Australia’s Rooftop Solar Revolution: A Postcard from the Future — Episode 238 of Local Energy Rules

Chris Nelder:
Currently the simple payback period for a rooftop solar system — and mind you, that’s at an average size of around eight kilowatts, which is much larger than a typical American rooftop system — is maybe four years, four years simple payback.

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John Farrell:
In what country do more than one in three households have rooftop solar? And where can you pay less than a dollar per watt to have rooftop solar added to your home even cheaper than a large scale solar project? If that seems upside down, perhaps that’s because we’re talking about Down Under. Joining me in May, 2025. Chris Nelder, host of The Energy Transition Show came on to talk about his recent research trip to explore the energy transition in Australia, and he has a wealth of information to inform American efforts to use all the resources and rooftops that we can. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a podcast about monopoly power, energy, democracy, and how communities can take charge to transform the energy system.

John here, with a quick listener’s note: I had a terrible case of laryngitis when recording this podcast. So, despite the best efforts of our production team, I sound pretty raspy. I hope you can listen past my voice for the terrific story of Australia’s solar success with Chris Nelder. And my apologies for the less-than-ideal audio.

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John Farrell:
Chris, thanks so much for joining me for Local Energy Rules.

Chris Nelder:
Thank you, John. It’s fun to be on your show for a change.

John Farrell:
I love to ask this of all my guests, but I was kind of curious, how did you decide to host a podcast focused on the energy transition? What was your path to becoming a podcast host discussing clean energy?

Chris Nelder:
Well, it really started with a decade of writing about energy as a freelance journalist, and so that was my gig for a decade. And then I was doing that in addition to a number of other jobs that I had at various NGOs and then, well exactly 10 years ago, basically, I believe it was May 2015, my business partner Justin Richie, pitched me on starting a podcast and basically made me an offer I couldn’t refuse. He said, look, we’ll do all the backend stuff. We will set everything up. We’ll send you the hardware you need, we’ll show you how to use it. We will set up everything on the backend. We’ll deal with all the software and engineering and the customer support and everything else if you’re willing to create the show. And so I couldn’t very well turn that down. As it happened, I had been in development on two other podcast concepts actually.They’re originally going to be radio shows and we weren’t able to make those fly. We recorded a couple of pilots with some other guests and before I even had this conversation with Justin and we had shopped the pilots around to public radio and so on and couldn’t find any takers, and so I was already primed to do an audio product when Justin pitched me on doing the show and then that was an offer I couldn’t refuse. I don’t have to do anything except make the show? Alright! And I didn’t even have to take a dime out of my pocket. He took care of everything. So that’s how we launched the show. That was 10 years ago when we first started really doing serious work on it. And the first actual episode launched in October of 2015.

John Farrell:
How did you decide to have this sort of, broadly, the energy transition be your topic? I’ve seen a lot of other energy podcasts including my own, that are a little more narrowly focused on a particular slice, but one of the things I’ve really appreciated about yours is you try to really encompass all of the different components, the policy side, the technical side, was that part of the original plan or just something that developed over time?

Chris Nelder:
Yeah, it’s a good question. I did want to cover the whole concept of the energy transition right from the get-go, but I also really wanted to kind of stay what I feel is sort of narrowly within that lane of energy transition because there have been so many people, our listeners too over the years who have said, oh, you really need to talk about farming, you really need to talk about agriculture, you need to talk about buildings and technologies like that more and so on, all these other things and environmental topics, sustainability topics that are really well outside the bounds of energy transition. And I have studiously kept to our lane here on energy transition because I feel like, well first of all, that’s where I have actual domain expertise after over 20 years of study in this area and that’s where I feel like I really have something to offer, but also covering everything else, you can’t really do it well. When Justin asked me what I wanted to name the show and we kicked around a lot of ideas for anybody who’s ever been in a band they’re familiar with that little game come up with band names and the more I thought about it, the more I thought, I think what this is about is the energy transition. Now 10 years ago that was not clear. 10 years ago it was barely a term that anyone was using, but I really felt strongly that that’s what the evolution of the energy system was moving toward and that was going to be the actual name of the game even before most people had realized it and they were just more broadly talking about energy or about specific industries within the energy system. I really felt strongly that because of the imperative of dealing with climate change and all the implications that has for the energy system, that the right way to focus it is around the transition. And so I said, you know what? Let’s just keep it simple. Let’s just right on the tin what it is. It’s about the energy transition, let’s call it the energy transition show. And that felt like a pretty bold move to make at the time because again, that was not a term that was being widely used, but I really felt strongly that the world would come to us if we just stayed focused on that and by golly, it did.

John Farrell:
Any temptation to use the German. I think I do recall that there is a term in German for energy transition.

Chris Nelder:
Energiewende

John Farrell:
Yes.

Chris Nelder:
Yeah. Well we have used that word many times on the show, but in the context of the German Energiewende,

John Farrell:
Fair enough.

Chris Nelder:
Or the European one because really the genesis of the whole European energy transition really was there in the German Energiewende that was already well underway. Something that a lot of people who are maybe newer to the study of energy transition don’t realize about Germany is that they started their energy transition really in the 1970s and it was not about climate, it was about getting off of nuclear power or rather it was about trying to head off the incursion of nuclear plants being built where people didn’t want them, mainly in sort of rural farming areas. There’s this decades-long history of the Energiewende that came out of that opposition to nuclear power in Germany that then kind of took on a different cast when it became more about dealing with the climate problem. And that’s why a lot of people I think have very mistakenly said, what is Germany thinking shutting down its clean nuclear plants when we need to have as much clean power as possible and blah, blah, blah. You’ve heard all the arguments I’m sure. And they just don’t seem to realize that there was decades of cultural momentum in that movement already, and unfortunately outside of our show, Craig Morris used to have a show and he talked about that a lot. No one seems to know that story or that history and everybody still thinks it’s about Fukushima. It absolutely was not. Although that did become a significant event that led to the final shutdown of Germany’s nuclear fleet eventually.

