The Soft Costs and Permits Keeping US Rooftop Solar Unaffordable | Soliverse Ep. 43

Rooftop solar costs seven times more in the US than in Australia, and most energy professionals don't know why.

Gavin Mooney, energy and utilities software expert based in Australia, breaks down how a 7-kilowatt system runs around 4,000 USD in Australia versus 28,000 USD in the US, pointing to the specific soft-cost and permitting reforms that created that gap. Where American and European markets treat slow approvals and high sales overhead as fixed realities, Gavin explains the structural decisions Australia made that other markets can directly copy, and why those same conditions now make Australia the world leader in battery storage deployment relative to grid size.

Gavin traces Australia's battery lead directly to its rooftop solar saturation: more than four million households, roughly one in three nationally, already have panels, and in South Australia the figure hits one in two. That midday generation flood drove the Hornsdale Power Reserve, installed in 2017 at just over 100 megawatt hours, and the market has since scaled to gigawatt-hour and multi-gigawatt-hour projects, with Chile the only country close in deployment rate relative to grid size. On costs, Gavin contrasts Australia's end-of-week installation turnaround against US permitting delays stretching weeks or months, state-level rule fragmentation, and high customer acquisition costs, pinpointing these soft-cost gaps as the core reason the same 7-kilowatt system costs 10,000 USD in Germany and 28,000 USD in the US.

Listeners in US or European markets get a concrete reform checklist from Gavin's cross-market comparison: compress permitting timelines, reduce customer acquisition overhead, and increase installer competition. On storage, he explains why arbitrage windows are wide right now as midday wholesale prices go negative, but warns that growing battery capacity will compress that spread, making early mover advantage real. He also frames demand flexibility, EV charging, hot water systems, pool pumps, and dynamic tariffs including Australia's three-hour free electricity windows, as the fastest and cheapest lever to absorb excess solar before new transmission is needed. Software orchestration, not manual consumer action, is what makes any of it scale beyond early adopters.

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Transcript

Coming up...

Gavin Mooney 0:00

A study I saw recently looked at the cost of a seven kilowatt system in Australia, in Germany, and in the States. And so for Australia it was about 4,000 US dollars. I think for Germany it was about 10,000. But then in America it was 28,000 US dollars.

Peter Pongracz 0:16

That is Gavin Mooney, Australian Energy Transition Advisor. He explains how the same 7 kilowatt system costs only $4,000 in Australia and why the US pays up to $28,000 for the same thing.

Gavin Mooney 0:31

In the US, there's a lot of soft costs around things like permitting, can take weeks or months. I understand the sales and marketing costs are pretty high. There's sort of state-level rules which add another layer of complexity, and that there's all this paperwork that drives up costs. And if you compare that to Australia, we have a really flourishing solar installer market here with a lot of competition. And that competition has really driven a lot of efficiencies in the market.

Peter Pongracz 0:59

In this episode, you will learn why rooftop solar in the US is more expensive and the major issues causing this problem. How Australia faces structural reforms to cut off soft costs, make solar more affordable, and unlock rapid battery adoption. And what can other markets copy from Australia's solar success? I'm Peter Pongrats, and this is Soliverse, the future of solar.

Europe's energy flexibility debate and what industry really needs

Peter Pongracz 1:24

Many things happened this week. I I attended this event in um in Brussels because it's just down the road, and uh basically it was a European solar summit or something like that. And uh it was quite helpful to kind of understand, you know, not just the regulators' perspective, but also the perspectives of uh the fact that we need to zoom out. And by zooming out, I mean uh until like 2024, we were really like more solar, more solar, and and that's the fastest. Then then it kind of transitioned into more solar and best, more flexibility. This year is it's really going to be best, best, best. But uh it was super interesting to hear, for example, industry associations like uh what was it, metal construction, uh metal, the European Metal Association, and you know, they were giving some pretty interesting arguments about what is happening on their markets and why cheap energy is important for them. And they just they were just saying that, yeah, like 50 euros a megawatt, we can keep the lights on. But if the the price goes at 90, then you know we are good as dead, you know. So we we need to almost move out of Europe and there won't be any production. So these are the kind of things that you never think about, right?

Gavin Mooney 2:39

No, I think that's really interesting because a lot of the energy-intensive industries, you know, the the the price of energy is such a massive input into their overall operating costs and their whole profitability model. And so, like you say, if if the energy becomes too expensive, then they just can't can't really sustain it. I know we have some industries here in Australia, like aluminium smelters, where they might need subsidies from the government to keep them going, or they they certainly need to lock in a really competitive energy price. And and if they can't do that, then you know it just doesn't work. But I think the flip side is also true, a country that can generate huge amounts of uh competitively priced electricity, and something that we're seeing more and more demand for is you know green energy, then I think the the industries will come when that when that's made available to them.

Peter Pongracz 3:32

That's the main thing. And you know, here in Europe it's uh a bit awkward because we are uh we are trying to reduce carbon, but uh and and you know, like uh with all the norms, norms, but so far, you know, it partially has impacted the industries as well. That that you know we we were optimizing, optimizing, but it led to higher costs of production, right? Industries leaving. And then uh we are only responsible for I think 8% of the global CO2 emissions. So, you know, that gives you like an indication of how much you actually produce, right? And and okay, we are a little bit further ahead than than, for example, Asia in terms of clean production, etc. But you need to find a delicate balance between the two, and that's really, really a difficult spot to be in.

Gavin Mooney 4:17

It is, and I think a lot of the people that were that are not really supporting renewables or supporting the a fossil world, they point to Europe and they claim that Europe's pursuit of a green agenda has led to de-industrialization on the continent. And you know, I'm not sure if that's really the cause, but it's there's certainly a correlation there, isn't there? Um, and so it's you know it's it's a pretty strong argument.

Peter Pongracz 4:45

Yeah, it's uh it's a tricky, tricky discussion to have, and especially you know, on our realms as well, everybody is uh uh renewable and solar focused. But uh what what I keep hearing from everybody across the globe is if the finances make sense, everything will take care of itself. And and this is I think the ultimate line that can be applied across the industry, whatever the industry is. And I think this is something that we should really focus on as well. So um

Why Australia leads the world in rooftop solar adoption

Peter Pongracz 5:14

on that note, maybe we can segue into Australia. So you're of course based in Australia, you've been active on the market, and uh to some extent Australia is somewhat ahead of the market as well, right? Uh compared to the globe. So uh why don't we start there?

