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ACCC wants federal rooftop solar subsidy abolished by 2021

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One Step Off The Grid

The Australian Competition and Consumer Commission, in a report on how electricity consumers have been ripped off by network companies, generators and retailers, has targeted the technology with the least impact, and probably biggest benefit – rooftop solar – for the most dramatic action.

The ACCC has called for the federal small-scale renewable energy scheme (SRES), which provides an upfront rebate, to be wound down and “abolished” by 2021.

At the same time, in a series of scatter-shot proposals, it has called on the federal government to underwrite the construction of new “dispatchable” generation, including coal and gas plants.

It also says it supports the proposed National Energy Guarantee, even though it admits it could further reduce competition, and therefore add to pricing pressures.

The bombshell, however, is the proposal to scrap the SRES scheme, which is already being progressively wound down, decreasing each year from 2016/17 until its planned phase out in 2030. But the ACCC wants this to be accelerated, saying it is unfair to non-solar customers.

Its own data estimates this scheme costs consumers, including those who do not own solar, no more than 40c a week – or about 5 per cent of total price rises in recent years that are largely due to inflated network costs, price gouging in wholesale markets and retail rip-offs

Nowhere in the 369 page report does the ACCC calculate the benefit of rooftop solar, despite most networks recognising it has reduced, delayed and narrowed the most costly part of the electricity market, the afternoon demand peak.

The ACCC makes one brief mention of the potential for rooftop solar to reduce demand and lower prices.

“In light of the dramatic reduction in solar PV installation costs, the ACCC considers the case for a subsidy for small-scale solar installations is now weak, and is of the view that the SRES should be ended earlier than its currently scheduled end date in 2030,” it says.

“Removing the SRES would save an average residential customer in the NEM $15–30 per year depending on state.” This equates to a saving to households of between 28c and 56c a week.

“This could be done by stating that certificates would no longer be created by new installations, or required to be redeemed by retailers, after a certain time.”

The decision is likely to make it harder for lower income and other households, that had hitherto found it difficult to find the money for rooftop solar, just as new programs are introduced that would make it easier for them to invest in the bill cutting technology.

Rooftop solar is currently going through another boom, with a record 1.5GW expected to be installed this year, as more businesses turn to the technology to deflect soaring grid costs. The rebate applies to installations of 100kW or less.

Indeed, rooftop solar is expected to continue to surge towards 58GW by 2050 – from just over 7GW now – as more households turn to rooftop solar, in particular renters and low-income households, and as larger business install even bigger systems (which would not qualify for the rebate).

This is considered to be a good thing. The Australian Energy Markert Operator says Australia can expect a grid that sources nearly half of its supply from distributed energy – including battery storage.

BloombergNEF comes to the same conclusions, arguing that such levels of rooftop solar would do more to close coal generators than any other measure, because of the inability of the coal plants to adapt to a flexible system.

A move to close the SRES scheme nearly a decade early would likely deprive lower income households of the opportunity to move into the market, although it would have no impact on industrial demand, which is expected to be close to 30GW by 2050.

The ACCC acknowledges the “inequity” of its proposal for those who had yet to install solar, suggesting that it would result in a significant downturn in installations, but said that by ending the scheme in 2021 – and not immediately, which it said was one option – could give people time to install.

(This suggests that the ACCC has learned nothing from the management of the feed-in tariff schemes, and the way those premium tariffs were managed, and which resulted in a boom-bust scenario for the industry).

The proposal was met with astonishment by the Smart Energy Council, which noted that installing solar was the one thing that households could do to combat the surge in prices caused by the unjustified and unfair increases in network, wholesale and retail costs identified by the ACCC.

“The one thing householders can do to slash their power bills is to install solar,” CEO John Grimes said in an email to stakeholders.

“The federal government needs to immediately rule out abolishing the SRES. Uncertainty around the SRES will cause unnecessary panic and confusion for consumers and the industry.”

Solar Citizens also responded. “Slashing the small-scale renewable energy scheme is absolutely the wrong way to go if you want to save households money on their electricity bill,” said senior campaigner Shani Tager.

“Already 1.8 million Australian households and businesses have put solar on their rooftops because it’s the best way to guarantee savings on your electricity bill.

“Energy consumers are tired of being taken for a ride by electricity retailers, which is why Australians are installing solar at record rates so that they can take the power back into their own hands.”

