The full impact of the boom-bust rollercoaster in the rooftop solar PV market is being revealed among the major solar energy developers in Australia, or at least those that are required to report to the Australian Stock Exchange.
A flood of red ink has blotted the balance sheets of listed companies with a heavy exposure to the solar market, quickly reversing a brief moment of profitability enjoyed when the developers and installers cashed in on the solar boom.
CBD Energy completed the picture on Thursday, revealing a near 60 per cent decline in solar PV sales from its Eco-Kinetics division, down from $60.4 million to $25.7 million, pushing it to a loss of $6.1 million for the December half after a profit of $7.1 million in the same period a year earlier.
Like others, CBD blamed the turnaround on the cut in federal government subsidies and the cancellation or decrease in feed-in tariffs in certain states, which led to a significant drop-off in the residential solar market from the “explosive” levels seen in the prior year. This was widely expected, and it has had a dramatic impact, not just on CBD but on a range of other companies.
Silex Solar last week reveled an even sharper decrease in sales for the half, down 70 per cent to $4.3 million from $11.4 million, pushing it to a loss of $8 million; although this included restructuring costs associated with the halt to solar cell production and the mothballing of its module manufacturing.
Solco, a WA-based company, saw its results swing from a profit to a loss of $3.8 million in the half, and it is now predicting a near 50 per cent slump in sales for the year to $27 million from $52 million. But its latest announcement shows the industry is still trying to get to grips with the scale of the slump – the latest revenue forecast is 15 per cent below its prediction of just one month ago. Origin Energy, the largest utility and the largest solar installer, revealed last week that the division housing is solar business (along with a few others), suffered a one-third slump in sales to $136 million, and a 40 per cent slump in earnings to $18 million for the first half.
Most of these companies, the smaller ones anyway, say the residential solar market is showing signs of stabilising, and may even grow as the cost of solar PV reaches “grid parity” and more customers are attracted to the technology as a hedge against rising electricity prices.
CBD said the price of PV panels continues to fall, and it says it has reached parity in some areas. “This is a very important milestone in attracting new customers without the need to be reliant on subsidies or feed-in tariffs,” it said. Because of this, as well as rising energy prices partially caused by carbon pricing (and network costs), residential solar PV will become more attractive. “CBD’s view (is) that there will be a sustainable long-term residential solar market in Australia.”
For the moment, CBD and other solar companies are focusing on the commercial, industrial and even utility-scale sector for revenue growth. CBD says the commercial solar sector is relatively immature, but beginning to grow rapidly. Solco announced on Wednesday that it had secured another two commercial-scale projects totaling 115kW and worth more than $1 million – from regional council and remote mining facility managers – and expects this market to grow rapidly. Solco says “grid parity” for commercial businesses has been reached, meaning that they are economic without the need for tariffs.
It’s also the focus of Silex Solar, which said earlier this month that the market for commercial and utility-scale solar PV was being driven by plummeting prices for solar panels, and rising electricity costs. “In that context, these projects are starting to drive themselves,” Silex CEO Michael Goldsworth told RenewEconomy at the time.
CBD’s bottom line result, which slumped to a loss of $10.9 million for the half, was also impacted by losses from the sale and value of renewable energy certificates. The price volatility has caused grief for many smaller solar installers and developers, who have not had the cash flow to retain the RECs to await stronger prices. Larger, deeper-pocketed, energy companies have been able to take advantage of this. CBD said it recorded a loss of $3.4 million in the half from the sale of RECs, and incurred a further $1.4 million loss on unrealised losses.
CBD also said it had not yet recognised a €7 million fee due for services from various solar projects in Italy. It expected this to be recognised in the current half.
However, what was not clear was the future of the AusChina joint venture in Australia, which was touted to try to snatch one third of the anticipated wind development required in Australia to meet the renewable energy target. CBD made no mention of this joint venture in its announcement, although it did refer to a 2000MW portfolio of wind developments.
The joint venture was to have developed the 132MW Taralga wind farm in NSW. The status of that development, which was the subject of a long and bitter court battle by anti-wind campaigners, is also unclear. The CBD statement said that “key milestones had been met”, and CBD is now playing a “consultancy role” on obtaining a PPA, identifying debt and equity investors, and an EPC contractor for the project’s owners, RES Australia.