Gavin Mooney 5:28

Yeah, sure. I think Australia is a really interesting country because we have this huge history of coal-fired generation. Uh, you know, we're a really big polluter, our electricity has traditionally been really dirty, and we're also a massive fossil fuel exporter, but at the same time, we're very much on the cutting edge of renewable energy adoption. And I think one of the really key areas where Australia leads the world is in this rooftop solar adoption. And I think for me, there's there's three main reasons why we have so much rooftop solar here. The first one is you know, it's just a sunny country. So we not only have a lot of sunny days per year, but the sunshine here is quite intense as well. And then Australia's obviously a big country, but also our cities are quite sprawling. They're sprawling suburban cities with a large proportion of the housing stock being detached dwellings. And so what that means is that a lot of people have got plenty of roof space to be able to accommodate solar panels. And then the third point is that traditionally retail energy rates in Australia have been pretty expensive. And so if you can start generating some of your own electricity, it means you know you can save a lot of money. The payback is pretty quick. And so we have not only the physical ability to install solar panels, but we also have the economic incentives. And so the transition here has become customer-led surprisingly quickly.

The massive cost gap: why solar is 7x cheaper in Australia than the US

Peter Pongracz 7:08

That's very interesting to see because I I think I saw a piece of data on LinkedIn the other day that uh to produce one kilowatt hour in Australia can be like two to three cents. Uh, correct me if I'm wrong, versus the the I think the contrary example was US and that was something like eight to ten cents uh on the on a residential level. Uh so that's uh that's also an interesting gap, right? So you kind of have the perfect conditions, but also the willingness to to do that, right?

Gavin Mooney 7:36

Yes, I think it's interesting to compare the cost. If we're talking about, say, rooftop solar, a kind of rule, rough rule of thumb we have here is that it's about a thousand Australian dollars per kilowatt of generation capacity. And a study I saw recently looked at the cost of a seven kilowatt system in Australia, in Germany, and in the States. And so for Australia it was about 4,000 US dollars. I think for Germany it was about 10,000. So, you know, quite a lot more. But then in America it was 28,000 US dollars. And I think it's really interesting to kind of look at like what went wrong. You know, what has Australia done so well that it's now so cheap here, so cost effective, and why are the other countries lagging so much?

Peter Pongracz 8:22

Yeah, that's uh that's an interesting point as well, because you mentioned a couple of uh items there, right? The components that actually go into producing solar. So you need to have the space, you need to have the kind of willingness of the public at uh large, you know, to install these uh installations because you know you have a little bit more spread out cities, it's similar to the US, but um perhaps you know there there is and was uh most of these things built on a grid-based solution, right? And if you were a little bit more remote already, then you had uh an automatic incentive to be self-reliant, right?

Gavin Mooney 8:57

You do, exactly. Um, I I think with Europe, one of the things holding it back could well be, like you say, a lack of roof space, which is why is it balcon craft or the the balcony solar is is becoming quite popular. But in the US, as far as I know, there's a there's a lot of soft costs around things like permitting, can take weeks or months. I understand the the sales and marketing costs are pretty high. Uh, there's sort of state-level rules which add another another layer of complexity, and that there's all this paperwork that drives up costs. And if you compare that to Australia, you know, we have a really, a really flourishing solar installer market here with a lot of competition. And that competition has really driven a lot of efficiencies in the market. So, you know, it's fast, simple, permitting, uh, relatively quick interconnection, low custom acquisition costs. You know, if I if I give an example, I could call up on a Monday, call up a solar installer, and I'd have panels on my roof by the end of the week. Yeah, it's it's that quick.

Peter Pongracz 10:06

We were talking about, you know, uh what's cool is uh the the balcony installation, right? And and and red tape. So I I spoke into many folks in the US and and everybody is saying the same thing that the first and most important uh step for you to take as a developer is really to get to know the community and and try to educate the community that you know if there is a solar farm or a solar panel on your roof, you're not gonna grow a third hand or something like that. And and and they really tend to emphasize this that we really invest a lot of time into speaking to the local uh city council, whoever the decision makers are, because it's it's crucial and they can really stop your project as well. Is that is that similar in Australia or or how is the structure there?

Gavin Mooney 10:53

Yeah, but the the question of social license is is really important because you can get local communities objecting to it, might be a wind farm, it might be a solar farm. Uh the big one at the moment is transmission infrastructure. And I think early engagement with the community and making them feel like they have a voice and they're part of the process is really important. I think what we've seen to some projects here is that the utilities end up having to pay quite a lot of money to the communities to just make them accept having, you know, a transmission line running through their property, for example. And I while I do agree that there should be some sort of compensation to the communities, I think if you if you're getting to that stage, it probably means that you haven't done the early works well enough. And something I saw recently in the news here is that some developers are proposing to build uh wind and solar generation in the far west of New South Wales. That's a state here, that's the state that Sydney's in. But what it means is it's really kind of in the middle of nowhere. So they were looking to get the transmission built to that area. But once it's done, because it's so remote, they anticipated that there wouldn't be any of these objections to the uh the wind and solar because there just aren't that many people living there. So I guess that's one of the advantages we have in Australia that we you know we've got so much space, we can we can build quite a lot.

Peter Pongracz 12:19

Indeed. And uh and so so basically, even uh taking the power plant that much further from the actual uh population centers would kind of outweigh the the losses of transmission, etc. So that's a that's an interesting point as well.

Gavin Mooney 12:33

It is, and you know, transmission isn't cheap at all. I think transmission costs are going up, and there's as we said, it's the whole social license question, but it sounds like they consider that that was you know the easier pathway than trying to build closer to population centers.

Peter Pongracz 12:48

Yeah, and I I guess you know you have different objections. For example, I just came back from a conference here in Brussels on Tuesday, and

Europe's 400GW grid connection backlog and what Australia is doing about it

Peter Pongracz 12:57

you know, the biggest takeaway that I learned is um we had a lady there from the International Energy Agency, and she she had some really good data on you know how much we installed across Europe and that last year was something like 85 gigawatts. But the most important piece of data was that we have 400 gigawatts, again, 400 gigawatts stuck in the queue. So basically, only if we cleared that we would reach and exceed our energy targets by 2030. So, and I I think that's one of the the biggest and most underestimated issues, you know, perhaps across the globe as well, that that the whole curtailment and and the grid connection queues are probably the biggest unmet need, right? And how how does that work in Australia? Can you can you give us an insight into that?

