Australian news, and some related international items

Australia’s Solar PV threatening profits of big energy companies

How big utilities propose to kill solar PV, REneweconomy By Giles Parkinson   9 July 2012 A couple of nasty figures have been produced in recent weeks that will give energy companies – retailers, generators and distributors – cause to reflect on how they will manage to satisfy their shareholders’ insatiable appetite for increased profits in coming years.

The figures were inter-related. The first lot were the updated demand forecasts issues by the Australian Energy Market Operators. Demand for 2012/13 is now likely to be nearly 10 per cent below where it was predicted just a year ago, and demand out to 2020 might be 30 per cent below the most optimistic predictions. For an industry that has relied on an unremitting correlation of electricity demand to GDP growth, this has been a shock to the system.

AEMO chief Matt Zema acknowledged the problems facing the industry as it tries to eke out more revenue in the face of declining demand. Essentially, he said in an interview with RenewEconomy, as demand falls and investment in fixed infrastructure increases, the cost per megawatt grows – creating a vicious circle, or what AGL Energy described in a document last week as the Energy Market Death Spiral.

Part of this reduction has been partly blamed on reduced manufacturing, and partly on reduced demand from households and business in response to surging electricity costs, and on the massive investment in infrastructure to cope with peak demand. But the most enduring, and growing factor, at least on the demand side, is the penetration of solar PV. And AEMO forecasts give little consolation to the established industry – the amount of solar PV in the Australian market is tipped to grow 10-fold over the next two decades, and its impact on revenue and profits for the incumbent generators, retailers and network operators will increase accordingly.

Private forecasts suggest that the growth of solar PV could be much greater than that recognised by AEMO. Yingli, the world’s largest solar PV manufacturer in 2012, has said that Australia could, in fact, become the first “mass market” for solar PV in the world – thanks to a combination of declining costs, rising grid prices, lots of sun and innovative financing models…….

Here are some tactics that are being suggested to deal with what AGL Energy managing director Michael Fraser described on the Radio National Breakfast program 10 days ago as the “infiltration” of solar PV and distributed energy. “It’s been a good thing,” Fraser said. “But we will have to watch that.”….

July 9, 2012 - Posted by | AUSTRALIA - NATIONAL, solar |

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