The Australian solar industry is preparing for what it calls a “David and Goliath” battle against the country’s biggest generators and network operators. The outcome will likely decide the immediate fate of rooftop solar in Australia, and the pace of the so-called “democratisation of energy” — a contest that pitches households and their solar modules against the centralised utilities that have dominated the industry for a century or more in Australia and across the developed world.
The Australian Solar Council’s launch on Wednesday of its “Save Solar” campaign — it wants to raise the modest sum of $25,000 to help defend the Renewable Energy Target — came as the first of the large state-owned generators renewed its attack on renewables and called for the Renewable Energy Target to be removed.
About 1.4 million Australian households have rooftop solar systems, and the combined capacity of more than 3.1 gigawatts is having a dramatic impact on the way the nation’s electricity market is structured, and on the business models of incumbent generators. It is shifting peaks, and reducing the amount of electricity needed during the day.
Queensland’s Stanwell Corp is closing its 385MW gas-fired Swanbank plant because it is being priced out of the market, although it is going to re-open 700MW of capacity at its Tarong coal-fired generators once the carbon price is removed in what it hopes will be that start a “coal revival” in the Sunshine State.
Stanwell has also signalled its total opposition to the RET — a position that it, and its political masters in the Newman government, have argued before. It says that the RET and other clean energy measures are “distorting” the market. More critically, it is making its operations unprofitable.
Stanwell’s position typifies the dilemma facing incumbent generators and network operators in Australia — and other international markets where solar and other renewables are making big inroads. CEO Richard van Breda complains about the cost of electricity in Australia. But his biggest problem right now is that the wholesale cost of electricity has never been lower since the launch of the National Electricity Market more than 15 years ago.
The low price forced his company to close half of its Tarong power plant in late 2012, and to report a loss from its portfolio of more than 4000MW of coal and gas-fired generation in 2012/13 — a situation that it blamed almost entirely on rooftop solar, which is not only stealing demand, but with other renewables is causing wholesale prices to fall.
In the meantime, gas prices are surging as the massive LNG plants near completion. Queensland households, for instance, will be slugged an extra $68 a year next year as the gas price rises start to bite. Ironically, the cost of green schemes is predicted to fall.
The three-year closure of Swanbank highlights how gas fired generators are being priced out of the market, although it enables Stanwell to sell its gas to other customers rather than burn it to generate electricity. That is exactly what Stanwell did with its excess coal after closing down the Tarong units.
The fact that Tarong is to be re-opened later this year should not surprise. The carbon price will have gone, and Stanwell said last year it hopes that the extra electricity demand from the new LNG plants will spark Queensland “coal revival”. The only thing that can spoil that renaissance, it appears, is rooftop solar and other renewables.