Gavin Mooney 13:46

Yeah, it's it's really interesting actually, because I think the fact that the pipeline is that big shows that there's no sort of lack of investor interest. So did the economics still stack up. Uh, but yeah, the the grid connection is is absolutely uh a bottleneck here as well. To the to the extent that we're looking at things like virtual transmission, you know, using using batteries either either end of a transmission line to to allow the transmission line to run run at high capacity. Um and other, you know, there are other uh sort of solutions to enhance the the network without actually building more poles and wires and those sorts of things are looking like some pretty interesting solutions as well. But I mean you can't you can't get away from the fact that at some point you will need to build more transmission. We've got a number of key projects here in Australia that need to get built to to unlock what we're calling renewable energy zones, which are areas that have been identified by the market operator here as good areas to build wind and solar resources. And so we need the transmission links to those areas to open them up, basically. But it just takes a long time.

Peter Pongracz 14:56

Again, and a lot more permitting, right? Uh an average solar project you can you can bring to life in 18 months uh when it comes to nuclear uh seven to ten years and then uh everything else, I guess the the grid and new new power lines would be somewhere in that bucket, right? The seven to ten years. So it's like quite far ahead of uh of planning and investment as well. And

Australia's battery boom: from Hornsdale to gigawatt-hour scale

Peter Pongracz 15:18

I guess it it begs the question to take this uh to the battery side, right? So you guys have actually built some massive battery sites as well. I've seen the the Tesla megapacks, etc. Yeah, of course, uh you have infinite land, but what is the the approach in Australia or what is Australia doing better than the rest of the world?

Gavin Mooney 15:38

Yeah, Australia is installing a lot of batteries. I think the the first big battery we had here was the Hornsdale Power Reserve. I think it was 2017 it was installed. Uh that was the world's biggest battery at the time. It was just over 100 megawatt hours. We've come a long way since then. So we're now installing batteries of the order of sort of gigawatt hours. There was there's uh plans for ones that are multiple gigawatt hours. I think if you look at the amount of battery storage that we're installing relative to the size of our grid, Australia is actually going faster than any other country. I think Chile was second. And I think you know, you've got to look at the reasons for this. We we talked about how much rooftop solar we've got in Australia. You know, it's more than four million households. That's like one in three households in the country. And in the state of South Australia, it's every second household. So half the households in South Australia have rooftop solar. And of course, the effect of that is to flood the grid with a lot of uh excess generation in the middle of the day. And there's all sorts of problems that that causes, which we we can discuss more if you like. But one of the quick solutions for that is installing a lot of battery storage because the the batteries will charge in the middle of the day and they'll start to soak that up and they can discharge it later in the day and help to meet sort of evening peak demand.

Peter Pongracz 17:03

And that's also interesting, you know, that the the the fall of the battery costs, right? So we've seen like uh the modules, we we we expected them not to fall this fast, especially last year, but they still did. And uh the batteries are following a similar uh pattern as well. And you know, as new technologies also come online, like I I anticipate the the cost to fall even further, which makes it the flywheel, you know, go a little bit faster still, that uh it's going to be more affordable for everybody to install, both on the the residential and the utility scale of side of things. And that's that's the key and important message that um the piece of data I have from Europe is that on a large-scale utility scale side um uh or power plant, you can actually get to uh a cost of around six euro cents uh of production uh price, and that's solar plus batteries already included. So uh around uh uh only solar, it would be around three cents. But this is a number number from Germany, so that's already quite low. But if you can drive that even further, that's going to be even easier to convince the the people who are not really into this, right?

Gavin Mooney 18:16

Exactly. Uh, I think a few things to unpack there. But I mean, the the initial batteries we had here had very short durations, and part of that was because of the cost. So they might have had a duration of only an hour or even less than an hour, and their role was really to just inject power into the grid at certain times to really support the grid, uh, things like frequency response and so on. And then as prices have fallen, we've been able to have longer and longer duration batteries. They've become more, more economically uh sound. And so we're seeing batteries here. I think four hours is probably the the default now, but we're also seeing eight hours, ten hours, eleven, twelve hour batteries coming as well. And so that you know, at that stage, you're really starting to look at being able to charge up during the day and then run almost the entire night. Yeah, it's it's starting to get into that world of round the clock solar. Um, I think what's interesting as well is how much we've seen uh consumer batteries take off. You know, it started with grid batteries and now we're seeing a big wave of consumer batteries as well.

How batteries charge and discharge to profit from price arbitrage

Peter Pongracz 19:24

That's an interesting point as well, that you know, flexibility is something that keeps coming back at almost every discussion I have. I think there are multiple components to that flexibility, right? So we have, for example, here in Europe, every year you you are seeing more and more negative hours, more and more curtailment. And okay, we we actually installed some meaningful amount of best already that helps you, you know, shave the peaks a little bit. Um, but at the same time, the that flexibility needs to work across the board. So we we should think about it as not just flexibility in a sense of being able to uh provide the energy when it's needed, but also provide the energy at the right price, right? Because you as an investor obviously are looking for some returns, you're looking at your RRR, and and that is the the most important use case or or or formulation that we need to find the solution to and that that should work at least on the midterm, right? Because everything is change changing every year. But how is the approach to that in Australia? What are the kind of you know, perhaps tools or or components of helping, you know, guide this system and and and figuring out when to charge, when to discharge, and when to when to sell at the right price?

Gavin Mooney 20:39

Yeah, at the moment, the the potential for arbitrage for batteries is really, really high because with all that rooftop solar, we're getting to the stage where we have very low demand, very low grid demand, I should say, in the middle of the day. And you know, the result of that is that prices can often go negative. And so a lot of these batteries will be able to charge up in the middle of the day for very little cost, or even they might be paid to charge up. And then you know, evening peak prices are always gonna be higher. So there's there's a good arbitrage opportunity there for the grid scale batteries. I think what's interesting is that as we add more and more batteries, more and more are going to be charging up in the middle of the day. And so prices in theory won't be negative forever because we're adding demand. And and so that that arbitrage opportunity actually shrinks. So the batteries are kind of eating their own lunch. So it'll be interesting to see how that progresses. But I think you know what what you were mentioning about uh the flexibility and and and orchestration, so on. Are you talking more about r on the residential side or or at the grid scale?