John Farrell:
Gosh, it’s so funny to you to mention Craig Morris, who I recall being one of my most reliable sources of what was happening in Germany.

Chris Nelder:
Oh, he was the best. Absolutely.

John Farrell:
Definitely a blast from the past there.

Chris Nelder:
Well, he was one of our very first shows that was episode four.

John Farrell:
Wow.

Chris Nelder:
Yep. We had him on the show to talk about the German Energiewende and that whole history back in October, 2015.

John Farrell:
Amazing. Let me ask you about a different country, which is the reason I wanted to have you on, which is to talk about Australia. So let me just cut right to the chase here for you to give the context about why Australia might be interesting to listeners of Local Energy Rules. Just how much better is this solar market in Australia than in the U.S.? What fraction of households there have solar power on the roof?

Chris Nelder:
Well, Australia has the highest penetration of rooftop solar per capita of any country in the world, and they have held that claim for many, many years. For example, by comparison, about 7% of US homes have rooftop solar systems. Australia has about five times that rate of participation. More than a third of houses in Australia have solar, and really those are just national averages in the states of South Australia and Queensland, which are a bit more rural. Nearly half of all homes have rooftop solar, but also the commercial and industrial and utility sector solar is really strong. Commercial industrial rooftop solar system installations are getting installed even faster than residential installations. In 2022. 1.4 gigawatts were installed on residential roofs and 1.5 gigawatts on commercial and industrial roofs, and in fact, rooftop solar is getting installed faster than utility scale solar, which is kind of also unique I think. I’m not sure if that’s true in any other country and some of these installations are really huge. Up until about a year or two ago, Australia’s largest rooftop solar installation was 10 megawatts, which is huge. The largest rooftop solar installation in Australia now is the Moorebank logistics park in Sydney, which is 60 megawatts of rooftop solar and 150 megawatt hour battery energy storage system. They’re actually looking to pretty much double that up to 130 megawatts of rooftop solar. Just a few more numbers I’ll throw at you. Rooftop solar in the first quarter of 2024 in Australia produced 13% of the country’s total energy supply. Now that’s more than grid scale solar, more than wind, more than hydro, more than gas, and at certain times of the year, rooftop solar supplies more than half of the main grid’s power. So this is just a remarkable circumstance here. And Australian experts expect that rooftop solar will continue to grow rapidly until it gets to about 70% penetration of all rooftops because that’s probably the reasonable maximum after taking into account apartments and shading and all that stuff.

John Farrell:
I’m so glad that you had all of that context you can provide us. One of the things I did want to say though about the speed of the installation of rooftop solar is that before California made its decision to slash net metering compensation, the commercial and residential sectors were adding more on an annual basis solar capacity than the utility scale sector in California. That was covered in a really good Canary Media piece about some of the implications. So I think it is a really important lesson for people that if we’re in a hurry for whether you’re motivated by climate or you want to see savings distributed to folks in terms of energy bills, that we can go there very quickly even when we’re doing it in small little bites.

Chris Nelder:
Yeah, absolutely. And it’s really just all about the structure of the incentives. What sort of utility tariff are you working with, what sort of costs and how does the whole industry work?

John Farrell:
So I want to talk about costs actually in terms of Australia, this is one of the things that just blew my mind when I first heard about it, but how much does it cost to go solar in Australia?

Chris Nelder:
Well, Australian rooftop solar systems typically cost around a $1.30 a watt before subsidies, and that’s installed under a dollar a watt fully installed and grid connected after subsidies. So the final cost is under a buck a watt and a typical rooftop solar system can be done within a month start to finish. Like if you call up a solar installer today and say, I want a system on my house in a month, it’s going to be there installed, fully grid connected, and ready to go. By contrast, the system cost in the U.S., I had to go actually refresh my numbers on this because I’ve been out of that game for quite a while, but it looks like the typical system cost in the US is two to three times higher in that sort of $2 and 40 cents to $3 a watt kind of range and installations can take months. Installing a rooftop solar system start to finish in a month I think is probably quite rare in the U.S.

John Farrell:
It’s so interesting. I have my own experience going solar a few years ago and it was really fast once they came out to put the hardware up. I think they did it in two days, but there was a lot of wait before that for the permitting and the interconnection agreements and whatnot, and then there was quite a delay afterwards before the utility turned it up. So it was sitting on my roof and my little app was telling me, oh, we’re generating electrons, but they’re not going anywhere until the utility was willing to come out a few weeks later and turn it on. So definitely been my experience as well.

Chris Nelder:
I mean I was in the solar business 20 years ago in California designing and selling rooftop solar systems. Back then, obviously it was quite different. We hadn’t really gotten far down the cost curve yet, but things were really, really slow and we couldn’t even get modules. In fact, part of the reason I got out of the business was because we couldn’t get modules. I couldn’t get my jobs finished and I’d collect a deposit from a customer, sign a deal six months later or nine months later, they’re calling me going, where’s my solar system? And I’m saying, man, we’re trying so hard to get you modules, but we can’t get ’em because Germany’s feed-in-tariff was so strong back then that they were sucking up about half of the world’s supply of modules and we just couldn’t get ’em. But back then we were looking at more like six bucks a watt and yeah, it would take months. It would take months and months.

John Farrell:
So I’m sure that you got some taste of this in your visit to Australia, not only seeing how many homes had solar on them, but I’m curious, how did Australia make rooftop solar so inexpensive and what lessons might it offer for how we do solar here in the U.S.?

