“The goal is to make sure the consumer buys the right solution. The only trouble is that clean energy is not a consumer-driven market, it’s a “market-driven market” where a manufacturer sells to a wholesaler who sells to a retailer who sells to an installer who sells to a householder or business owner,” Enphase managing director for Asia-Pacific Nathan Dunn said.
All along the chain, the incentives and value propositions are slightly different.
“It’s a complex environment to operate in,” Dunn says. “There is no single go-to-market strategy that can be implemented across the entire industry. You have to be focused on delivering a solution to each one of the different folks within the value chain.”
When the solar industry peaked around 2010 to 2012 it was essentially driven by incentives for people to connect and put systems on their homes through government subsidies and very generous feed-in tariffs, he says. It was a fine time to sell solar – and make money – without necessarily delivering the true value that the consumer was looking for. “As part of the maturation of the industry that kind of focus on the end customer is what’s required now,” Dunn says.
Commercial solar PV systems make immediate sense to owners who generally have daytime operations, but regardless of the high penetration of residential solar in Australia its benefits are still a bit vague. If you’re out all day and don’t have a battery, what’s the point of having panels in the first place?
“There’s a focus on helping [consumers] understand how to maximise the value they’re getting out of the grid support and try to offset that ever present challenge of increasing their electricity costs. For us it’s about a solution and working with the end customer to give them the best possible outcome,” Dunn said.
The full kit for an Enphase convert would include a PV system where energy use is optimised via microinverters, modular AC batteries and its energy management system, Enlighten.
Storage is slowly gaining ground but consumers are bound to struggle with the technology. The case for bigger capacity doesn’t always add up, and as more users are connected by intelligent software that includes weather forecasting abilities it may work out that optimal battery sizes are much smaller than benchmarks used today.
Dunn chooses his words around optimal battery sizing carefully. “The proposition around bigger is better … to me does not make sense.”
More than half Enphase batteries being fitted are in retrofits, he says, in PV systems that were most probably installed a few years ago and are around 1.5kW to 3kW. The average system these days is about 5.5kW to 6kW, but Dunn says a family of four with a 3kW solar-and-storage system can definitely offset evening peak charges.
“Anything larger than 3-4.5kW of PV generation is probably too much [for a household of four],” he says.
“In the absence of absolute data, the anecdotal feedback we’ve had from the market is that customers don’t necessarily know what they want; they just know that energy storage is something that will benefit them.”
So why are systems commonly bigger than 5kW when he says in many cases 3kW may be enough? It’s about the difference between what the consumer needs and what’s being sold to them, he says, and about how systems are sold. “How many installers, how many retailers sit down to ask those questions to get straight to the point [of selling an appropriately-sized system]? I don’t know if there’s a lot of that going on.”
If an installer can collect about four weeks’ load and generation data from a PV household there’s a much better chance of sizing a storage solution fit for purpose.
“You don’t need to buy a 3.5kWh big unit to go on the side of the house just because you think it’s cool; you’ll end up spending more money than you need to just because you won’t end up using the energy that’s being saved in the battery.”
All honest battery-makers will admit safety is a grey area, with Australian Standards still running its ruler over the chemistries used in the industry before it delivers a new set of rules. (Enphase uses a lithium ion phosphate product provided by Japanese company ELIIY Power.) But when the first Australian house with a faulty battery goes up in flames Dunn knows it won’t matter which brand or chemistry is the culprit, the entire storage industry will get a kicking.
There are new entrants almost every day, he says, and there are no rules to hold anyone or anything back.
“[Safety] is one of the growing concerns that I have for the industry as new entrants come into the market,” he says.
The reason the storage market is so opaque, he says, is because it’s so young. “It’s nowhere near as big as the hype would suggest.” The early adopters have their batteries, but the next level of consumers are still looking for a financial benefit before they commit – and a 7-to-8-year payback isn’t good enough. “I don’t even think we’ve scratched the surface of that second tier,” says Dunn, who suspects a payback of 3 to 5 years will be more palatable.
The second tier of customers haven’t committed to storage yet because they’ve heard prices will fall, and subsidies would speed things along, he says. It’s all very well for politicians to shift the storage discussion to grid-scale assets, but to overlook the 1.65 million solar households that haven’t installed batteries yet is missing the point.
“If you get consumers to understand that utilising that asset they’ve already got, that generates electricity and in some instances exports to the grid at vastly reduced rates to what they are charged, talking to those folks about storing some of that energy and utilising it later does a lot more for grid stability than having a large battery bank at generation,” he says.
“Behind-the-meter is probably the biggest opportunity in the Australian market right now.”
Enphase has form when it comes to helping utilities iron out grid stability issues. In 2016 the company was approached by the Hawaiian Electric Company to find a solution to stability problems on the island Oahu, home to Honolulu, where solar penetration is higher than 30%. Enphase is the largest single generator on the island, and its engineers based in Petaluma, California, worked out if grid profiles were updated on around 800,000 of its microinverters on the island the problem would be resolved. Once privacy issues were cleared the engineers pushed the button and the fix was downloaded. And it worked.
If the solution to grid stability is waiting behind the electricity meters of thousands of Australian homes, you’d hope that the parties that negotiate connections of renewable energy systems to the grid would be on good terms. But Dunn says it’s often not the case. Relations between the renewables believers and the incumbent central-generation crowd present a “dichotomy”, he says. One on hand, there’s universal acceptance of connected solar and the common cause of grid stability and reliability. But when you start to talk about connections it’s common for installers to report having difficulties getting systems signed off with networks.
“The biggest thing is … educating the installer about how to approach that process correctly. If you have an adversarial view of it, it’s going to continue to be adversarial,” he says.
Enphase concentrates on educating installers on its technology, so they can in turn be confident when negotiating with networks when it comes to connection.
The education process for consumers is just as important, but hard to action. The exciting thing is to help the customer understand the benefits of the renewable solution. Anything has to be better than the status quo, where you get a bill which tells you nothing other than how much electricity you’ve used. No hints about where the power’s been used, what the biggest load in the house is, where the power came from, what you should be doing to change things. As new technology comes in that helps consumers understand and refine their usage, he says, they’ll modify their behaviour and start to maximise the value of the assets they have.
“It’s transitioning a market and an industry that is essentially dumb into something that is more smart and intuitive.”