Peter Pongracz 21:48

The grid scale, because that's uh at least here in Europe, that's still much more generation, right? And and that's that's something that if if it's solved, then I think eighty percent of the problem is solved as well.

Orchestrating millions of distributed energy devices with software

Gavin Mooney 22:00

Yeah, I think we, you know, we're heading towards a system where we've got millions of rooftop solar systems, you know, hundreds of thousands of batteries, you've got electric vehicles and other flexible loads as well. And you know, you just can't manage all those things manually. And that's that's where we we need software to start orchestrating these and and automating them, whether it's things like battery dispatch. So I think most of the most of the grid scale batteries use a sort of auto-bidder software to to help them decide how to how to charge and discharge at the optimal times. We're talking about grid balancing as well, uh, maintaining reliability and so on. And you know, you you increasingly end up with with systems where thousands of distributed devices can can sort of respond collectively to to market conditions or or grid conditions.

Peter Pongracz 22:50

That's something that keeps coming back as well, that more and more devices and more and more components of the system. But uh again, we we need a more holistic and more high-level system-wide thinking of how all of these components will work together, right? Because if we have uh a battery from one manufacturer, if we if I have my modules from another, I have my inverters from a third one, it's going to be difficult to establish the connection and make sense of the whole data, right? And that's not really an easy thing. And I guess on the residential side, nobody's going to write their own software on the utility scale side. Uh again, unlikely as well, but there you have a little bit more incentive to kind of figure this out because uh 1% dropping your yield, you know, can cost you millions per year or uh tens of millions in production losses. So uh it's it's a bit of a you know two sides of the same coin, but really different uh needs, right?

Gavin Mooney 23:48

Yeah, I think so. Uh there is a lack of standardization here. And for any of these uh software companies, trying to build the orchestration software and remotely controlled devices, a big part of what they have to develop is the integration to all the different manufacturers' devices. I think in some cases it can be easy, you could use a sort of aggregator so you can integrate to one aggregator that will then have the integration to all the different devices, but there's a lot of work in just building out integration. It's it's far from standard at the moment.

Peter Pongracz 24:20

Yeah, for sure. And I mean, uh the only kind of interesting use case I've seen so far is you know, Tesla uh was uh basically showing off this use case of the the modular megapacks where you have you know basically four containers ships shipped to site, and basically everything is Tesla from the hardware to software. So even the the connection between the four containers and and the software is from them. So then this is the only way if you go more vertically integrated, which I guess in the battery space, not many companies can do besides Tesla and the Chinese manufacturers, right? It's it's going to be uh a tricky, tricky situation in a few years.

Gavin Mooney 25:00

Yeah, it's uh it's a very diverse market. I think you're right. Where Tesla does have a bit of an advantage there, being able to offer like the full stack and the software that goes with it as well. I imagine there will have to be some sort of consolidation or adoption of standards for people to be able to control these devices. Uh, but at the moment it's uh it's quite fragmented.

Peter Pongracz 25:20

Yeah, for sure. And uh, you know, on the on the fragmentation side, uh maybe maybe if feed dig a little bit deeper into you know different uh geographies, let's say compared to Australia, uh what did you see in in your professional career in terms of approaches to to solar and and best development? So if we look at, let's say, let's start with the US. So how does the US differ in terms of mentality and and market dynamics compared to Australia?

Gavin Mooney 25:51

Wow, that's uh that's that's a big question. Uh take, let's let's not delve into politics too much. But the the US as a country is is obviously a large country like Australia. But I th I feel like they have got more grid-scale solar, even though they have a lot of potential for rooftop solar, uh, they haven't reached the same sort of levels that we have in Australia. So they've got a lot of grid scale solar, and then you've got markets such as Texas and California, which are really sort of pushing the boundaries more than other parts of the country. So California gave birth to the famous duck curve, and they've also been installing a lot of battery storage. Texas built the grid infrastructure, and a lot of wind then came to the state. So it's been doing really well with wind, and now they are also installing uh a lot of batteries. I think what's interesting for me is that different markets sort of approach it different ways, and there's there's various reasons for that. You know, Northern Europe probably has more wind, southern Europe is more solar oriented, for example. But when you get to high penetrations of you know the variable renewable energy, then I think you know there's there's um a bit of a convergence on the different sort of operational challenges that you're gonna have, regardless of the geography. So, you know, you're gonna experience variability. You're gonna have a need for storage to kind of smooth that variability out. You're gonna have a need for flexibility. Like I think the demand side is a massive untapped resource, which we can talk about a little bit more if you like. And and you know, with that flexibility, you're then gonna need the orchestration to sort of to make the most of it, to get the most out of it. And so, yeah, I think it's interesting how markets can start off in uh at different places, but if they're all heading towards high variable renewable energy, the they're gonna experience the same challenges.

Demand side flexibility: dynamic tariffs, free electricity hours, and shifting consumption

Peter Pongracz 27:52

Yeah, for sure. And uh maybe let's let's discuss this demand side topic because that's quite interesting and quite juicy. So you mentioned uh dynamic pricing, tariffs, you know, orchestrations. How does that play out in real life?

Gavin Mooney 28:05

Well, if you look at where we've come from in Australia, you know, we've got this this huge amount of rooftop solar, and you think of a typical house, it generates a lot more electricity than it needs to consume, especially in the middle of the day. So that floods the grid in the middle of the day. And so the question becomes you know, with huge amounts of low-cost solar, how can we encourage more consumption during those times? And as I said, I feel like demand side flexibility is a really big, uh, untapped resource. I think you know it's easy to understand that if we can shift a little bit of demand, that can often be cheaper and faster than building additional generation or or even having to build additional network infrastructure. So it's it's undoubtedly valuable. And then there's different levers that we have. So one of them would be tariffs. You know, if you look at tariffs where they've come from, consumers didn't have digital meters, they had analog meters, probably a flat rate tariff, maybe so people pay the same amount regardless of the time of day. Uh, maybe it was peak and off-peak, but in the old world, consumers rarely thought about timing. You know, they they wouldn't change their consumption habits based on thinking, oh, electricity is expensive now, I better, I better turn something off. And I think what if you look at where we're going now, um we have digital meters, we have home energy monitoring devices, so you can just look at your phone and see how much electricity you're using at any time, you can see how much it's costing you. And an example from here, you know, we have so much solar, so much cheap solar in the middle of the day, but there's now tariffs here that will give you three hours of free electricity, you know, as much as you like, it's free for three hours. And you can imagine that's a a really strong price signal. Um, you know, I I can speak from my own experience of of how that changes how you consume energy.