Chris Nelder:
Well, I mean first and most importantly, they had a subsidized net feed-in-tariff at the state level in South Australia starting in 2008. That’s when it really started, and that really kickstarted the uptake of rooftop solar in the country. It was 45 cents a kilowatt hour net, which is a very healthy feed-in-tariff, but it varied around the country. The highest one at that time was a 60 cent gross feed in tariffs in New South Wales. At that time, the retail price was around 25 cents, so if you’re buying electricity from the utility at 25 cents and you’re getting paid 45 cents to export it to the utility, obviously you’re making money hand over fist with the feed in tariff. And so that was the most important thing that really allowed the solar industry in Australia to catch fire. South Australia also had a really concentrated retail electricity market, which was heavily dependent on gas generation, and gas is very expensive, so the combination of high retail prices for electricity plus the feed-in-tariff from the government and obviously a very good solar resource made deploying solar just a no-brainer for most people.
Whereas in contrast to the U..S, it wasn’t just rich people who took advantage of the subsidies and put solar on their roofs because actually the rich are relatively priced insensitive. Instead, it was suburban and regional areas with people of middling economic status who embraced rooftop solar. In fact, typically it was families that were nearing retirement or post-retirement who are worried about their electricity bills increasing while they’re on a fixed income. And in fact, to this day in Australia, the wealthiest areas still have the lowest proportion of rooftop solar installed currently. Currently, the simple payback period for a rooftop solar system, and mind you, that’s at an average size of around eight kilowatts, which is much larger than a typical American rooftop system is maybe four years, four years, simple payback.

John Farrell:
It’s just so remarkable and it’s so interesting too. I think hearing you start by talking about the feed-in-tariff and the very high rates that it paid people to produce solar, folks might think, oh, well that just seems excessive, but that was also the way that we got the solar market started in the U.S. we just used this odd combination of multiple income sources. You had a tax credit on the one hand that you would eventually get to buy down the upfront cost. If you lived in California, you might have a production incentive. In other states there was a rebate that maybe came from the utility that was upfront. So this idea of giving a subsidy to get the industry started really is pretty much the same. But I think what’s interesting about Australia then though is their initial investment obviously drove down the cost of solar, and that was true in the U.S. too, right?
We’re still much lower than we were when you were doing solar installations 20 years ago, but for some reason we’ve sort of plateaued in terms of our cost. One of the things I thought was really interesting is that in listening to the energy transition show, you had several podcast interviews with folks in Australia and it does seem like there were a few things. Maybe it was simple solar installation certification for electricians. It didn’t sound like there was a local permitting in the way there is here where it can be different for every city. There was simple interconnection. There was the feed-in-tariff, which is kind of like this all in price that you would get. Yeah, I don’t know if you could just walk through some of the things that you heard about or already knew about that Australia was doing to drive that price down so low.

Chris Nelder:
Quickly to comment on the feed-in-tariff aspect. The feed-in-tariff really was key to getting the solar market started in Australia. It was also, again, as I mentioned earlier, the reason why we couldn’t get any modules in California because Germany’s feed-in-tariff was so strong 20 years ago. Japan used a feed-in-tariff to get its solar industry moving, and in fact, I wrote an article about 15 years ago about why the U.S. should have a feed in tariff and speculated about some ways that it could even be done administratively by the president if the various state utilities wouldn’t go along with it. Unfortunately, America never went down that path, but as you said, there was the California buydown program that was the big incentive when I was in the business and then it did go to that production incentive. It’s a very powerful kind of incentive and it’s worked really well to get solar moving as far as why costs are so much lower.
It’s all the things you mentioned in Australia because the economics of rooftop solar are so strong and because rooftop solar is so commonplace, the cost of acquiring a customer is nearly zero in Australia, and that’s a huge advantage over the U.S. where customer acquisition can be one of the largest cost components of a project, just the money they have to spend on marketing and outreach and all the different ways that they use to try to get a customer. In Australia, it sells itself. Solar installers don’t need to spend a lot of time and effort on marketing, and since U.S. solar markets are totally balkanized right down to the local township level with no consistency in terms of what you have to do to pull a permit, interconnection requirements, so on and so forth, the cost of customer acquisition, permitting, interconnection and so on are just so much higher in the U.S. and really there’s no easy way to fix that because we do regulation of utilities at the state level, so every state comes up with its own thing, so there’s 50 different markets. That is not the case in Australia. It’s much more unified. And also things like the electrical codes. The requirements for solar installers are much more onerous in the U.S. as well. In Australia, they’ve got an army of electricians and over there they call ’em Sparkies because they’re really informal. In Australia, I used to think it was really funny that they had a grocery store chain down there called the Fooderie. So if you want some food, you go down to the foodie, you want an electrician you call a sparky, and so they’re out there installing solar rapidly, efficiently and cheaply. The labor cost is much lower, I think, than the U.S. on a sort of system basis. And actually a lot of those installers are small family businesses, and so they’ve been a really important part of the economic basis of the industry. Interconnection processes are also much simpler in Australia because there’s again much more uniformity in the electrical code, interconnection eligibility requirements and so on. In some parts of the U.S. like California, there are a lot of what I call tiny kings with tiny kingdoms in these local municipal building and planning departments who used to drive me absolutely insane when I was in the business. They can all require different things and their jurisdictions, and that makes pulling permits a nightmare because what you have to do to pull a permit, what you have to pay, what the requirements are for a system, what kind of documentation you have to provide, what the process is, how long it takes, all of that can vary from town to town. So literally you could have one set of requirements in this jurisdiction and one mile down the road in the next little town, you’ve got a totally different set and then one mile down the road from there, another totally different set That kind of balkanization is crazy making and it adds a lot of cost for those people that are out there trying to sell and install solar systems.

