Antinuclear

South Australia energy prices cut by renewable energy

Wind, solar force energy price cuts in South Australia REneweconomy, By Giles Parkinson  3 October 2012 The rules of Australia’s energy markets continue to be redrawn after the South Australian pricing regulator on Tuesday cut its calculation of wholesale energy costs and recommended that retail electricity prices be cut by 8.1 per cent.

The draft decision by the Energy Services Commission of South
Australia (ESCOSA) may only directly impact the customers of AGL
Energy on standing contracts in that state – but it’s likely to have a
profound ripple effect on the energy industry in Australia.

The decision recognises that the game is changing because of the
growing impact of renewables and falling demand. It also recognises
that the industry’s power over the regulators is waning fast, and its
ability to gold plate its assets – be they networks or generation
plant – is rapidly declining…….

South Australia has the highest penetration of wind in Australia – it
accounted for around 26 per cent of energy supply in the year to the
end of July, overtaking coal and trailing only gas. It also has the
highest penetration of solar PV in the country – 2.4 per cent of its
electricity last year was sourced from rooftop panels – and this has
made a major contribution to reduced demand on the NEM, and in turn to
lower electricity costs. Indeed, AEMO has cut its energy demand
forecasts for the state by 10 per cent, mostly due to a 7 per cent
reduction from the solar-powered residential sector, where one in 5
houses has a rooftop solar installation.

The influence of wind and solar is expected to increase in coming
years. AEMO predicts that solar PV will make up 3.4 per cent of energy
demand in the state in the current year – rivaling the penetration in
Germany, which has had a dramatic impact on wholesale prices. By 2020,
it says, the solar PV could account for 6.4 per cent of demand. It
estimates that one third of solar PV installed in the state is
producing at times of peak demand.

This, in turn, has led to the state’s two coal-fired generators, to be
put in mothballs because the ageing plants can no longer make money
with wholesale prices falling so low. The two plants that once
provided 30 per cent of the state’s energy have now been shunted out
of the market by a combination of wind and solar – apparently more
expensive – and lower demand. This is the future faced by the
conventional energy industry everywhere – in the eastern states, in
the US and in Europe…..
The REC Agents Association underlined the impact of solar PV on
wholesale prices in a research note that also points out that
estimates of the impact of the cost of the small scale component of
the renewable energy target have been grossly over-estimated,
particularly by those seeking to have the target reshaped.

The RAA says the combination of rooftop solar and solar hot water has
caused a 1.2 per cent fall in power consumption across the NEM –
around half of the reduction noted in the market. It estimates this
can be quantified at $20 per MWh, or 2 cents per kWh, and the
contribution of rooftop solar to reducing power consumption is
expected to more than double by 2015 – with further impact on
wholesale electricity prices.

And it notes, the cost of the small scale scheme will continue to
fall. From 2014, once the multiplier is phased out, it will account
for less than one per cent of retail electricity prices. It also notes
that the real cost of the scheme is well below the $40 a certificate
that retailers are allowed to pass throught to their customers. The
market price of these certificates is close to $30…. http://reneweconomy.com.au/2012/wind-solar-force-energy-price-cuts-in-south-australia-39705

October 4, 2012 - Posted by Christina Macpherson | energy, South Australia