Peter Pongracz 30:10

Uh for sure. And yeah, I mean, if if we dig into a typical consumer of how the energy consumption has shifted, and you know, of course, we are expecting more and more electrification of everything, right? Including from production to uh domestic consumption as well. That's going to still push our demand for energy higher. The question is, how do we consume it smarter?

Gavin Mooney 30:33

Yeah, exactly. I think, you know, if you look at the traditional system, we have tended to match supply to meet demand. And and so, you know, the way the markets operated, we would look at what demand is at the moment, what it's expected to be in the next half hour or so. And then, you know, we we spin up enough generation to make sure we can meet that demand. And what we're increasingly looking at now is how can we shift demand to match supply? And and like, you know, there's there's various flexible loads that we can play with. Uh, things like electric vehicle charging, that's a great one. Because, you know, an EV is basically a battery on wheels, but it's also a large, flexible electrical load, you know, just sitting in people's garages. And so, you know, my personal experience, I I had uh some time on one of these three-hour free tariffs. And it, you know, for me, I would do everything I could during those three hours. You can schedule the car to charge if it's at home. Uh, in it was in winter that I was on it, and so I was scheduling the heating. The heating would go really hard for three hours, probably probably heat the house up a little bit more than it needed to, and then you know, then it can just sort of coast the rest of the day so we can get away without needing heating for the rest of the day. Uh, and you know, there are other flexible loads as well. Some people have pool pumps, it doesn't really matter when uh when they run, so that's a good one. Um, hot water is another one, electrical hot water. You can you can have that run in the middle of the day, and then you know the water's gonna still be warm uh come the evening. And so I think it it's really interesting how these how these tariffs can change consumer behavior. But I think we can't really get away from automation because how many how many consumers want to spend their time thinking about energy?

Peter Pongracz 32:25

Nobody. Or or what one in a hundred, maybe. Yeah, yeah. If if you really find pleasure in trying to plug this, uh plugging this system together, yes, uh, you you are the one. But I think uh the the others, you know, they are just basically want to forget about it and and basically try to make the most or like out of their consumption patterns or uh you know behavior. But again, you know, incentives drive behavior, right? So that's that's the the most important part to to build the right incentives to to drive the right type of behavior for people. Let that be, you know, uh um build reduction or uh you know, some for people who care about the environment, yes, that's the added value as well. But I think again, finances uh solve everything.

Gavin Mooney 33:13

They do. You know, I think uh you know, obviously not everyone wants to become an energy trader or optimize. I think the average person probably just wants lower bills, greater convenience. And that is again where the automation comes in. Because another example, you know, the the three free hours is quite easy to remember, but there's also tariffs here where you're exposed to the wholesale price of energy. We call them dynamic tariffs. And so the price you pay varies every five minutes. And of course, you know, even the most enthusiastic energy nerd isn't going to be looking at their phone every five minutes and turning things on and off to try and you just can't keep up with that. And so that's where software again becomes really useful, uh, especially if you have a home battery. Because now it's looking at, well, can I charge the battery off rooftop solar? Can I charge a battery because wholesale prices are really cheap? And then let's look at the forecast. You know, what is is there going to be a price spike later when I can discharge the battery and sell energy and make a profit for this consumer? And let's also factor in the consumer's typical consumption patterns. I I know they're probably going to run the dishwasher in the evening. I need to allow a little bit of energy for that and maybe for cooking, you know, and so on. And I think, you know, there's the software is getting quite advanced now that it can, it can learn what your consumption habits are, it can forecast what energy prices are going to be, and it can really optimize the battery for you so that you get a return on the investment. You're not you're not just optimizing your own rooftop solar generation, uh, but you're also sort of making a profit from the battery as well.

Peter Pongracz 34:50

True. And that's that's the most optimal use case. But you you mentioned the keyword that really really uh spiked my interest. So you

How the energy crisis accelerated the shift away from fossil fuels

Peter Pongracz 34:58

you mentioned price spikes. So it really uh forces me to steer into this direction of the whole Iran uh war situation and the energy crisis. Uh, how has that played out on the Australian side? Because here in Europe, this is basically the top of the news, top of the discussion, both political and and industry level as well. And um, you know, there's no quick solution to that. But on the flip side, it actually gave us, at least in Europe, even more motivation of really being able to detach from gas or as much uh detach uh detachment as possible. Uh how how has this played this played out in Australia?

Gavin Mooney 35:40

Yeah, we've definitely been impacted here. Uh, I think Australia is the world's largest importer of diesel. If you look at diesel consumption per capita, it's you know, we are by far the world's largest consumer per capita. We have had queues at petrol stations, we've had some rural petrol stations apparently running out of petrol. Obviously, anyone that owns an electric vehicle is feeling quite content with their purchase decision now. And what that's meant is, you know, if there's any sort of silver lining to this war, it's that there has been a massive shift in demand for uh electric vehicles and and away from fossil fuels. I mean, and that's not just at one level, that's at the consumer level where people are going out to buy electric vehicles, uh, but also at the government level, looking at what policy changes are are needed to really reduce our dependence on on imported fossil fuels, because it's it's clearly a massive vulnerability.

Peter Pongracz 36:38

Of course, you know, fuel is one part, right? So you you need this is the the mobile part of the industry. But you know, as uh when we look at fuel as uh an industrial input, as we we mentioned at the beginning, it's it's quite tricky because at least here in Europe, we we are in a really weird place uh where you know PPA prices are falling, which means the investment into renewables are getting a little bit less attractive, but the energy's energy prices are going up. So so we are in this paradox of like, okay, how do we solve this? It's because if the money doesn't flow in, that's going to impact you know future uh project build-out, but at the same time, the energy prices keep rising.