John Farrell:
I find this so remarkable in terms of the complexity. I had always kind of understood that permitting was this barrier and then as the cost of the rest of the system in the U.S. went down, permitting becomes this larger fraction. And we do reward some cities, they get awards or gold classifications for having simplified and low cost permitting in a particular city or jurisdiction can get that. But the thing I hadn’t realized before we were involved in some research this last fall is this issue of the kingdoms. Part of what you were saying is that even if some of the jurisdictions in a metropolitan area have a really great streamlined process, the problem is that it’s still different. So you can have one city with a great process that’s different from the next door city, which also has a great process, but maybe they just use a different software platform or they have a different method of making payment or the hours are different for you to call in to get answers to your questions or even the file naming convention for the design drawings that you have to send in is different.
And the thing that was interesting to me, we were interviewing solar installers about this and I think they were all just kind of like, well, this is just the cost of doing business. We don’t like it, but we understand that these cities have this jurisdiction and we just build our own spreadsheets to try to understand what’s going on. Or I had one guy who was like, I call every single time to verify what the permitting process is like. I get someone on the phone every time I do a solar installation and it’s not necessarily a cost that is line itemed for the consumer of like, well, the permit in this jurisdiction costs $200. It’s just built into the cost of installing solar, and I just don’t think we appreciate until you make a comparison to a place like Australia, how outrageous that is.

Chris Nelder:
Oh, it’s nuts. It’s completely nuts. I had to resort to creating my own little, I had a little folder for every little township that I worked in in Marin County and the East Bay Contra Costa County and Sonoma County primarily because I had to keep my cheat sheets up to date on what each little township required and what hoops I had to jump through in order to pull a permit there. I’ll give you one little anecdote. So in Mill Valley, I could go down to town hall without an appointment, meet my installer down there, and we could pull a permit over the counter. It’d take about 15 minutes. The permit cost was I think 50 bucks. And the only documentation I had to provide was a plot drawing of how the modules are going to be laid out on the roof, a single line drawing for the wiring, cut sheets for the major components of the equipment, and a list, a price sheet, a list of all the components that were going to be installed and what they cost.
That’s it. One permit package, $50, 15 minutes over the counter, here’s your permit, get out of here. Whatever it was, three, four miles down the road in Ross, I had to provide five copies of the permit package and the first piece of that, I had to drive all the way out to the county office and get into their paper archives of the original sales documentation for that property and make a scan. I had to pay a couple dollars to have them give me a scan of the plot of the property, not the house, but the property lines. And then I had to go measure from the outside of the building to where that property line was. This is another site visit for me and then come back and make a drawing on my CAD system of the layout of the property and then the house within it and draw the distances between the outside of the building and the property line for a rooftop solar system, right? I’m not changing the envelope of the building, I’m not moving the building. And then I had to provide extensive documentation on all sorts of details about the equipment and how it’s going to be installed, the number of attachment points, whether the DC disconnect on the roof was going to be vertical or whether it was going to be flush mounted on an angled roof, blah, blah, blah, blah, blah. So the permit package itself would be about five times the size of the one that I had to give or six times the size of the one that I had to give it to Mill Valley. I had to provide five copies of it. I had to give three to the building and planning department and two to the fire department, which is in a separate building, separate office drive over there, give them their copies, and then wait like three to four weeks for them to review it. And then the permit cost was $3,500. That’s four miles down the road from Mill Valley. And in between there were two other jurisdictions that had their own sets of rules. So it is just crazy. I mean all of that stuff adds cost and Australia just doesn’t have those kinds of barriers in place in the first place. So it’s a lot easier to come up with a cheaper solar installation when you’re not having to climb over all that stuff.

John Farrell:
Do you think it’s possible for the U.S. to replicate Australia’s low cost rooftop solar? What would we need to do?

Chris Nelder:
Well, the Department of Energy really did try to persuade states to basically step up their game a little bit and remove some of this friction and come up with a little more standardization. I mean, another thing we didn’t cover yet is that each of these tiny kings and these tiny kingdoms in the building and planning departments can decide for themselves which version of the electrical code a solar system has to be installed to. So I could design a system that would perfectly adequately meet the electrical code requirements in Mill Valley, and the guy in the building and planning department over in Ross could say, oh no, we use a different version of the electrical code. You can’t design it this way. The Department of Energy really did try to identify where all the problems are and get them to start doing things to remove that friction, but I don’t know where that effort stands now for more than 15 years, Galen Barbose and his team at the Lawrence Berkeley National Lab, published an annual report called Tracking the Sun, which detailed all these soft costs of installing a solar system in the U.S. and that’s things like customer acquisition costs, permitting, interconnection fees, all this stuff that we’ve been talking about.
And the Lawrence Berkeley team contrasted the costs of installing the system in the U.S. with countries like Germany and Australia where the soft costs were just much lower, and they tried to identify how those costs could be reduced in the U.S. and they tried to promote that stuff to the states. I don’t know if they’re still publishing that report. Like I said, it was published annually for over 15 years. That’s kind of downstream for me now. I don’t know if they’re still doing it, but actually I’m guessing that’s probably one of the things that’s likely to get disappeared by Trump and Musk’s ongoing project of dismantling the energy department along with the rest of the federal government. So who knows? But that’s the kind of thing that would really make a difference. And then of course, eliminating tariffs for modules imported from from Asia, but it looks like we’re going to be waiting at least another four years for any action on that front too. I mean in Australia, the actual cost of modules is now so low that it’s really sort of a trivial part of the system cost. In fact, installers routinely push their customers to install the largest systems possible because most of their project cost is now in the installation labor. So yeah, it’s a radically different kind of context.

John Farrell:
Let me just sort of recap something though that I think you articulated really well. So you not only have these thousands of tiny kings and tiny kingdoms, then you have sort of state level policy regulation, which may vary from utility to utility around interconnection. There might be a statewide policy, but states often have different levels of scrutiny over municipal and cooperative utilities versus investor owns. So now you have a layer on the electricity system that’s balkanized that doesn’t even necessarily overlap with the balkanization that you have at the municipal level. And then you have obviously significant differences between states around code adoption and enforcement, which you also mentioned. So yeah, it is I think striking how much of Australia’s success is kind of unifying those policies and practices across the entire country and how much the United States has, how much distance we might have to cover. I’ve always been hoping that there might be some analog in some other industry where we have more standardization. I haven’t seen it yet and not expecting that you would know, but yeah, I don’t know. It’s remarkable how complex this is to be in the business of doing solar. So a lot of admiration for people who are willing to stick with it.

