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Big energy retailers intensify attack on rooftop solar subsidies

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Big utilities such as Origin Energy and AGL Energy are maintaining their attack on subsidies for rooftop solar, joining forces with industry lobby groups to call for their removal – just as they prepare to roll out solar leasing schemes of their own.

solarEVmacCastleBig energy retailers such as Origin Energy and AGL Energy are maintaining their attack on subsidies for rooftop solar, joining forces with industry lobby groups to call for their removal.

Both Origin Energy and AGL Energy want subsidies for small scale solar removed. In submissions to the review of the Renewable Energy Target being conducted by the Climate Change Authority, both argue – along with the Electricity Supply Association, and the Energy Networks Association – that the costs of the technology have fallen enough to justify the removal of the upfront payments under the small scale technology component of the RET.

“Household solar PV now no longer requires subsidies to be an attractive proposition for households,” AGL Energy says in its submission filed last week. It says the small scale solar target has “already exceeded its original policy intent” of 4,000GWh.

Origin Energy says solar PV is forecast to more than treble by 2020 to more than 13,000GWh. It says that even this estimate may be conservative, considering the attractiveness of solar to businesses, particularly with the rollout of leasing models.

Origin Energy says the case for upfront subsidies is mitigated by its declining cost. It wants changes to the price cap, and the deeming period – both of which can be done by regulation rather than legislation. And it wants the system size reduced to a maximum 10kW from 100kW.

The push by Origin Energy and AGL Energy comes as both companies prepare to launch major marketing pushes into the household leasing market.

Origin Energy has flagged its intentions to one columnist, although it is yet to expand on these plans to shareholders and other media, and AGL is also said to be assembling a 150-strong team in Melbourne to attack the solar leasing market. About 30 people are already believed to have been hired. It has labelled solar tariffs as a “scam”. Meanwhile, green groups put Australia’s total fossil fuel subsidies at $47 billion over the next four years.

Both retailers see the push to leasing models as a way of “locking in” their customers for the long term. All energy retailers lose between one fifth and one quarter of their customers each year, as people look for better deals, and the push to “distributed energy”, the emergence of new energy management programs, and the arrival of new business models is threatening to upset their business models.

The South Australian network operator said this week it could see no future for centralized generation, or for retailers, the two components that “gentailers” such as Origin and AGL combine.

Europe’s biggest utility, E.ON decided last month to split its business in two, argung that its old centralized generators could not work hand in hand with the new distributed model based around renewables, storage and smart grids.

By using their balance sheet to offer zero down leasing models, Origin Energy and AGL Energy hope to capture a much bigger share of the solar market. Their position would be helped if the subsidies could be removed.

Origin was once the biggest installer of solar in the country, although AGL never matched its output despite the purchase of a small specialist solar company.

The CCA is due to present its findings to the government on Friday, but there is no word yet on when the report will be released. It is not clear what, if any, weight the government will give to its report.

The Abbott government earlier this year bypassed the CCA and appointed its own review panel headed by the pro-nuclear climate science denier Dick Warburton.

That review recommended scrapping or scaling back the RET dramatically, even though it found maintaining the current target, or expanding it to 2030, would provide the most benefit to consumers.

The Federal Government is determined to slash the large scale scheme to around 26,000GWh – from its current target of 41,000GWh – although it has said there will be no change to rooftop solar for households.

It has, however, remained vague about the fate of systems from 10kW to 100kW, which provide a similar upfront benefit for businesses.

The Federal Government is also being pushed to fold the small scale scheme into the large scale scheme – which would not impact the household sector very much, but would result in less large scale generation being built.

The CCA in 2012 said there was a case for cutting the small scale target from 100kW to 10kW, although it stopped short of actually recommending that action.

The Clean Energy Council says that the extra costs for a small business to deal with the large scale renewable target – in upfront metering and other costs – would amount to more than $10,000.

Meanwhile, Origin Energy, AGL Energy, Queensland government owned coal generator Stanwell Corp, and their industry lobby groups want the 41,000GWh reduced to a “real 20 per cent” – effectively the Abbott government’s line of around 26,000GWh.

Origin wants no more than 1,500MW of large scale wind generation built between now and 2020.

AGL and the ESAA argue that, in any case, the 41,000GWH target cannot be met.

This is contradicted by the CEC, as well as project developers such as Senvion, Infratil, CWP Renewables and Recurrent Energy, who all point out they have several thousand megawatts ready to go.