Why standalone solar farms no longer stack up without batteries

Gavin Mooney 37:22

Yeah, it is. Uh and low, you know, we can celebrate low price for solar and wind generation and so on, but those low prices, they get too low, then as you say, they stifle, they stifle investment. I know here in Australia now, you wouldn't really get a standalone solar farm being built because there just isn't the return. With with all that rooftop solar in the middle of the day, the the grid scale solar farms are often being curtailed. And so they pretty much have to have uh on-site battery storage now so that they can generate the solar, but then send it to the grid later when the grid actually needs it.

Peter Pongracz 38:04

Yeah, so it drives back to to the point of flexibility, right? And and also we we still live in a high interest rate environment as well, which makes the job a bit harder as well. You know, loads of capex that needs to go out of your pocket for first of all before you start generating. And you know, I'm I'm working with a couple of companies on the the transaction side as well, and there the data is clear. You you are investors are willing to pay for assets, even higher premiums, even for a lower return, as long as those assets do have uh a reasonable track record, and those assets are in the later stage with uh best solar wind, so the hybrid project is becoming more of the standard. So it's exactly what you mentioned as well.

Gavin Mooney 38:54

Yeah, I can I can understand that. It's um it's interesting times, isn't it? There's uh a lot of challenges going on, and um I think the only thing, the only positive thing really is that as you say, um we are seeing a surge in the build-out of of renewable energy. I mean, I saw a statistic just a few weeks ago that in March uh exports of solar panels as as well as cells and wafers from China, they doubled in one month. And I mean that's that's just crazy. I think it's crazy because to think that the supply chain can flex that quickly, but also it's it's pretty amazing that the world would react so suddenly. You know, you think that to make an investment decision and to decide to you know build out a solar farm, for example, would would take quite a long time, but it's it feels like this this crisis happened, and then just like that, flicking a switch, people are able to say, right, we need to get some solar panels in, let's go.

Peter Pongracz 39:56

That's a huge thing as well. And you know, the especially on the supply chain side, to be able to react so fast, you know, okay, in terms of China, they definitely have some unique indicators of what may happen, plus a little bit of surplus as well. But ultimately, we will really need to look into our supply chains as well across the globe, right? And and try to vertically integrate or reshore some of those productions. And that's a huge topic here in Europe. You know, we are we are discussing about that for a long, long time. But uh on the other hand, it's going to be difficult to make it financially viable, right? The price we can produce at here in Europe is never going to be as cheap as in China. And also at this point in time, we also don't have the technology to produce those panels at scale. So uh it's uh it's also a bit of a tricky situation.

Gavin Mooney 40:46

It is. I think it's a really valid question on whether Europe. I mean, it's clear that America wants to try and do it itself. Uh, and how successful it will be remains to be seen. But you know, putting a 100% tariff or basically banning Chinese imports is is going to reduce consumer choice. So they may they might have to buy the American-made ones. But in Europe, like you say, you're you're starting from a long way behind where China already is. So China has that huge industrial machine, it's it's already scaled, it's got the efficiencies and the product sort of development and advances. So what how much you know of a price is is a fair price to pay so that you have that supply chain uh certainty. And I'm not sure. As a consumer, would a consumer really care? Would they just want the cheapest panel? I think they probably just want the cheapest one. It's more the the politicians that feel like they need to have a degree of you know energy security, I guess.

Cybersecurity, supply chain risk, and the case for European-made inverters

Peter Pongracz 41:49

Yeah, and also it it's also something that came up at the the the solar power summit uh as well that they kept mentioning energy security and cybersecurity side by side. So, in other words, I think we will see a day quite soon where you will need to be mandated to use X amount of you know modules, inverters, different hardware produced in countries where you can't just be switched off, right? Because eventually if you look at across look at this across the globe, 80% or maybe even a higher number of the hardware is coming from China. And okay, we us here in Europe, we we are uh we have a good relationship with them, but technically speaking, you it's quite easy to turn the power off. And uh it's it's it's a real threat. You know, we had a um uh Russian cyber attack in Poland on uh on some uh uh sites, so that's quite a quite a real threat, and I think that's going to only intensify if if the world continues down this path.

Gavin Mooney 42:50

Yeah, it is interesting, isn't it? I mean, we traditionally think of stocks and flows, and countries for a long time have imported fossil fuels where once you've burnt it, you need to buy more, you need to import more. And so that's a very much a continuous, ongoing dependency. Whereas we think if we buy solar panels, yes, there's a dependency up front, but once you've got them, you know, you're kind of generating your own electricity. But then when you put that in the in the context of, I think it's the inverters that are the devices of concern, isn't it? If if those inverters have monitoring devices in them, communication devices, they can just be switched off remotely, then that is a uh yeah, it's a huge risk. I think is was there a is Europe talking about a law where the inverters are gonna have to be made in in Europe? I think that's something I read recently.

Peter Pongracz 43:41

It's hazy to my knowledge, but yeah, inverters, that's the only part where we are kind of okay, where we can produce uh in Europe uh a meaningful amount, but uh still, you know, there are the other components. Uh so it's it it's it's also something that uh that I I think. It's going to be implemented quite soon. By soon, I mean like one to three years, you know, it will have to be implemented. And I I've seen a great final discussion from uh uh I think uh the energy minister of Lithuania or Latvia. So they actually managed to disconnect from Russian gas in 10 years. So they they saw what is happening, they saw the the Russian forces across the border, and they they just said, okay, no more. So they they have uh created a plan and actually executed on that plan. So they import zero Russian gas at the moment. And that's quite impressive.

Gavin Mooney 44:39

It is lessons for the rest of Europe, really, isn't it? Where it feels like the current crisis is almost a reminder that you know we got a warning a few years ago and maybe didn't move as fast as they could have done, and now it's it's happening again.

Peter Pongracz 44:53

I mean, usually we are quite slow to adapt, but uh now I I hope this is going to put some uh wind in our sail and and it's going to be executed on as well.

Gavin Mooney 45:03

Yeah, I hope so too. It's um yeah, difficult times, but times of uh of great change, isn't it? I think

Is hydrogen the last piece of the puzzle or still too far away?

Gavin Mooney 45:11

something something that Europe, maybe you can comment on this. Europe seems especially Germany, seems to be one of the few countries that is still pursuing a hydrogen agenda. You know, we we had a lot of hydrogen hype in Australia uh in the in the last few years, but I I feel like and I don't just mean for for mobility, not for hydrogen cars necessarily, but just just for everything, for long-term energy storage and so on. Um I feel like we've kind of moved past that to a large extent in Australia. But as I understand it, Germany still has a hydrogen plan and they they want to import hydrogen from other countries. And is that for energy storage purposes or uh mostly?