Chris Nelder:
Yeah, it’s nuts. And I was just working within the Bay Area, I was just working in three different counties. I mean, if you’re working for a national outfit, you’re dealing with tens of thousands of variations that you have to work around. California actually published a handbook in 2019 called the California Solar Permitting Guidebook, Improving Permit Review and Approval for Smaller Solar Systems, which was an attempt to solve this problem somewhat. And that guidebook outlined what actions municipalities could take to reduce the soft costs and speed up project timelines because there were obviously all the people working in the solar business in California had been screaming about this stuff for years and years and years. And finally, the legislature, I guess it was, or maybe it was even the governor’s office, I don’t remember, decided, okay, let’s at least try to encourage the utilities to start moving toward a unified system or set of requirements at some level. I’m not sure if other states have done likewise or for that matter how many California municipalities took that advice. Unfortunately, I’m not really up to speed on state level solar policies anymore. I got out of the solar business 20 years ago.

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John Farrell:
We’re going to take a short break when we come back, I ask Chris about the impact of electricity prices in Australia on the adoption of rooftop solar, whether having an independent grid operator for the distribution grid makes a difference and in what ways Australia is a postcard from the future for managing lots of renewable energy. You’re listening to a Local Energy Rules podcast with Chris Nelder, host of the Energy Transition Show about the lessons he learned in a recent research trip to Australia.
Hey, thanks for listening to Local Energy Rules. We’re so glad you’re here. If you like what you’ve heard, please help other folks find us by giving the show a rating and review on Apple Podcasts or Spotify — five stars. If you think we’ve earned it. As a bonus, I’ll gladly read your review aloud on the show if it includes an energy related joke or pun. Now, back to the program.

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John Farrell:
We were part of a group in Minnesota that was having conversations with legislators about simply preempting local permitting in order to try to level out some of the balkanization because again, that problem of even if you have a good best practices guide, unless cities are actually adopting things that make them identical, you still have to have that folder for every single community. Maybe now it’s a virtual folder, but you still have to have the database. So I don’t know, it’s going to be interesting to see what comes of it.

Chris Nelder:
That’s right. Well, and of course anybody in this country who really would try to make a strong case for setting national standards and eliminating some of that friction at all these different municipal levels would probably just be accused of being a socialist.

John Farrell:
Right. Let me turn to a different topic or a related topic, which is about electricity pricing. So obviously people who are following rooftop solar are likely familiar with what’s going on in California, and this question kind of is sort of tied into that, but I was curious, how much does the price of electricity matter in Australia’s solar adoption? Does the low cost of solar make it irrelevant? And I say that just because in so many jurisdictions in the United States, we use this policy Net Energy Metering rather than a feed in tariff or other mechanisms to compensate solar owners, which means that how much electricity costs is actually a very important input into whether or not it’s going to pay back to go solar.

Chris Nelder:
Well, I mean the price of electricity is extremely important in Australia. It’s the number one reason why they have a world-leading rooftop solar adoption, because their policies and pricing have made it, as I said, an economic no-brainer for homeowners to install solar instead of just continuing to pay high grid power prices due to high natural gas prices. And that’s even with the solar subsidies declining on a schedule year by year. So yeah, having a high grid power price is certainly to your advantage if you’re trying to get solar installed.

John Farrell:
One of the things I am also kind of curious about is the differences in some of the grid structure. So if I understand it correctly from listening to your interviews on the Energy Transition Show, a big difference between Australia and the U.S. is that the grid operator is actually independent from the utility companies, the ones that own the power plants or sell electricity consumers. I’ve written some about how U.S. utilities can use their grid operation function in anti-competitive ways, both at the transmission level and at the distribution level. Is this idea of having an independent grid operator, something that we should be thinking about in the U.S. to encourage more distributed energy adoption like rooftop solar?

Chris Nelder:
We should be a little careful about our terms here. So the grid operator, as you call it, in Australia, is known as the Australian Energy Market Operator or AEMO, and basically they operate the transmission grid and the wholesale market, and then below that you have all the distribution utilities, and many of them are actually competitive in Australia. It varies from state to state like it does in the U.S. and then there are some states like South Australia where the distribution grid operator doesn’t do any of the above. They don’t do generation, they don’t do wholesale market participation, they don’t buy or sell electricity, they just operate the distribution grid. And so they actually have a kind of separation between the distribution grid operator and the utility actually is selling the electricity in a way that we don’t have here in the U.S. I mean the utility industry in the U.S. is really very complex. There are some utilities that are vertically integrated monopolies, which is I think primarily what you focused on, but then there are also the so-called deregulated or restructured states where the generation business is competitive and separated from the poles and wires and billing part of the business that the utilities still run, and that’s just on the generation and distribution side. In the wholesale markets and transmission networks in the US you’ve got the ISOs and the RTOs, again, which is comparable to AEMO, the Australian transmission grid operator. There’s a whole other set of complications within the ISOs and the RTOs where utilities can prevent competitors from building more transmission lines outside of the utilities control. We did a whole episode on that in fact with Ari Pescoe last year, episode 227 on FERC order 1920 if you want something really geeky. So essentially all of that complexity adds cost and time to every solar project.
It’s hard for me to imagine how any simple ways to restructure the U.S. utility business to be more like Australia’s. The devil’s in a million details there. I mean, just look at all the details underpinning the multiple failed attempts to convert private utilities to municipal utilities in the U.S. as you and I discussed back in episode 233 of my show last year. But there are certainly ways that state utility commissions can simplify the processes and reduce the cost of installing rooftop solar systems in the U.S. It’s a matter of getting down in the trenches of a utility commission proceeding state by state and battling it out with all those details because there’s always someone, usually a distribution utility, that profits from those additional costs and complexities one way or another. So you have to defeat them battle by bloody battle, and that’s especially true when it comes to fighting for utility rates that are friendlier to solar.
I mean, it just cracks me up every time I hear some other podcaster or utility pundit saying, we just have to put in place friendlier rates. It’s all about rate design. I’m like, yeah, it is all about rate design and obviously none of those people have ever tried to actually fight for a better rate through a utility commission proceeding because I have, and it’s absolutely brutal. It is far more difficult and complex than any of those people imagine. I mean, you can fight for a better tariff to support solar for years and years and accomplish nothing. It’s because the utilities can always afford to hire more legal expertise than you can to draw the battle out longer than you can, to increase the friction and slow everything down in a way that you can’t. And that’s just the way that the game is played in our lovely 50 states of different utility regulation.

