Residential energy efficiency and distributed generation - Natural partners or competition?

Residential energy efficiency and distributed generation seem to be natural partners in our journey towards a more sustainable energy future. A growing range of energy efficient consumer technologies and extraordinary declines in photovoltaics system prices has seen household electricity demand fall whilst a growing proportion of the remaining load is provided by household self-generation. Australia is a particularly interesting example of these developments, with around 15% of households now possessing a PV system while per-capita household demand has also fallen markedly. However, existing retail electricity tariffs and regulatory arrangements can create mixed incentives for households contemplating both PV and energy efficiency options and for their network service providers. This is certainly the case in Australia with net metering arrangements that value self-consumption of PV far more than PV exports to the grid. There are also complex benefits for the electricity network created by these household energy resources that can be significant. In this paper we use real household load and PV data from Sydney households to model the potential implications of existing electricity tariff arrangements on the financial attractiveness of PV and energy efficiency. We model these options separately and in combination for both households implementing these options and their network service providers. Our results highlight how inappropriate tariffs may well adversely impact on the value that the combination of energy efficiency and PV offers not only to households, but also to their network service providers, and suggest ways that such impacts might be ameliorated by acknowledging the benefits that these resources can offer to the electricity network.