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Rooftop solar enjoys second boom as fossil fuel scare campaign backfires

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Rooftop solar to the rescue Photo: Elenathewise/iStock

Photo: Elenathewise/iStock

It appears the fossil fuel industry’s scare campaign over renewable energy driving up the price of electricity is having the same desired effect that it had back in 2011, when they campaigned against placing a penalty on polluting the atmosphere with global warming gases.

Yep you guessed it – households and businesses are flocking to install solar on their rooftops.

Green Energy Markets’ Solar Report assessment of STC creation data shows that March hit levels of capacity not seen since the days of 45c to 60c premium feed-in tariffs in 2011 and 2012, when there was also an STC rebate that was twice to five times its current level.

All up, we estimate almost 92MW (92,000 kilowatts) of rooftop solar PV capacity created certificates in March.

The chart below details the history of solar PV capacity installs since the beginning of the Small-scale Renewable Energy Scheme. I’ve added a green dashed line providing a 6 month moving average to try to illustrate longer term trends, with the yellow line representing actuals.

National solar PV capacity creating STCs by month of creation – Feb 2011 to March 2017

Source: Green Energy Markets Solar Report

Source: Green Energy Markets Solar Report

The chart clearly shows the surge in sales around mid-year in 2011 and 2012 as households rushed in before STC rebate multipliers stepped down, as well as the loss of the Queensland premium feed-in tariff. Since those heady days of high government support though it’s been a steady decline.

Things for the rooftop solar sector looked particularly grim at the beginning of last year. January 2016 was a shocker (partly symptomatic of Christmas holidays) which was followed by a weak February and March.

It was the worst quarter we’d seen over the history of the Small-Scale Renewable Energy Scheme, barring the very first quarter when the SRES first began in 2011.

Capacity then recovered in the 2nd and 3rd quarters of 2016 but still at levels clearly down on 2014. At this point we thought maybe the market has bottomed and had managed to reach a steady state of about 60,000kW per month.

Then in November and December the market took off reaching levels of capacity similar to 2013 levels.  They held up well in January too, with 65.5MW registered for STCs, which was higher than every other month of 2016 bar November and December, and 11% above the 2015 monthly average – quite exceptional given the holiday period.

At the time we put this down to the well-worn sales technique the solar industry has employed in the past to get wavering customers to sign the dotted line.  This is the threat to get in now before the government pulls down the rebate. While the STC rebate was only dropping by not much more than $50 per kilowatt, sometimes customers don’t analyse these things rationally.

Then February recorded more capacity than November. And now March capacity has shot 16 per cent higher than December.

This has got us thinking at Green Energy Markets that more fundamental and longer term drivers are potentially supporting this increased capacity.

  1. Wholesale power prices doubling

First and foremost contract prices for wholesale power have reached extraordinary levels and these are flowing through to rises in retail electricity prices. 2018 baseload forward contracts are trading at about $100 or more – almost twice the levels when the carbon price was in place.

Power contract prices for next year are now far higher than wholesale spot prices during carbon price period

2013 average prices from http://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard; electricity forward prices from https://www.asxenergy.com.au/ as at 29 March 2017

2013 average prices from http://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard; electricity forward prices from https://www.asxenergy.com.au/ as at 29 March 2017

This is being felt most acutely by business customers, who pay separate fees for their energy consumption from network charges. Our analysis finds that the commercial sector (which we define at 10kW of bigger systems) is now a very big part of the solar market.

Back in July 2013 commercial systems made up 10% of the market by capacity. In December 2016 they were 30% and in March 2017 they were 28%.  We are hearing of business customers seeing their energy charges for new contracts doubling to prices close to 20 cents per kilowatt-hour. Solar represents an incredibly compelling financial proposition at these kinds of prices for energy from the grid.

Ofcourse these higher wholesale power costs are also flowing through to residential consumers but they shouldn’t be generating the same kind of bill shock that we saw back in 2008-2012 driven largely by the Australian Energy Market Commission granting network monopolies a license to print money.