Peter Pongracz 45:57

Well, to my knowledge, and and across Europe, you know, people are viewing this as the last piece of the puzzle. So if you get to like 98% renewables, then maybe hydrogen is the last step to get to 100%. So, you know, once you can store that excess solar long-term in a way uh in a different way, shape, or form that you can mobilize when needed. Apparently that is the that is the last uh last use case. But uh, you know, I was actually chatting about this uh with um uh a good friend of mine, Dr. Marek Kubik, and he's he's an expert on battery storage, and he said, yeah, I mean the hydrogen part could be could be the solution, but it's still uh a long, long way from where it needs to be, right?

Gavin Mooney 46:41

Yeah, it sounds like the when you look at the losses in the end-to-end process, you know, you've got the you generate renewable energy, assuming it's green hydrogen, then we have the electrolyzer to create the hydrogen, and then if we're transporting it, then you know, are we are we converting it to a liquid? Uh yeah, we are we gonna lose some hydrogen in in the ship that that that transports it and and then you know we're gonna burn it to generate electricity at the other end. I mean, yeah. I guess long-term energy storage is just a whole area that we haven't really solved yet, right? There's a few different chemistry batteries that are out there. There's things like compressed air, liquid air storage, but I feel like we haven't really cracked it. And that you know, that probably doesn't matter yet. You know, we we have time. At last, as you said, it's it's the last few percent. If we get to a grid that's 95% decarbonized by 2030, 2035, you know, we're doing pretty well. And then we can worry about the the last few bits.

Peter Pongracz 47:39

Yeah, for sure. I think I think this is the really the last, last question to be solved. But there are some interesting technologies. You know, I I've spoken to a company called uh Polar Night Energy from Finland, and they do uh storage in sand. And that's a that's a really cool tech, you know, that you you build a silo, you fill it with sand, and then that also partially solves the the question of longer uh duration storage. So they can store it a couple of weeks um uh based on that description. So that's that's interesting. And apparently the energy density and and the price is getting comparable to CATL. So that's uh uh an interesting use case that we should focus on a bit more, I think.

Gavin Mooney 48:20

Yeah, I've heard of them. I think Caldera is another one in England. It's it's this is thermal energy storage, isn't it? So I think they they're talking about giving you useful heat out the other side, but not necessarily converting that back into electricity, but actually using it, using it as heat.

Peter Pongracz 48:37

The latest version you can do both. So that's that's a pilot, but uh that's gonna be the holy grail. But for for them, the easiest use case is industrial heat to be tackled and industrial processes where you still have these uh steam uh engines you know uh running the process, but still uh a really good starting point, I think.

Gavin Mooney 48:58

No, it is interesting, uh, and I think we'll we'll see more and more things like that. It's funny because I think they use sand, don't they? I think a long time ago in England, well before my time, it was it was common to when you had a you had a like a wood burning fire in your living room, and so that would be what was keeping the house warm. Maybe it was burning coal. Um, and then you would put a brick in front of the fire, and you know, just a clay brick, and the brick would absorb heat from the fire. And then when you went to bed at night, you would take the brick with you into the bedroom, and of course, the brick slowly discharges or sends the heat back out into the room and kind of keeps your bedroom warm overnight. So it's a very early form of thermal storage, but quite quite effective.

Peter Pongracz 49:43

Yeah, for sure. I mean, most of these dynamics are are just uh rooted in the laws of physics, right? And and and that's what we need to focus on for first principle thinking, right?

Gavin Mooney 49:53

It is. Uh and I guess you know, coming back to the what other stuff we've been talking about, that's that's why the challenges we're seeing in Australia and the and the solutions we're coming up with are probably going to be very similar to the ones that play out in the rest of the world as well. You know, things like batteries, flexibility, and so on.

Peter Pongracz 50:08

And

How Gavin ended up in solar and why he stays

Peter Pongracz 50:09

Gavin, you mean you mentioned the the past already, but how how did you actually end up in solar?

Gavin Mooney 50:14

Ah, yeah, I it's more just a passion, I would say. If you look at my career, I have been working in the energy and utilities industry the whole time. But for me, it's mostly been on the software side for utilities. So customer information systems, billing systems, and increasingly now the software that can orchestrate large numbers of you know distributed energy uh resources. But the actual sort of energy transition is obviously a lot broader than just utilities software. It's it's it's transmission, it's building up generation, um, flexible demand and stuff like that. So yeah, it for me it's just really um a personal passion. Uh it's something I like explaining things to people about, I like communicating about it. I feel like there's a lot of there's an awful lot of misinformation out there, and I think it's really helpful if people can come up with some clear, easy to understand, very much fact and and and data-based analyses to kind of explain things to people and things like why, you know, why a solar panel will generate a lot more energy in its lifetime than it costs to make the solar panel, you know, why putting in a battery is is is going to be beneficial and it's not just going to last five or ten years and and so on, because there's always a lot of people and vested interests trying to slow down the transition, but a lot of their arguments don't don't make sense. And and so I think it helps to have some really clear inputs to help people understand, you know, why we're doing this and why it makes sense.

Peter Pongracz 52:00

And speaking of the data side of things, you're you're certainly doing a great job at it. You know, I actually found you on LinkedIn and I've been following you for a long, long time. And I think you know, the the content you put out there, it's A, really informative and B very easy to digest. So that's that's two of the components that make uh make great content and that reaches the audience, and you know, it's actually absorbed by the audience as well.

Gavin Mooney 52:24

Thank you. Yes, it is something I enjoy doing. Um with content on LinkedIn, it's it's a it's a balance between how to come up with content that's gonna reach a wide number of people, but also content that's gonna satisfy the more detailed, oriented, and technical people uh in the audience. You know, it's it's it's sort of who which which end of your audience are you optimizing for? For example, you know, if I post something about Australia, then the European audience might be just interested in the the headline numbers. They'll be like, oh wow, Australia is sorting so many batteries at the moment, or something like that. But obviously the the people in Australia that are seeing that content, they're gonna be in at the next level of detail and they might want to engage on on the policy or on why things aren't as good as they could be, uh, and so on. So it's yeah, it's always a it's always a balancing act, but it is something I enjoy doing.