Indeed, the ACCC report continues its bias against renewable energy subsidies – saying that the large-scale renewable energy target had “distorted the market” in Australia. It did not recommend any changes or early phase-out of the LRET, though, despite widespread calls from conservatives to do so.

Extraordinarily, it focuses only on the “spot market” for the large-scale certificate price, which accounts for a tiny fraction of the market. The report ignores the fact that most new wind and solar farms are signing contracts that attribute zero or minimal value to the LGCs.

Instead, the ACCC – which has dismissed price gouging by generators in the past as “the market at work”, with a light-touch regulatory supervision – wants more gas reserves opened up, and it wants government to underwrite new generation, including potentially coal plants.

It does, however, urge state governments in Queensland, Tasmania and NSW to write down the value of state-owned networks, and wants to impose rules that limit utilities with 20 per cent or more market share from acquiring more generation capacity.

The ACCC investigation into wholesale prices confirms what everyone has known – that network costs are inflated, that retail offers are deliberately confusing and over-priced, and that generators are gaming the market.

Bids from coal generators in NSW and Queensland had increased far beyond the increased cost of generation, and even Snowy Hydro – the fourth biggest utility now owned by the federal government – has nearly doubled the price of its bids, even though the cost of hydro generation has, of course, not shifted a jot.

It notes that the lack of competition in the South Australian market had affected prices there, although it concedes this has been eased by the introduction of the Tesla big battery, and resumed generation from Pelican Point.

What is intriguing is the proposal for the government to write power purchase agreements for new generation that would cover output from years six to 15 of the plant.

Ostensibly, this is in response to the inability of major customers to contract for more than five years. The ACCC says this should be open to all technologies that can prove to be dispatchable. It proposes a price of $45-50/MWh.

The Nationals, of course, took it as a sign of support for their push for new coal generation.

Ostensibly, this is in response to the inability of major customers to contract for more than five years. The ACCC says this should be open to all technologies that can prove to be dispatchable. It proposes a price of $45-50/MWh. The Nationals took it as a sign of support for their push for new coal generation.

An earlier version of this article was first published on RenewEconomy’s sister site, One Step Off The Grid, which focuses on customer experience with distributed generation. To sign up to One Step’s free weekly newsletter, please click here.

  

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  • Joe

    I thought that The ACCC was there to help us, I’m not reading much here that is The ACCC in helping mode.

    • MaxG

      You must have misread their mission: “The ACCC promotes competition and fair trade in markets to benefit consumers, businesses, and the community. We also regulate national infrastructure services. Our primary responsibility is to ensure that individuals and businesses comply with Australian competition, fair trading, and consumer protection laws – in particular the Competition and Consumer Act 2010.”
      This stated “benefit consumers” only means (what is stated later), it is achieved through ‘ensuring compliance’ with the C&C Act 2010.

      • Joe

        Hi Max, you are a better man than me with C&C Act 2010. With all this so called ‘competition’ and ‘compliance’ in the electricity industry us punters have just been milked and milked out of our hard earned.

    • Patrick Comerford

      Argh the ACCC the regulator that’s asleep at the wheel most of the time. A $50 mil budget doesn’t buy you much.

    • solarguy

      Trans Mars Injection Burn will commence in………..5,4,3,2,1 ignition. For fox sake we can do better than this shit, surely. It’s a case of the life boat being intentionally set alight!

      • Joe

        It think the term is …’Collateral Damage’…that be us punters as everyone else makes merry at our expense.

    • lin

      I struggle to think of a single example of where the ACCC has done something that benefits the consumer.

  • Alexander Hromas

    It appears that the ACCC has become highly politicised and hence useless these agencies should be able to give frank and fearless advice to governments not just be noddy dogs. Probably best to disband it and start again

    • MaxG

      It’s the neoliberal game to undermine the purpose and efficacy of government bodies to further their cause. A.k.a. Trumpism.
      “Frank and fearless” has been sacked, defunded and sold. CSIRO anyone? ABC next?

    • Rod

      Spot on. It sounds like they gave the COALition everything they asked for. And coal is “dispatch able”! Only in Orstralya.

  • Glynn Palmer

    The ACCC preliminary report published in September 2017 preliminary findings were that, on average across the NEM, a 2015–16 residential bill was made up of:
    network costs (48 per cent)
    wholesale costs (22 per cent)
    .environmental costs (7 per cent)
    .retail and other costs (16 per cent)
    .retail margins (8 per cent)

    That is 7% environmental costs on our bill which is just less than the 8% retail profit margin enabled by governments selling their retail businesses.