  1. The scare campaign that renewable energy is destroying the world

You could call this the Daily Terrorgraph effect – essentially the tabloids across Australia have discovered that stories alarming readers that the cost of just about everything is going through the roof help sell newspapers. Or at the very least earn tidy commissions via One Big Switch campaigns.

Also, suggestions the lights are about to go out for a third of the year also work well in capturing eyeballs.

While power price rises are undoubtedly real, in reality their impact on household budgets are not nearly as bad as the wall to wall coverage of our tabloids might suggest.  Also, the suggestion that the grid will melt down sending the lights out for a third of the year if we add just one more wind or solar farm is manifestly stupid.

But it seems such media coverage, irrespective of how poorly researched it might be, gets both households and business people very anxious, just like it did when the carbon price was under consideration.  It also helps if you have politicians spreading fear about power bills and reliability.

But it doesn’t quite work out the way the fossil fuel industry that dreamed up the PR campaign intended.  Households and businesses start worrying and think I need to take things into my own hands – and that happens to mean a solar system.

  1. Batteries, electric cars and the emergence of the technophile market segment

This might be called the Tesla effect. Batteries and electric cars still don’t quite represent a readily affordable or compelling financial proposition for many households or businesses.  But they really like the idea of ultimately owning what they perceive to be a really cool piece of technological kit.  At present our evidence is only anecdotal, but we suspect the hype and excitement about batteries is driving customer enquiries to solar businesses.

In the end these customers are baulking at laying down the cash just yet for the battery. But they think I can afford solar now as the first step, and later on when batteries and electric cars become cheaper I’ll get them too.

We would warn readers that before they get too excited, that it’s still early days.  We can’t be sure the high levels of capacity seen from November until March are here to stay. But is starting to look very interesting.

Tristan Edis is Director – Analysis & Advisory with Green Energy Markets. Green Energy Markets assists clients make informed investment, trading and policy decisions in the areas of clean energy and carbon abatement. Follow on Twitter: @TristanEdis  

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  • George Darroch

    So, we’re probably adding 800-900MW of sunny day capacity per year at the moment?

  • George Darroch

    Keep us updated on the yellow line please too. This is interesting information.

  • trackdaze

    Mmm yes unitended consequences.

    In CIA terms this would be called blowback.

    In entertainment terms it would be called the Streisand effect

    And to LNP donors? it will probably become known as the great Abbot priceblowout followed by the frydenberg solar reflex.

  • Rod

    I’ll stop getting angry when I see “ENERGY CRISIS” in my local Murdoch rag then.
    I now know the effect their scare campaign is having.

    • Goldie444

      Rod, I hope you didn’t buy this “Murdoch rag”.

      • Rod

        I paid $1 for a Month of online. I wish I could get my money back!

  • Robert Massaioli

    “March hit levels of capacity not seen since the days of 45c to 60c premium feed-in tariffs in 201”

    Is 201 supposed to be a year?

    • Paul Sheridan

      The Roman’s were still in Britain at this point, and I’m guessing they were as fond of solar as they were of plumbing and the like.

  • Ian

    Just how battery- ready are current grid-tied solar offerings? If you want to have a decent sized system with battery storage it will need to be over 5KW , the dreaded standard 4111.1 seems to be putting a spanner in the works. Lobbying is needed to rewrite this stupid standard, at the very least to limit its scope to power exports only. ie, any size single phase or otherwise inverter, but export limited to 5KW. 900MW worth of solar installers and customers has got to be a powerful lobbying group.

    • nakedChimp

      5kW max is for exporting (back) into the grid.
      You can set a hybrid inverter to whatever you want to export.. even ZERO.

      Grid-tie inverters don’t have this option, they don’t even have the ability to island or be used with a battery, they have only one use – exporting the power into the grid. For this you probably would need a special battery who has it’s own inverter built in.

      The battery behind the meter has no bearings on this whatsoever.
      You can have a 100kWh/300kW battery if you wanted to.

      If they refuse to let you connect for example a 10kW hybrid inverter that has been throttled to export a max of 5kW they are in the wrong IMHO.

      PS: such gear is not widely available yet though (hybrid inverters with more than 5kW continuous).

