Economics of stand-alone power systems

With funding from the Consumer Advocacy Panel, Renew, formerly the Alternative Technology Association (ATA) undertook economic modelling on the costs and benefits of installing stand-alone power systems (SAPS) for rural and remote customers on the fringe of the electricity grid. This would be as an alternative to extending the electricity network.

Given the distances involved and low density of customer connection points in fringe-of-grid areas, in many cases it will be more cost-effective to meet customer energy requirements with a SAPS, rather than by network augmentation.

This research sought to quantify the long-run energy costs from a variety of SAPS designs as compared with the long-run costs of upgrading the electricity grid in fringe-of-grid locations. More specifically, the research sought to identify the level of network capital expenditure at which it becomes more economically efficient to install a SAPS, rather than upgrade the electricity network.

The key finding of the research was the fact that it does not take significant amounts of network capital investment to make SAPS more economically attractive.

While Renew was not surprised to see that even the most costly off-grid option was cheaper in the long-term than a $100,000 network upgrade, the research shows that it is more cost-effective to:

• Spend approximately $78,000 up-front on a high quality, automated SAPS than to upgrade the grid at a cost of $50,000 (to put that in perspective, $50,000 broadly equates to the cost of undergrounding 100 metres of existing power line to a single home); or
• Spend about $65,000 up-front on a high-quality, automated SAPS and some basic home energy efficiency measures than upgrade the grid at a cost of $40,000.

Renew believes these findings should be taken into account by governments and regulators across Australia when considering energy supply in rural and remote areas.

Click here to read the report.