    I have yet to read the ACCC report but I have heard very little about the need to reduce carbon emissions, the weak 26% reduction locked into the NEM, or the obvious fact that the electricity sector has the lowest cost options to reduce emissions.

    In 2009 Malcolm Turnbull went to the wall over climate change, after declaring “I will not lead a party that is not as committed to effective action on climate change as I am”. Now he has sold his soul to the AbbottKelly/Joyce right to buy his right to lead a liberal party that has lurched further to the right since he achieved his aspiration to lead the conservative (that was once the small l liberal ) party.

    • Alastair Leith

      Malcolm said that to topple Abbott, now in the drivers seat he shouldn’t be held to any of his professed principles, he’s the leader of our country after all, what need of principles or honesty?

      • JohnOz

        Malcolm Turnbull must have got to the same school as Groucho Marks who said: “I have my principles and if you don’t like the I have others!”

    • Jonathan Milford

      Abbott, who was once in favour of a carbon price, sold his soul to Murdoch and the IPA to get elected. Turnbull is merely hoist on a slender majority and being held to IPA policies by such ‘coal is good for you’ liars in the Liberal ‘pollute as you like’ party, traitors in the ‘natural asset stripping’ National party and angry bench parties such as anti-conservation Conservatives and anti-immigrant One culture Nation.

      • dhm60

        Abbott has a soul? Right up there with Putin’s hilarious statement about Trump being “an intelligent man”.

  • Energy Governator

    Matt Canavan seems to have confused (intentionally) ‘dispatchable’ (ACCC quote) with ‘baseload’.

    • Farmer Dave

      I don’t think Matt Canavan understands the difference between “baseload” and “dispatchable”.

      • Energy Governator

        Yup!

      • Joe

        I think I may be able to assist with the definitions of Matteo Coalavan. If its ‘Coal’ it is cheeeeeeeep, it is dispatchable AND baseload and it is reliable. If its Renewable Energy it is expensively subsidised, its not baseload, its unreliable and intermittent.

  • Alastair Leith

    (This suggests that the ACCC has learned nothing from the management of the feed-in tariff schemes, and the way those premium tariffs were managed, and which resulted in a boom-bust scenario for the industry).

    Quite, this advice is actually from a national body charged to understand and regulate markets FFS?! Once again proving the ACCC’s irrelevance to Australian economic matters. Recall the ACCC CEO saying the cabal of gas generators in SA gaming the market as documented in MEI Report by Mike Sandiford and Dylan McConnell called “Winds of Change” was normal market competition.

  • JohnOz

    The ACCC says that removing solar rooftop would save the average residential customer a maximum of $30 per year.

    Perhaps the ACCC would like to explain why, according to the International Monetary Fund, during 2015 each Australians subsidised the fossil fuel industry by $1,200. It might also wish to explain why the 250 year-old coal industry still needs subsidies.

    • Joe

      And there he was today (11/07 ) chucking in his 2 bob’s worth…The Beetrooter aka our Bananabee Joyboy. He is relentless in the cause of Coal4ever. He wants that new ‘baseload Coaler’. He wants us punters to stump up the moolah. Its Subsidies for Coal…..Forever!

    • Ben

      Hi JohnOz, I think you’ll find the original IMF report is a complete crock, have you seen it? WP/15/105.

      The basic premise is that fossil fuels should be taxed more to reduce emissions, increasing energy costs, therefore not taxing is subsidising.

      “Coal subsidies reflects the undercharging for its environmental impacts” page 20.

      Then petroleum, which as we all know is heavily taxed here in Australia. Then natural gas, also taxed and with royalties applied.

      Perhaps you could explain in more detail the coal subsidies you are referring to?

      • JohnOz

        Take Australia which directly subsidises fossil fuels $11 billion per year, $460 per person, the indirect subsidies (including externalities such as health, agriculture and infrastructure damage, etc.) is $1,200. see:

        https://www.marketforces.org.au/campaigns/ffs/

        Also look at the recent excellent report from Stamford University looking at global energy demand and costs in 2050. Roughly speaking energy costs will be about same as now but the EXTERNAL cost will be about a quarter of current costs as a consequence of removal of most of these costs:

        https://web.stanford.edu/group/efmh/jacobson/Articles/I/CountriesWWS.pdf

        • Ben

          Hi JohnOz, the fine print on one of those lists states they estimate 20% of the fuel tax excise goes to miners. I think the numbers you are using are grossly inflated, and don’t mention the actual taxes the coal industry pays.

          https://www.smh.com.au/business/companies/miners-pay-their-fair-share-of-tax-if-you-count-royalties-report-20180108-h0f0qh.html

          Everything you presented is from an extremely one-sided point of view, which is no way to develop an informed opinion.