The Abbott government, as RenewEconomy has reported before, is driven by its antipathy to wind farms. Hence its support for yet another wind energy inquiry, this time stacked with the most virulent anti-wind campaigners in the Senate.

Recurrent suggests that if the government wants more large scale solar, rather than large scale wind, then it could add a premium for day-time generation, or even consider “banding”, a mechanism promoted by independent Senator Nick Xenophon.

The government, meanwhile, continues to play games with the RET, saying it is willing to re-engage with labor on negotiations, but only if there is agreement to cut the target significantly. Labor says it is prepared to accept some minor modifications and cuts, but will not “be party to any policy that cripples the renewable energy industry.”

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  • barrie harrop

    The solar momentum is unstoppable with over 1m Aussie homes wanting less expensive sustainable energy,not a good time to own poles/wires and huge generating capacity fired by dirty coal.

    Home storage viability not far away say 3–5 years,see lots of stranded assets looming on horizon .

    • adrian hauser

      We already have home storage. Cheap and effective. However with FIT prices lowering the power companies will have to provide a subsidy for daily connection fees for solar owners, which at the moment is continuing to rise rapidly.

  • Neil_Copeland

    I don’t have much of a problem with removing the subsidies so long as the $10 billion in subsidies to the fossil fuel industry is also removed to maintain a level playing field. But I doubt Origin and AGL will be mentioning that one.

  • The Lismoron

    How dare the little people benefit from subsidy!! Big Gen is about to bleed because of BAD commercial decisions (HELP!!! we never saw it coming!!!), Big Gen needs corporate welfare!!!

  • Annette Schneider

    Don’t buy your solar from AGL or Origin! Go to a small, local business.

    • Matthew Wright

      I second that, we need to get it out there
      AGL and Origin hate solar – so why would you buy it from them!!

      • Mark Roest

        They only hate solar, and subsidies, when someone else is making some money on them. They are hypocrites, just like the Koch brothers, buying votes to support their financial interests against everyone else’s.

  • Eric Seegers

    What absolute hypocrites Origin, AGL & Energy Australia all are! On one hand they are getting money from the fed gov. to put in submissions against the RET, which is causing their dinosaur businesses to lose revenue & now they want to do a Coles/Woolies tactic on the rest of the solar industry by leasing systems to their customer base. This will force many small & medium solar businesses to the wall as has happened with the big 2 supermarkets. ACCC, ARE YOU LISTENING!

    I’ve seen what rubbish systems & work their contractors do as I’ve had to fix their stuff ups! I’m a small family electrical contractor with solar as part of our business. It’s good for low income earners to get solar through leasing perhaps, but it would be far better for the whole industry if low/no interest loans could come from the government for those that need it.

    • wideEyedPupil

      or existing installers have access to leading financial products from a third party lender as exists in many other markets.

  • Roger Brown

    Even without subsidy solar power and solar hotwater systems pay for themselves by slashing or killing your bills . Since having solar Hotwater for 22 yrs and 2 yrs with 3Kw solar power , i get a small xmas bonus $164.00 , last year was $250 , so “Service Charges” gone from $25 – $70 a quarter and 5 cents increase in c/kWh.Also got a carbon price refund of $10.84 ?

    • Ken Dyer

      Roger you have done well with your carbon price refund. Only $539 to go of the promised $550 from the carbon tax repeal.

  • Beat Odermatt

    We have too many small minded people in charge of large companies. Instead of using technology and innovation to advance our environment and securing the future of generations to come, they are driven by greed.

  • “Household solar PV now no longer requires subsidies to be an attractive proposition for households,” this view is wrong. If it is not have subsidies, many families would not choose to install solar pv.

    • Ronald Brakels

      If the current subsides were cut it would result in a decrease in installations, a loss of jobs in the installation industry, a stochastic increase in the number of people killed by Australia’s greenhouse gas emissions, and basically unwarranted economic damage. But point of use solar installations would not stop and would continue even without subsides and ovver time would pick up from its decreased level.

  • we should to actively support the public utilities , in order to protect our world, we should support the cause of solar power system vigorously.

  • madethatway

    Oh the greed of electricity companies. Will it never end?

    Yet another example of Aussie (now Chinese owned, like everything else) energy companies attempting to round up and force people into handing money over to them so they can continue with their stinking, oppressive, monopolies.

    Screw the bastards. May every one of them become the unemployed and homeless in Australia – it might give them time to reflect on their greedy, sociopathic business principles.