      • wmh

        A grid-tie inverter can be teamed up with a diverter to heat the domestic hot water, a very cheap form of storage battery, particularly if you already have the electric hot water tank.

  • Chris

    Went over to a mates house and a solar salesman had just signed them up to a 4kw system. He told them it will generate around 15kwh a day which will offset their daily usage of 17kwh a day. After he had left we logged into the smart meter portal, calculated how much of their mid-day usage would be offset and factored in sold power via the FIT and figured out theyd save around $60 a month and would take 12 years to pay off the panels. They tore the contract up straight away. Im an electrician by trade and the amount of people disappointed in their savings from solar panels is astounding, and complaints seem to be growing. Even check the “crappy solar” facebook page, full of complaints. This “solar revolution” is led by dodgy salesmen and is an absolute con….

    • wmh

      But if they fed this excess power into a hot water system then that would use another 4kWh even in summer and more in winter. Think power diverter.

      • Rod

        Yep, or if they split their PV into two strings E and W or North and West and pre-heat/cool their house or switch loads to the solar day.
        So many ways PV can reduce bills. Shading, monitoring tools, incentive to become efficient. Honestly if you intend staying in your own home for 5 years, PV is a no brainer.

        • Chris

          Heating is gas as is most of Vic, A majority of their usage was between 4-8, which consisted of lighting, cooking, TV etc. I told them to make their house as efficient as possible before even thinking about solar…

          • Rod

            Good on you. I wish all installers would give such advice.
            Maybe down the track they might look at a heat pump for heating/cooling and HWS and cut the gas connection.
            Then PV will definitely make sense.

          • neroden

            Absoutely right, always do efficiency before solar.

            Also, if you want to get off of fossil fuels, switch to electric heat pumps (etc.) before getting solar.

    • stephan011

      12 years payback = 8% return on investment. Still a good investment.

      • neroden

        At least if you plan to live there for a long time. You recover 8% of your cost each year for 12 years… and then keep recovering 8% forever after (or until the grid gets way cheaper).

    • melci

      My 5kw system saves us $500 per bi-monthly bill in summer. Guilt-free air conditioning is a wonderful thing. Methinks you did your friend a dis-service Chris.

      • Chris

        Their quarterly bill is around $500… Wouldnt want to know how much your bill is if youre saving $500 every 2 months!!! And no, they agreed saving around $60 per month was not worth it…

        • melci

          Our bi-monthly bill is about $700 (Australian), but that is because everything in our house is electric (we don’t have gas). Our stove, oven, solar hot water booster, pool pump, air con and heating, and we are geeks with big screens, computers and multi-terabyte RAID arrays and NAS’s coming out of our ears. 🙂

          If your friends would save $720 per year with a PV system, it’d take 7 years to pay off a 4kw system which is warranted for 20 years of life here in Australia. Why didn’t they think that was worth it?

          • DoRightThing

            Good on ya!
            It’s also worth getting solar just to give a big fat finger to the fossil fuel industry for their crimes against decency and kick them where it really hurts – their bank accounts.

          • Chris

            Here in vic we use mainly gas for heating, and hot water. And I didnt mention $60 per month saving were savings during summer time. Come winter in melbourne and thats more like peanuts. Like I said we calculated around the 12 year mark.

          • Ian

            why don’t you switch to electric hot water heat pumps for water heating and reverse cycle air conditioning for space heating. ?

          • neroden

            Watch out: nat gas prices will be going up in Australia within about 5 years.

    • Goldie444

      Chris, you are talking in yearly averages for kwh’s but forgetting that in summer, this PV would displace all daytime aircon at least. That was the quote to install the 4kw system? Location?

  • Gavin Anderson

    I just upgraded my 1.5kw solar this year with another 2kw because we just lost the 30cent feed in tarrif in Victoria. So count this as another reason.

  • Evan Vernon Giles

    We are with AGL and we had 4 people in our house and power consumption was $600 per quarter and AGL told me we would save $300 per qtr and that saving would pay for the solar

    We are now down to 2 people our bill is now below $300 and we probably won’t pay anything for power

    However we are renting so can’t do anything now