          And before you rant at me for being a climate change denier or a coal lobbyist of some other name calling, the only thing I’m advocating is the use of facts over fancy.

        • Shilo

          John OZ, I can only find $5 billion, and its only for “Hard remote areas to develop” Which I would say would be Gas.
          Fossil Fuels pay a crazy amount of royalties for extraction have you looked at the amount paid?. The amount paid could be taken away from the amount given to give you a amount given to each person!!!!!?????.

      • dhm60

        I have seen and read WP 15/105. Its here: http://www.imf.org/external/pubs/ft/wp/2015/wp15105.pdf

        For more on “the complete crock”; in 2013 (2 years before the “crock” was published); the IMF published a book titled: “Energy Subsidy Reform: Lessons and Implications.” Its here: dx.doi.org/10.5089/9781475558111.071
        It forms the basis for all subsequent IMF criticisms of fossil fuel subsidies.

        A quote from the IMF: “Energy subsidies are dramatically higher than previously thought. Estimates for global energy subsidies in 2011 have been revised to US$4.2 trillion, more than double the US$2.0 trillion previously reported in a 2013 IMF book, Energy Subsidy Reform: Lessons and Implications. The upward revision is partly due to factoring in new World Health Organization estimates on harm to health from pollution exposure.”

        Following on the 1980s work on the social costs of highly polluting fossil fuels to human health and agriculture by William Nordhaus, President of the American Economics Association and Professor of Economics at Yale University many other researchers including Epstien, the US GAO, the WHO, the Lancet, Harvard Uni. and the IMF have added this considerable financial burden to the fossil fuel industries’ already eye-wateringly large subsidies.

        These costs are avoided by fossil fuel companies but are paid for by tax-payers around the world so they constitute a true subsidy – not a “crock”. As such the G8, the G20, the IMF and the OECD amongst others have all called for subsidies to the fossil fuel industries to be removed. To stop distorting the market place – a sure sign of a subsidy – and destroying peoples’ health and their environment – a sure sign of a socially irresponsible industry.

        • Ben

          Perhaps the IMF can be asked to include the cost benefits of all the advantages to civilisation that have come from the industrial revolution, and not just the negatives?

          • dhm60

            Been done already and still all major economist groups regard fossil fuel subsidies as an inefficient use of capital resources and, thus, an impediment on economic growth. Read the IMF document I linked. It’s all there. Try the OECD for more criticism of this gouging.
            The fundamental question remains: why does a reputedly very profitable industry need tax payer funded support after 140 years of operation? Apply basic capitalist logic of “if it can’t swim, it sinks” to that.

          • Ben

            I read the report already, thanks. It mentions Australia by name three times, and two of those are to identify Australia as a port price for coal. The third reference to Australia just includes us in the list of “advanced economies”.

            The report discusses “pre-tax” and “post-tax” subsidies and defines these as:

            – pre-tax “the price paid by consumers is below the cost of supplying energy”

            – post-tax “the price paid by consumers is below the supply cost of energy plus corrective (environmental) tax”

            Electricity in this country is subject to GST – that’s a tax.
            Coal miners pay royalties – that’s a tax
            Renewable energy is subsidised – that’s a tax
            Road users pay fuel tax and vehicle registration – these are taxes

            There is outrage in this country about the cost of energy already, and the ACCC report just released identifies opportunistic generators and lack of competition – not a tax but not exactly efficient and low cost.

            The report states that if electricity is produced using natural gas purchased at a price below its export price, then it should be taxed up to its export price. I’m sure you are aware that East Australian gas is already linked to the international gas market, and also is subject to internal transport costs though the transmission pipelines, before it even reaches a gas turbine.

            By what means does this IMF report apply to Australia?

          • dhm60

            By what means does this IMF report apply to Australia?

            1. The IMF report is a report on the effects of such totally unjustified and inefficient tax payer-funded support for some of the richest private companies, globally.