John Farrell:
Let’s talk about, one other thing I thought was really interesting in the conversations you were having, which was this idea of managing solar. We started out the podcast by talking about how Australia really is in an entirely different place when it comes to the amount of folks that have rooftop solar and therefore the amount of solar that’s on the grid. And obviously there are some very interesting technical differences between modern renewable energy and fossil fuels in terms of how they operate, your expectations about when they produce, the outages that it can occur from fuel or from other issues. I feel like Australia was sort of like a postcard from the future for what the U.S. might need to learn, U.S. grid operators would need to learn, from managing lots of solar on the grid. I’m curious if you could talk some about some of the key tools that you heard about that they’re using to build a grid that is really taking advantage of their excellent solar resource.

Chris Nelder:
I like that postcard from the future metaphor because that is really why I wanted to go to Australia and do all those interviews. I was there for a couple months and produced six shows from those interviews. Five of them are out now. The final one will be launching in a couple of weeks. But yeah, Australia is very much at the cutting edge and showing the rest of the world how it can be done. In terms of the key tools, obviously storage is a key element at the moment about one in seven households that are installing solar are installing solar and battery systems, and then there’s maybe 20,000 homes with batteries overall now in Australia. And there’s also some strong policy underway to support vehicle-grid integration so that EVs can act as household energy storage and compliment the solar systems. There’s also quite a bit of work underway to expand the use of demand flexibility and other kinds of interactions between the utilities and customer-owned resources, what Australian policymakers refer to as customer-owned resources or CERs, which is similar to DERs, but it’s an important difference of perspective and it’s not quite the same domain of things.
South Australia, again is probably the leading state as far as being a postcard from the future. And as I said, the final episode in our miniseries, which will be episode 251, which launches June 4th, is all about South Australia. They’re doing some amazing cutting edge things there, and they’ll be the first gigawatt-scale grid in the world to be supplied entirely by variable wind and solar, most of which is going to be rooftop solar. And that’s with the help of a lot of distributed batteries, storage and cutting edge demand response technologies including bi-directional communication between the distribution grid operator and the home solar inverters, home energy management systems, all kinds of stuff like that. I mean, as it is now, rooftop solar sometimes meets as much as 75% of South Australia’s total electricity demand, just rooftop solar, and by 2027, so right around the corner, they expect to be operated entirely on variable wind and solar.
So they’re going to be the first major grid in the world to have to cross that threshold. And they are well aware of the many challenges involved in that. They’ve only got one relatively underpowered transmission grid linked to the rest of the AEMO transmission system right now, and so they can’t rely too heavily on being able to import power from other states. There is another transmission link being built between South Australia and the rest of the network, and they will be happy to tell you in South Australia that they have built their part and they’re waiting for their neighbors to build their part of that additional transmission link. But yeah, I mean they are already at the point where rooftop solar supplies the vast majority of their electricity. Sometimes it can supply a hundred percent of their grid demand already, like when the grid demand is low in the shoulder season and that kind of thing.
But by 2027 on an annual basis, they expect to be 100% supplied entirely by variable wind and solar. And again, their distribution grid operator there is just that. It’s just a distribution grid operator. They have no control over whether their customers can install solar or batteries or anything else on their house. They have no electricity sales, they have no generation, they don’t even do metering, so their distribution grid operator there is going to have to figure out how to operate a gigawatt scale grid. Actually, I think it’s close to three gigawatts that is entirely supplied by variable wind and solar without having any control over any of it directly. And that’s just a monstrous challenge, and I was so impressed to see the really smart forward-thinking work that the folks down there at the South Australia power networks are doing to prepare for that day.

John Farrell:
I just have to say that one of the things that really struck me from your interviews, Chris, was the degree to which the sense of optimism and resolve among the people who are doing that grid work. I have this suspicion that it has something to do with what you just described about the role of the grid operator here, which is none of the other things, like no conflicts of interest, no legacy power plants that they own, none of this other stuff. It’s just like, well, this is our job and we have to do it. I feel like in the U.S. you talk about, oh, what if we got to 10% rooftop solar, which is a lot for here, and people are like, oh, well customers won’t build it in the places that we need it and it will require all these upgrades on the grid and we don’t really know if we can manage that much solar.
And I just feel to some degree, these are all excuses for other motivations that some of these folks may have because they have other roles that they play. And I don’t know, it was really refreshing. I don’t know if it was only the South Australia folks in particular, but in the conversations people are just like, well, we’re going to do a lot of wind and solar and we’re going to have to figure out how to make the grid work. And I was like, God bless you. You’ve just accepted that we’re going there and I feel like that acceptance, we’re never quite there in the U.S. in terms accepting that this is how the future grid will look like. It’s like we always are having some sort of political fight about that before we get to the engineering challenge.