Peter Pongracz 53:20

You mentioned that uh you you are contemplating your next move in terms of your professional career. Is there is there anything, any, anything that you can hint on or any direction that you you you that's kind of you know shaping out to be a plan already?

Gavin Mooney 53:34

Yeah, look, I'm having some interesting conversations at the moment. I think I I will be staying in in energy and utilities. Um probably looking at maybe getting more into advisory so that my work can be more closely aligned to the sorts of things that, for example, I post about on LinkedIn and you know, helping companies navigate the energy transition, working out what is the impact for you on this market rule change, for example, um, helping helping software companies navigate the the changing market conditions and and things like that. So I don't think I'll be going very far, but it's it's certainly a very interesting space at the moment.

Peter Pongracz 54:12

Yeah, I mean, there are very very very few people I met who who worked in renewables and left. Uh so I think that's definitely a bug. If caught, you know, it will never let you go.

Gavin Mooney 54:24

Yeah, I I think you're right. It's it's like an electric car, isn't it? How many people drive an electric car and and then say, well, I'm never going back to never going back to petrol now.

Peter Pongracz 54:32

Gavin,

Australia's cheaper home battery scheme: 380,000 installs in ten months

Peter Pongracz 54:33

we actually talked a lot about batteries, but you have a great example about uh the Australian home battery scheme. So maybe maybe let's discuss a little bit more about that.

Gavin Mooney 54:43

Yeah, sure. So you know we we talked about grid-scale batteries where Australia is installing a lot and probably at a faster rate than any other country relative to the size of its grid, but also we have now have a federal scheme, a federal government subsidy called the Cheaper Home Batteries Program. And it started in July last year, and it subsidizes roughly a third of the cost of a home battery, and the uptake has just been um vastly in excess of what was expected. So it's been going for 10 months now, and we've seen 380,000 batteries get installed, which is you know, in in 10 months, that's that's more than a thousand per calendar day, let alone per working day. Um, and that adds up to nearly 11 gigawatt hours of storage. To put that in context, that first big battery that was installed in Australia, you know, nearly 10 years ago, well, the amount of storage Australian households have installed in in those 10 months, it's 70 times as much storage as that first grid scale battery we had. So it's it's a really staggering amount of storage. Um, and I think it's already having an impact. You know, we are we are seeing an increase in in midday demand, and those home batteries are sort of some of them will be feeding back into the grid as well to help meet the evening peak. But even if they're not, it's meeting that household demand in the evening peak. And so it is tending to reduce peak demand and hence prices. So it's been a hugely successful program.

Peter Pongracz 56:20

Wow, that's uh that's a huge amount, you know. 11 gigawatts. Uh I I think, you know, to to roll that out, it would have probably taken the same uh amount of time to do 11 times one gigawatt as well. So it's uh it's a huge achievement.

Gavin Mooney 56:34

Yeah, I think it is. It's fast, it's also distributed. And you know, this is just the first 10 months. And the scheme's going to run for years. So just imagine, you know, what we're going to look like by 2030.

Negative prices, curtailment, and what rooftop solar has done to the grid

Gavin Mooney 56:45

I guess we we didn't talk too much about the consequences of all that rooftop solar. I suspect these are consequences that other markets have seen as well. But you know, I said how households generate far more electricity than they they need to consume, especially in the middle of the day. And so that all that excess electricity is just exported to the grid. It doesn't have to be dispatched, it doesn't go through any sort of competitive bid process. It's just sent to the grid and the grid has to take it. Uh and so you end up with very low grid demand. And that means we can get negative prices. And, you know, some people think negative prices are a failure of the market, but I think it's really just a market signal showing that at the moment we've got you know more generation than than the system needs right now. Those negative prices come with problems for some large-scale generation. You know, it leads to economic curtailment. So wind and solar farms might have to turn off when prices are negative. But you know, this is in some ways that the batteries is an example of how how the system's now adapting to that.

Peter Pongracz 57:52

Yeah, and that's that's a really important component as well. And you know, I I think the more people understand not just their own domestic consumption, but the system at large, the the more stable the system will become and and and ultimately everybody will benefit, right?

Gavin Mooney 58:08

Yeah, i exactly. Um I feel like it is an energy transition. Um, it's not going to be done overnight. And so this is a natural kind of consequence. I think, you know, rooftop solar paved the way to a market that incentivizes batteries in a way. It created the opportunity for batteries to be to be economically sound. And also, you know, the negative prices mean it's great for batteries, they can be paid to charge up in the middle of the day, but at some point those prices won't be negative anymore. And like we said, the but the spread, the arbitrage opportunity get gets reduced. But that's probably a good thing in many ways. It leads to a less volatility and a more stable system.

Peter Pongracz 58:52

True. And you know what we are seeing here as well, that you know, the the flexibility aspect always also translates into not just uh the flexible discharge, but also flexible production as well. So, you know, Europe traditionally, you until 2024, you know, you you really saw a small percentage of projects built with trackers, but uh now, especially in the south, it's becoming more the norm. And even in Germany, you know, due to the flexibility and the negative pricing, we see more and more trackers being installed. So you can respond a little bit more flexibly to that demand as well. So that's um that's also another part of the system.

Gavin Mooney 59:31

Yeah, it is. Um I think that's that's one of the broader lessons we're seeing in Australia as well, that the high renewable systems are increasingly rewarding flexibility and and responsiveness and orchestration in Aberba. They're gonna be the useful tools going forward.

Peter Pongracz 59:46

And on that note, Gavin, I I think we are getting to the end of our time. If if you could give a shout out to the audience, who would you like to speak to and how should they reach you?

Gavin Mooney 59:56

Yeah, look, I'm pretty active on LinkedIn. As we were just saying, that is probably the best way to get in touch with me. So you can look me up there. And uh yeah, I'm always happy to hear from people. I get quite a few messages and things. I try to respond to as many of them as I can. Um, but yeah, always happy to connect with new people.

Peter Pongracz 1:00:12

Awesome. So we will link uh to your LinkedIn profile in the show notes below. And on that note, Gavin, thank you very much for for sharing your knowledge about Australia and uh and the whole world. And uh let's do this again soon.

Gavin Mooney 1:00:24

Thanks, Peter. Sounds great.