Antinuclear

Electricity utilities scramble now to embrace domestic solar and storage systems

Energy companies embracing domestic solar and storage systems in scramble to protect profits, ABC News 14 June By business reporter Stephen Letts The battle lines in the fight to power the nation are rapidly being redrawn as the emergence of domestic solar and storage systems have forced the big utilities to scramble to protect their shrinking fiefdoms.

Six months ago, the big three power companies – AGL, Origin and EnergyAustralia – were spending considerable time and resources fighting to have both large and small scale Renewable Energy Targets (LRET and SRES) either cut or abolished.

In the past few weeks the rhetoric has been all about the lucrative growth opportunities for their small residential solar businesses.

Both the big listed Australian utilities – AGL and Origin – have told their recent investor briefings that their traditional businesses in the National Electricity Market (NEM) do not exactly have bright prospects.

Coal fired generation in decline; demand and prices hit

A recent report from Bloomberg’s New Energy Finance division found that, since 2010, electricity supplied by fossil fuel generators has declined by 9.5 per cent.

Electricity demand has fallen by 6.7 per cent over the same period, while the Australian economy has grown by 9 per cent.

On NEM figures, prices have fallen on average by 12 per cent a year between 2007 and 2012, making coal generation increasingly marginal.

Price declines have impacted fossil fuel generators the greatest, as they have fuel and operating costs not borne by renewable assets and are more exposed to spot prices,” the Bloomberg research pointed out.

“The market revenue of fossil fuels in the NEM has declined by more than half since 2007, after accounting for the pass through cost of carbon and the wholesale energy sold or offset by renewables,” Bloomberg found.

AGL, Origin and the Hong Kong-owned EnergyAustralia – which accounted for more than a third of the NEM’s capacity – say they are not contemplating a full scale retreat from coal burning generation in the short term but, at the same time, they are not deploying more resources there.

In a sign of the times, Alinta – another sizeable generator – last week decided to close two uneconomical coal-fired power stations, as well as an associated coal mine in South Australia.

Alinta cited the glut in power supply, driven by falling industrial demand and increased renewable supply, for the closures and the loss of 400 jobs………

Battlefront now on the other side of the meter

The battlefront has now moved to the other side of household electricity meters – away from the coal valleys, grid and the NEM – and onto suburbia’s rooftops.

Shifting the battle just the 15 centimetres to the other side of the meter has massive implications for both the utilities and consumers.

A survey conducted recently by Morgan Stanley’s utilities team found there was a strong level of consumer interest in escaping the grid.

Around half the households surveyed expressed an interest in solar and storage systems at around the $10,000 price point with a 10-year payback period.

Morgan Stanley argued the utilities’ cost of not adapting to the challenge would be substantial………

The storage scramble is on

Last month AGL made the first significant foray into the ‘solar-plus-storage’ household market, announcing its Power Advantage product from its New Energy division.

The lithium ion battery AGL plans to sell is capable of storing 6 Kilowatt-hours (kWh) of solar energy and is suitable for mid-sized household solar units.

AGL told its investor presentation that the New Energy division would have a separate culture from its declining core grid electricity business and it would be central to its longer-term transition away from coal.

It is an understandable move given AGL’s forecast that the household solar market could worth as much as $2 billion a year by 2030……..

Days after the AGL presentation, Origin laid out its own plans to become the dominant player in solar.

Since 2001, Origin has installed 80,000 solar units making it the second biggest player in the market.

Origin has been driving its growth using a rather different tactic to AGL.

Its strategy is based on pay-as-go, power purchase agreements with “zero cost” up-front.

Customers will be committed to take electricity off the panels on seven to 15-year terms at prices up to 70 per cent below current tariffs.

The consumer gets immediate financial benefits and Origin locks in long-term relationships aimed at reducing its “churn”…….

The third big player – EnergyAustralia – is still testing its solar expansion and has a partnership with US-based Enphase Energy.

It is believed EnergyAustralia has been looking closely at developing a storage package in partnership with Tesla’s headline grabbing Powerwall battery next year as well.

Battery storage prices are tumbling……….

June 17, 2015 - Posted by Christina Macpherson | AUSTRALIA - NATIONAL, solar