Retailer Harvey Norman on Tuesday announced a deal to buy 5MW of solar panel systems from CBD Energy and its newly merged US company, Westinghouse Solar. As deals go in the electricity sector, it is not a large transaction, probably worth $15 million at best. But in an industry that many predict is about to be turned on its head by new technologies and cost structures, it is a very significant move.
All manner of consultants and industry experts have predicted that electricity services will eventually be sourced from retailers such as Harvey Norman rather than the utilities that currently deliver electrons to the doorstep. Now that costs have fallen to the point where solar PV is a relatively easy sell to customers, particularly in light of what they are being charged by the incumbents, the retailers have started to make their move.
“With Australian power pricing continuing to rise, we are continuing to see very strong demand for solar installations as we are already at grid parity,” said Alan Stephenson the head of the commercial franchise of Harvey Norman, which sells stuff to builders and the like.
Stephenson says Harvey Norman intends to become a leader in the solar business, and the Westinghouse brand appeals for a number of reasons.
One is its “plug and’play” solar technology which is being touted as the big new thing in rooftop solar, where inverters are located in individual panels, and A/C current is delivered to the household. It is regarded as a simpler and more efficient system.
The second reason is the brand name, Westinghouse, which fits nicely into the Harvey Norman suite of products. “Having a brand like Westinghouse to market is a great advantage for us,” says Stephenson, who noted that the rate of uptake of rooftop solar PV – which amounted to more than 830MW in Australia last year – is one of the strongest in the world. (Countries with higher installation rates usually have a significant portion of commercial-scale solar PV, yet to take off in Australia). Harvey Norman had previously sourced its panel through CBD Energy, using the Haleon and Solon brands, but Westinghouse is a powerful brand, and Harvey Norman has significantly upped the scale of the relationship.
The way the industry is heading, particularly as the utilities and networks struggle to defend their costly grid infrastructure, which is forcing them to increase their prices just as new technologies such as solar PV (and then battery and other storage systems) are falling. It seems likely that more customers – both household and wholesale will be looking for electricity as a service rather than a commodity, and new financing packages such as solar leasing will accelerate that move.
This is where smart meters, smart appliances (sold by the likes of Harvey Norman), and technology such as solar PV and battery storage come into play. Some predict that in the near future, new home builders will turn up at retailers to strike a deal on appliances and supply – the role of the utility will potentially be much diminished – unless of course they can buy their way into this new service model, but it will require a much greater understanding of customer needs than they show at present.
This is a good deal for CBD, which might have expected the merger would have given it more opportunities to enter the US market, but may play out the other way.
The sale represents double the 2011 orders for Westinghouse and a major boost for its new product. CBD is also looking to establish a solar panel assembly plant at Stapleton near the Gold Coast, to cater for increased demand as “socket parity” becomes widespread geographically and more apparent to consumers. “We are at the front end of an emerging trend,” said Carlo Botto, the head of strategy at CBD Energy.