            2. Australia is part of the global economy; especially the global resources economy.

            3. The Australian tax payer, thanks to the efforts of the Australian Mineral Council and their friends in various governments and media outlets, pays vast amounts of money to highly profitable privately owned companies to conduct their businesses. See here for many details indicating a lot of very inventive taxes set up to benefit the fossil fuel industry: http://www.tai.org.au/sites/default/files/Mining%20the%20age%20of%20entitlement.pdf

            btw many of these entities pay very little, if any, tax after earnings; as they employ smart accountants (KPMG, PWC, E&Y, etc) to minimize their obligations. The GST, is a consumption tax, and is irrelevant to this discussion.

            Ah, Australian state royalties. The Economist magazine described these as derisory its May 2005 edition (Less than South African and Brazilian royalties by a big margin.) and correctly predicted that when the China-led demand boom slowed; Australia would be in trouble. China’s growth rate slowed from +10% in 2015 to a more sustainable 7% now and; guess what? Western Australia in now almost broke – which is why the GST was just raised – to bail out the geniuses who managed to go broke on the back of the biggest boom the world has ever seen. Not a good idea to rely on royalties.

            You seem to be combining two reports. The IMF (and others) report into the pressing need to totally eliminate unnesecary tax payer support to the GLOBAL fossil fuel industry which includes the mainly foreign-owned mining companies operating in Australia. And the ACCC’s report into the politically inspired shambles that is the Eastern Australian energy market. I have restricted my comments to the former.

          • Ben

            I have only used the one IMF report, and explained how the premises of the “subsidies” barely relate, if at all, to Australia’s economy. Nothing you have returned supports the level of subsidy claimed – $1200 per person…
            The TAI report is interesting, and perhaps the only hard evidence I have seen of actual dollars provided to the fossil fuel industry. Of course, only a portion of this will apply to electricity generation, with most of the funding accounted for by government spending on infrastructure – rail and ports. I can’t see anywhere in the report that discusses returns on investment in this infrastructure, which is surely relevant.
            Anecdotal claims of tax minimisation strategies are not an example of subsidies – but obviously taxation paid by electricity generators is relevant, especially those that are foreign owned.
            Australian state royalties may be “derisory” to the Economist, but have surely affected many people’s livelihoods in Australia, e.g. in Traralgon following Hazelwood’s closure, shortly after the Vic government increased coal royalties.

          • Ren Stimpy

            You hero!

          • Ben
          • Ren Stimpy

            Cock sucker!

          • Ren Stimpy

            The advantages to civilisation?

            Good one, nature-destroying dickead.

          • Ben

            Lol, having a bad day are we?

            Do you think the industrial revolution has been detrimental to civilisation? Billions of people would disagree

          • Ren Stimpy

            Yeh thank dog for the Delete button … if only I had a Delete button for some of the things I’ve said to people in real life!

  • solarguy

    I’m smelling the stench of coal lobby money!

  • Chris Fraser

    The ACCC do not recognise PV Owners consumer choice. The new rooftop solar reduced demand on utility generation, when they didn’t have the balls to increase generation themselves.

  • $40-50 per MWh for new dispatchable generation? The ACCC would have to be dreaming; they should stick to analysing things they know something about.
    Coal is uneconomic to back up high penetration renewables anyway as it cannot ramp far or fast enough and can’t switch off. It would have to be left running and wasting fuel when it isn’t needed.
    Gas OCGT’s and storage are the only dispatchable generation that will do the job with wind and PV. Energy from these costs about $200/ MWh but they only need to run less than 10% of the time. This combination can reduce the carbon emission to 15% of what it is now for no more cost than current coal heavy generation.

    • Shilo

      Is it not the same for wind and solar at times, meaning, they cannot turn off when the market is fully supplied by them, or is it different?

      • Ren Stimpy

        Wind and solar don’t have any fuel cost for the power they produce but isn’t being sold.

        • Ben

          What do the wind and solar farms do with their power they produce but isn’t sold?

          • Reply to Ren Stimpy
            When wind energy is ‘spilled’ it means the turbines are turned off although the wind is blowing and energy that could potentially be generated is not.

            Edit: Yes RE projects need to be able to source adequate dispatchable generation as ‘backup’. There is more than one way to do this; I favor State Governments owning or at least controlling sufficient OCGT turbines and PHS to provide balancing generation for all the RE in their state. Another way is the Reserve Capacity Mechanism used in WA where generators are paid set contracted premiums according to their ability to provide peak power. Either of these mechanisms protect the system from gouging during peaks.
            The other way is the proposed NEG mechanism where retailers have to contract for enough dispatchable generation to do this this. However for this to be successful there needs to be more regulation to prevent price gouging during peaks
            Note: OCGT’s are small capital investment compared to RE.