Chris Nelder:
Yeah, that’s exactly right. I mean, in many ways the U.S. is a petro state. You really can’t overstate the political influence of the oil and gas industry in particular in the U.S. and the millions of different ways that they have used to delay and sidetrack and otherwise put down the energy transition. Of course now their biggest champion, Trump, is out there actually starting to eliminate the agencies that just collect data and produce databases of climate events and temperatures and all sorts of things like that that are sort of underpinning the argument for action on climate change. All of that is driven ultimately by the oil and gas industry. And yeah, we’ve been fighting that tide since day one in the U.S. and we’re going to have to keep fighting it, and I’m glad that that optimism about Australia really came through to you because that was something I really wanted to emphasize and highlight in our miniseries.
I think it is remarkable and I think it is inspiring and I hope it’ll inspire other countries as much as possible to follow Australia’s example because in many respects, in fact, I’d go so far as to say in every respect, the energy transition is a political question, not a technical one. In Australia, the right wing liberal party has advocated for solar and for the energy transition because it’s good for voters’ pocket books and it increases their resiliency and self-sufficiency. And I should just clarify that the liberal party in Australia is right wing, and so for them, what’s good for voters’ pocket books increasing their resiliency, increasing their self-sufficiency, reducing their demands on the government, those are all good traditional conservative values, and so solar makes sense for them. But again, they’re not being driven by the oil and gas industry. And that kind of conservatism vanished in the U..S long ago, even before Trump took over the Republican party and turned up the dial to 11 on its opposition to the energy transition.
And that’s mainly because of the political power that the fossil fuel lobby has held in America for decades and decades and decades, really more like a century. There really isn’t quite the equivalent of that in Australia. The mining industry is the closest analog, and it does have stakes in coal and natural gas and uranium, but its political power in Australia is just a tiny shadow of the political power that the fossil fuel industry has in the U.S. So those are kind of hard to compare directly. And as for the remaining technical challenges to achieving their decarbonization goals, all of the people I interviewed in Australia who are direct participants in its energy policy and the implementation of that policy, how they manage the grid and so on, they’re all very clearheaded about what needs to be done, and they have very clear plans and government support to overcome the hurdles that have to be overcome still, and they’re all unified in going in that direction. I don’t think anyone has any doubt that it can be done and it will be done. The kind of FUD tactics that’s fear, uncertainty, and disillusion, that the fossil fuel lobby has used a great effect in the U.S. really aren’t that effective in Australia because people know better.

John Farrell:
Are there some lessons for U.S. utilities and utility regulators in what Australia has done, as you mentioned, that they’re just clearheaded and focused on solving these problems?

Chris Nelder:
There are many lessons that the U.S. utilities and utility regulators should be taking from the Australian experience, and I hope they will. This is actually something we discussed at length in episode 204 with Audrey Zibelman, who for several years was the CEO of AEMO. It’s a very complex topic with a lot of elements, which is why she helped to organize what’s called the Global Power System Transformation Initiative, and she was the initial chair of that organization, and their mission is to basically try to increase the dialogue and the exchange of information between different countries so that they can learn from each other’s best practices and experience, and not everybody has to reinvent the wheel. So that’s a really important job that needs to be done, and I do hope that people from the U.S. who are interested at all in solar policy in particular will go talk to some of the people in Australia and see how they’re doing it.
And in fact, I’ve had many people in Australia say, we would love to have some people from the U.S. come over here and learn from our experience. We will welcome them with open arms, we’ll give them a tour, we’ll show them everything that we’re doing. And you mentioned, I think that the Western Australia grid and how curious its system is, it’s mainly a loose collection of micro grids that are not even connected to each other in Western Australia. So it’s a very unique kind of a beast. It’s very rural. It’s a largely unpopulated area where the main industry is mining. There are long distances between places where people and activities are happening, and so the solutions that they need are really very unique and unlike anything a typical U.S. utility might need. It’s just a fascinating place, and so that’s why I really wanted to highlight that in episode 247, which is part of our miniseries.

John Farrell:
One of the things we talked about this in Australia, like you said, that folks are just focused on the problem solving. I assume that means there isn’t really, there has been in the U.S. some sort of utility-sponsored backlash to rooftop solar as we’ve seen here.

Chris Nelder:
No, there really isn’t. I mean, one of the most important lessons I drew from the Australia interviews is that the whole country from the Prime Minister and the members of Parliament right down to the local town councils and the distribution system operators and everyone in between — all the state level ministers and officials — are really very well aligned around the objective, and that is to obtain 82% of their electricity from renewables by 2030. So the whole country is aligned around that objective and they communicate with each other. They make plans together to make sure that they’re all aligned and that the things that they’re doing are all working together toward that objective and they’re just getting on with the job. They really don’t have the kind of intrinsic resistance to the energy transition that we have in the U.S. for the aforementioned reason, but also a whole lot of other reasons, structural, political, economic, and cultural reasons.
And that’s true both within and outside of the utility sector in Australia. There’s been a right wing political faction that has opposed the energy transition in Australia, but it’s not coming out of the utility sector. The Liberal National Coalition commonly and simply known as the coalition or the LNP is an alliance of two right wing political parties, the Liberal Party of Australia and the National Party of Australia, and again in Australia, the Liberal Party is a right wing party. The coalition held control of government from 2013 to 2022, and they did massively slow down the energy transition during that time, but then it lost to the Labor Party in 2022, and the Labor Party is very much pro-transition. The coalition led by Peter Dutton suffered a landslide defeat to Labor in the Australian federal election that took place last week, but their resistance to the energy transition was really cultural and tribal in nature, stemming from decades of animosity by mining interests against environmentalists.
Again, this goes back to the seventies and instead of just arguing against renewables and for fossil fuels like the right wing does in the U.S. because again, it’s driven very specifically by the oil and gas industry in the U.S., this coalition in Australia argued for moving to nuclear power, but they didn’t actually have a serious plan to do it. Even the states where they said they wanted to build nuclear plants had already said, we don’t want them, and in fact, Australia has a law banning nuclear power. Australia has never had any sort of a nuclear industry nor a single nuclear reactor. It was all just nonsense and a delay tactic on the part of the coalition designed to slow down the energy transition and that’s all it was. And fortunately, the Australian people saw right through that and kept Labor in power in the election last week.
And we discussed all this in political context, in detail in episode 246, and just a final note about nuclear, for those who want to understand more about why nuclear power does not have a serious role to play in the energy transition, in my view and in the view of the people we’ve interviewed, we did a whole miniseries on that too last year. That was episodes 209, 219 and 237. Those are not ideological discussions of talking points, by the way, which is essentially all you get in every other discussion you come across about nuclear power in this country. Those episodes are absolutely packed with historical information and tons of hard data that clearly demonstrate why nuclear is a non-starter in the energy transition and why those who are still pushing nuclear are doing so for political, not technical or economic reasons. If nuclear power had to compete on its own two feet on a level playing field with other energy generation technologies, no one would have ever built a nuclear power plant.

