure on the national electricity grid at the peak of last summer’s heat fell to its lowest level in five years due to the rising influence of household solar panels, a new analysis has found.

Summer is usually the time of greatest strain on the electricity system due to the widespread use of energy hungry air-conditioners, but the demand on the hottest day dipped this year as more electricity came from decentralised rooftop solar systems, which sit outside the grid.

An audit by the energy consultant Hugh Saddler, an honorary associate professor at ANU’s Crawford school of public policy, found that household solar contributed more to meeting consumer needs than some ageing coal plants, including the Liddell generator in New South Wales and Yallourn generator in Victoria.

Related: Australians could be charged for exporting energy from rooftop solar panels to the grid

Saddler said it underlined the role solar power was playing in making coal-fired electricity unprofitable and increased the likelihood of early coal closures, a point also made by the head of the government’s Energy Security Board, Kerry Schott.

“Anyone who has got any sense is talking about it,” Saddler said. “It’s just so obvious.”

Saddler’s analysis, in his regular national energy emissions audit for the Australia Institute, aligns with a separate report published by the government’s Australian Energy Regulator and released on Monday.

The regulator found that black coal-fired power fell to its lowest level on record for the first three months of the year, and gas-fired electricity slumped to its lowest level in 16 years. The regulator’s chair, Clare Savage, said it was the first time electricity from large-scale solar farms was greater than from gas.

“The milder temperatures during the past summer period and an additional 2,500MW of rooftop solar capacity drove lower demand and lower wholesale prices, which is good news for consumers because it should lead to lower bills,” Savage said.

Saddler found demand for electricity this financial year peaked on Sunday 24 January – the hottest day in many parts of eastern Australia. He said the grid was less stretched at the summer peak than in any year since 2014-15.

This showed solar was reducing the need for additional back-up from expensive plants that are turned on only at peak times, particularly gas-fired stations, he said. At the peak, solar power provided more than five times the maximum capacity of the newly announced Tallawarra B gas-fired plant.

“The lower level of the 2020-21 peak, relative to each of the previous five summers, is undoubtedly mainly caused by growing supply from rooftop solar,” Saddler said.

The rapid growth in solar – about 20% of households now have it, up from 0.2% in 2007 – is the clearest example of an electricity grid that is now transforming more rapidly than what was not long ago considered a “step change” scenario by the Australian Electricity Market Operator.

Over the past year, renewable energy has provided 28% of electricity. Four years ago some analysts believed it was unlikely that the national renewable energy target – roughly equivalent to 23% – would be met by 2020.

The target was met in 2019 and has not been replaced. Some states have introduced their own targets and schemes, and the tumbling cost of solar has made it increasingly attractive for households to install.

Savage said low demand for electricity from the grid due to increased rooftop solar generation could affect the stability of the network. She pointed to the situation in South Australia, when Aemo for the first time used new powers to help stabilise the network by turning off some rooftop solar.

A draft deliberation by the Australian Energy Market Commission in March recommended that households with rooftop panels be charged for exporting electricity into the power grid at sunny times when it is not needed.

The commission said it was needed to prevent “traffic jams” of electricity that could destabilise the network, and could allow more household solar systems and batteries to be connected to the grid and make the system fairer for all electricity users.

Richie Merzian, the Australia Institute’s climate and energy program director, said the rise of solar was being driven by Australians wanting to put panels on their roof. He said it “defied any ideological interests”.

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He said he welcomed the conversation about how to deal with congestion in the grid but questioned why the proposed solution was to penalise solar households.

“The reality is that we could be doing so much more,” he said. “We should be subsidising and supporting more of what we want.”

Other findings of the Australia Institute audit include:

• Emissions from fossil fuel combustion fell by 7.3% over the year to February. More than half was due to the coronavirus pandemic.

• There is no evidence there was a fall in electricity use in Australia due to Covid-19 outside Victoria (where comparable data is not yet available).

• Petroleum emissions, mostly from transport, are expected to increase this year.