          • Shilo

            How do you control roof top solar from supplying the grid, being that there and will be huge numbers of connections suppling.
            Will it all need a control system, that externally can simply shut of the outflow?
            What actually happens when roof top solar is supplying more than the gird actually needs, if there are no controls on stopping it?
            Can a oversupply happen from inverters from solar and create a problem within the grid?

          • Rick

            Inverters have overvoltage protection. Most common is to just shut down on over voltage but latest inverters have progressive reduction in output over a voltage range below the maximum allowable.

          • Shilo

            Ok so that stops the grid being oversupplied, but, is there any ability to mass control all rooftop solar connections.
            This must be needed in the future when thier supply is close to and all of the demand area by area.

          • Rick

            Having central control on power flow from solar does not offer any benefit. The solar output will be automatically clamped at the prescribed voltage limit for an increasing period as more installations come on line. AEMO forecast that rooftop solar will meet the entire midday grid demand in South Australia by 2024. That could present stability issues unless there are synchronous capacitors or the inverters are centrally clocked, which is not possible with existing units.

            Wind generation in South Australia is already being capped regularly for stability reasons and the limitation of the interconnector to Victoria. With rooftop solar increasing the wind generators just get capped more often. This will lead to them losing market share and their economics increasingly unattractive.

            Having central control of household batteries would be beneficial for the grid but, given that battery life is highly dependent on cycles and depth of cycles, why would a battery owner allow central control of their asset with the prospect of severely limiting its life.

          • “That could present stability issues unless there are synchronous capacitors or the inverters are centrally clocked, which is not possible with existing units.”
            More BS from you. The standard has been in place for 2 years which ensures they do and AEMO’s tests of previous models shows overwhelming majority had no problems.
            Wind has been curtailed 2.4% so far in 2017/18. Hardly a significant issue, but if it happens more in the future – as it might, so what. With wind and solar that cheap, it still beats the alternative.

          • Rick

            So you are stating that with 100% rooftop solar supplying the network in South Australia that there will be no frequency stability issues?

            I expect the SA network provider, Electranet. and the national grid operator AEMO to know a bit more about integrating rooftop solar into the network than Giles Parkinson. Both organisations continue to have grave concerns over the stability of the SA region:
            https://www.electranet.com.au/wp-content/uploads/2017/07/2017-Transmission-Annual-Planning-Report-Overview.pdf

            https://www.aemo.com.au/-/media/Files/Media_Centre/2018/AEMO-observations_operational-and-market-challenges-to-reliability-and-security-in-the-NEM.pdf

            How much was wind curtailed in 2015/16 and 2016/17? You need to be aware of the trend! It is the beginning of what will become the end for grid scale ambients as rooftop solar increases market share.

          • Shilo

            I am just thinking of how the system will work and who will get paid what, once there is periods of time where rooftop solar is supplying all the power for part of each day.
            Control over the roof top solar and battery’s, if deemed to be in the best intrests of everyone, will maybe become a issue.

          • Rick

            Providing there are synchronous condensers on the network to hold the frequency, the solar panels will regulate at the maximum permissible voltage by automatically limiting their power output. If there are batteries with the system, the batteries will be fully charged before power is exported to the grid.

            Over time, the rooftop solar will gradually replace the wind generators. South Australia has already exceeded any economic value from the wind generators and relies heavily on Victoria and other States to absorb the high level of intermittency. In fact they are pushing for a higher capacity interconnector to NSW to export increasing level off intermittency to NSW. Rooftop solar is the low cost option for South Australians.

            The ACCC has recommended the SRET be scrapped so time is running out to get subsidised panels. The price will jump by about 50% initially until China begins dumping panels in Australia following the end of their subsidies.

            Under the NEG, retailers will still be obliged to purchase rooftop solar power so that is guaranteed a market up to the point of system over voltage but retailers will not be obliged to contract with wind generators beyond the amount needed to satisfy the RET so the wind generators will not enjoy unbridled access to the market as they have now.

          • Shilo

            So what you are saying is wind farm investments will suffer and be harder to justify building new farms longer term?