John Farrell:
I’m so glad you mentioned that because that was one of the things, the story you shared about the conservative ploy to use nuclear really made me wonder about the role that it has played here in energy transition conversations in the U.S. So I’m excited.

Chris Nelder:
I’m glad to hear that. I wanted you to wonder about that.

John Farrell:
Yes, yes. Well, I definitely did, and I’m excited to go back and revisit the episodes you just mentioned to hear more about more of that deep dive. I just wanted to ask you one last question about Australia, which is do you think low rooftop solar costs act as an inoculation against resistance to the energy transition from whatever quarter it comes from.

Chris Nelder:
Yeah, absolutely. I mean, when over a third of the country has a solar system on their roofs, it’s just not nearly as easy to bamboozle them about alleged costs and risks. It’s not like in the U.S. where over 90% of the country has no direct experience with solar and is easily confused and lied to by deep pocketed fossil fuel interests, especially ones that are aligned with their political party. The energy ignorance of most Americans is easily exploited and has been for decades, but it’s not so in Australia. In Australia, most people are just more familiar with all aspects of the energy transition. Nearly everyone I interviewed now, again, most of them are energy geeks, but they all had an app on their phone that showed them the real time wholesale power prices across the entire country, state by state, and they were happy to just whip out their phone and show me.
Right now it’s negative $45 in this state and negative $23 in that state, and they follow it and they understand it. Everyone speaks kilowatts and kilowatt hours and megawatt hours, knows what their power costs, and they know how to optimize the use of their own solar system, and if they have it, their own battery array around those prices to get the most value out of selling their power back to the grid. They’re just far more energy knowledgeable and that leads them to be more conversant about things like appliance ratings, the size of their EV battery and so on. I mean, I can’t even tell you how many years I have been harassing editors at various media publications that are covering energy in the U.S. begging them to just use the units. Kilowatt hours, megawatt hours, megawatts, homes equivalent is not an energy unit, but they keep dumbing it down and they keep saying that because they’re just so concerned that they just, I don’t know, maybe they think Americans are too dumb to understand what a watt is or what a kilowatt is or what a kilowatt hour is, or maybe editors and media publications are just too cowardly to try to actually teach somebody something.
I mean, we should be teaching these units in third grade. When you learn about all the other units, when you’re learning Roman numerals, that’s when you should be learning kilowatt hours. I mean, it’s printed right on your appliance. You walk up to your microwave, it says a thousand watts on it or whatever. That should mean something to you. And the very idea that we can’t teach people the units, we can’t expect them to understand what’s printed right on the front of their fricking appliance is stupid, and they don’t have that problem in Australia. The more everyday citizens understand energy in a broad sense and participate in electricity markets directly, their own pocketbooks are involved by having a rooftop solar system with a battery backup that they can leverage against a smart utility tariff. The more educated they are and the more they realize what the energy transition solutions can do for them personally, that gets them personally interested, that makes it a whole lot harder to bamboozle them with bullshit and it makes them automatic allies in the energy transition because it brings them power in both senses of the word.

John Farrell:
I love that you use microwaves as an example of energy literacy because it actually matters a lot. If you ever want to heat something up with a microwave, if it has 700 watts or 1500 watts, it’s going to make a big difference in how much time it’s going to take.

Chris Nelder:
Absolutely.

John Farrell:
A very relevant measure. Chris, this has been wonderful to talk to you and to learn so much about what’s been happening in Australia and what we can learn from them. Any final thoughts for our listeners?

Chris Nelder:
Well, I mean, I would just love if all of your listeners would listen to our whole miniseries on Australia. It was a huge amount of work and expense by the way, to go spend months over there and interview all these people and produce these shows. And I’m very proud of them. I think it’s some of the best work we’ve ever done, and I do think it has a very inspirational story to tell that I would very much like people to hear. So there are six episodes in that miniseries and they really tell the whole story of Australia’s energy transition, at least as best as I could do it, and listeners can find the whole [email protected] slash Australia 2024.

John Farrell:
And I just have to say, you’ll never help Chris recoup the entire cost of his trip to Australia, but a subscription to the show where you get access to the full conversation is a hundred percent worth it if you want a chance to really learn more about the energy transition, whether it’s about nuclear power or Australia and rooftop solar. It’s been an essential source of education for me in my work around the energy transition. So Chris, thank you so much for the work that you’ve been doing.

Chris Nelder:
It’s very kind of you to say, John, I’m glad you appreciate it, and thank you for the kind shout out.

*****

John Farrell:
Thank you so much for listening to this episode of Local Energy Rules with Chris Nelder host of the Energy Transition Show about the remarkable progress of rooftop solar in Australia, and what we can learn about making solar low cost and accessible to everyone. On the show page, look for a link to several Energy Transition Show podcasts, including Chris’s six-part series about Australia. We’ll also have links to ILSR’s extensive resources on rooftop solar, including our maps on rooftop solar potential, our annual report on distributed solar-leading states, and our explainer of why U.S. utilities hate rooftop solar. Local Energy Rules is produced by myself and Ingrid Behrsin. With editing provided by audio engineer Drew Birschbach, tuned back into Local Energy Rules every two weeks to hear how we can take on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.