          • Rick

            Yes. The economic value of intermittent generators on the grid is using them to conserve perched water in pondage limited hydro. Already in 2018 the effects of Hazelwood closure can be seen in the pondage levels at the Snowy Hydro being substantially lower compared with the same time in 2016.

            As solar replaces wind to conserve perched water. the wind has reducing economic merit. Given that the economic life of wind turbines appears to be about 15 years it is unlikely existing wind generators will be replaced with wind generators. Rather the uptake of rooftop solar will fulfil any economic niche for intermittent ambient sources.

            Solar is more predictable than wind and the ramp rate is constrained so they are easier to manage from a grid perspective.

          • Shilo

            So, the whole supply system in Australia you think will be Solar, Batts, and Hydro?. Out in time of course.

          • Rick

            I do not think we will have something like the “whole supply system”. Off-grid power is likely to become more common.

            Solar and battery could become economic for off grid in residential locations. The battery prices need to come down and operating life in excess of 25 years. That would be competitive with retail power now. This would reduce the grid demand. There is opportunity to develop hydrogen generators and compact gas storage systems. Hydrogen is the densest form of non-nuclear energy storage.

            Grid connected rooftop could achieve 20% market share in the NEM and be close to economic. I expect distributed/rooftop solar will gradually replace the existing wind generators because I doubt it will be economic to replace them. Grid scale remote ambient generation cannot match load based local solar generation that avoids the high transport and billing costs.

            The bulk of generation in Australia will remain coal for a long while yet. In the very long term maybe fusion but that appears to be difficult to achieve.

          • Shilo

            Rick, I cannot see where will get a new coal plant built.
            To fund one, there needs to be a clear path of it being accepted as a form of supply.
            Having RE having the first right to fill energy demand and the 5 min settlement, puts coal out of being able to supply and there will be days, during the day becomming more and more often where, coal will have no where to sell. Even if it bids the lowest, it still gets filed behind RE.

          • Rick

            Under the NEG the retailers and large designated consumers will be required to contract a set ratio of intermittent ambient and dispatchable generation for a nominated period. I doubt anyone has worked out how this will work yet but it is probable the grid scale intermittents will no longer be guaranteed market access. They may generate but they will not be paid for the output as the dispatchable generators will get paid under the contract terms even if they are not required to generate. It guarantees an income stream for dispatchable generators and recognises their necessity.

            Under the NEG I expect the only generation with unbridled market access will be small scale solar as the retailers will be obliged to take that generation and it will earn them ambient generation credits. That is why I expect to see rooftop solar gradually eat away at grid scale intermittents. Until the price of LGCs come down substantially, the cost of rooftop solar power to retailers will be lower cost than large scale wind and solar.

            Recommendation 4 of the ACCC report is intended to support the financing of dispatchable generation through government guarantee via power purchase arrangements through mid term operation of the generating asset.

          • Shilo

            I think it all is looking like a very hard road ahead. Thank you for you insight.

          • Ren Stimpy

            They are starting to send it into batteries.

        • Shilo

          Yes I understand that, (even though for the low cost coal plants in australia and certainly around the world, the cost of winding back to say 65% and burning coal is a very low component) my point was Wind and Solar Cannot do either ramp up or ramp down at will and when the market is fully supplied it just keeps supplying, especially from rooftop solar.

          • Ren Stimpy

            As more batteries are installed on and around the grid the ramp up and ramp down issues with wind and solar will be gradually solved.

          • Shilo

            The peaks will be a hard thing to capture, especially if it falls on low demand say like over weekends.
            The big issue will be the amount of roof top solar flooding into the grid, at times stopping all other forms of supply from having anything to sell.

  • N Page

    Bit of a stretch to call emissions trading a ‘rebate’ isnt it?

  • Brunel

    Ground-based solar is cheaper. We already have a renewable energy target – so why have rooftop solar panel subsidies on top? How does that help single mothers living in rental units?

    Should mandate that any negatively geared property must have solar panels on the roof.

    • Just_Chris

      I agree with you on this to a point. The SRES has been
      really effective we needed it in the beginning (along with the FiT) to start
      the industry but now we are reaching the point of reducing returns. The amount
      it is costing is going higher and the benefit is reducing. $20 per year per
      customer is not mind blowing but one has to ask what else could we do with that
      money? Is that about $500 million per year? In my opinion there are so many
      more effective ways we could spend that money on. I think $500 million would
      buy a lot of domestic home battery storage if it was used as a subsidy. In the
      long run a large amount of storage would help the PV industry a lot more than
      more PV installations in the short term.

      I completely agree that we are at the point where we need to
      mandate PV on domestic buildings. I live in Melbourne and if you want to build
      a new house you need a water tank or a solar thermal hot water heater. Great,
      but why not PV? It would cost buttons to install on a new build and probably
      pay for it’s self in the first 3 years of the new owner moving in. Same with
      rental properties Melbourne’s suburbs are full of rotting rental properties
      with ancient hot water systems, 50W 12V down lights and no insulation, there
      should be something in the legislation that pushes landlords into maintaining
      and upgrading their properties. My favoured option would be a 5% tax on rental
      income that accumulates in a fund that can either be spent on reducing the running
      cost of the property or lost to the government after 5 years. Negative gearing
      is a dumb tax break that doesn’t help anyone.

  • John Gardner

    Don’t forget that this whole privatisation thing was started by PK, supposedly as a means of introducing competition into these markets and getting rid of the allegedly inefficient government entities. Of course, this is supported by bodies like the ACCC which have a neo-liberal bias, so they can hardly say that this enterprise is a failure so they come up with this sort of bullshit. The fact that the report supports the NEG certainly shows their colours.

    • Rod

      Yes, giving full support to the NEG before the final details are published seems very foolish.

  • Malthus Anderson

    Giles, is the ACCC staffed by dinosaurs too? Why does the right insist on investing in the past?

  • Shilo
    Wind can be switched off quickly and so can utility PV. Rooftop PV is another matter; the earlier inverters are not wireless controlled so cannot be switched off but the new generators can. However the problem remains that the network operator has to have the technology to do this; they don’t yet in WA and I’m nor sure about other states
    That’s why too much rooftop PV will become problematic.

    What is needed is more wind and more storage (up to an economic limit) – these can generate at night.

    Once RE gets to 40 – 50% of generation there will be frequent periods of surplus RE, usually in the middle of the day. At 85% RE penetration > 20% of it will have to be ‘spilled’. So any new generation needs to be ‘constrained’ i.e. able to be switched off.

    • Ben

      An example of high renewables penetration is California, who have a mix of hydro, solar and wind although the major power source is gas. Even so, and with more transmission options, they still face RE curtailment – in 2016 California curtailed 308 GWh of renewable generation.
      Closer to home, SA is another example where curtailment is already occurring at what – 30% installed wind capacity?
      Most wind turbines installed in the last decade have the ability to reduce their output down to zero, I guess PV sites with tracking can limit their output to some extent, but maybe not zero.
      Rooftop PV subsidies will possibly be switched to domestic storage subsidies as politicians compete for votes, which should help flatten out the daytime rooftop excess.

      • We wrote about curtailment a while back. It’s 2.4% in South Australia, not 30%.

  • juxx0r

    The ACCC is the second most fraudulent government department after the ATO.

    Anyone who thinks they work for the benefit of the people needs their head read.

    • nullifidian1

      The problem, IMO, is that the ACCC, like the productivity commission, is dominated by economists. Given the charter of the ACCC, there is no reason that this should be the case. Unfortunately, there is a widespread belief that economists know what they are talking about, and it is particularly unfortunate if those economists have been indoctrinated by neoliberalism.

  • Ben

    The info about the NSW Solar Bonus Scheme is interesting – still being collected after the scheme has finished.

    Solar PV equity – the feed in tariff supplies more benefit to the solar customer than the initial SRES does, reduced usage plus the sale of exported electricity, and the tariffs are recommended to stay, so it’s probably a small dent in rooftop PV growth that will pickup. Mostly offset by far greater growth than expected under the subsidy scheme in the first place. I think we’ll see state governments acting in this area by continuing to subsidise solar PV installations – maybe for vulnerable groups.

    LRET
    “investment in renewables has largely been driven by incentives under the Australian Government’s LRET”…
    “separate revenue stream… through sale of LGCs”…
    “revenue under the LRET scheme has been a significant factor in their investment decisions for renewable generation projects”…
    “future investment is likely to favour renewable plant even in the absence of direct policy intervention”…
    “90% of the 4400 MW of committed generation… is either wind or solar PV”
    “2500 MW of coal and gas is expected to retire in the next four years”

    There is a section on the LRET discussing spot and future markets, plus PPA. The reasoning for leaving the to scheme run its course is the already committed generation will exceed the schemes terms and there will be e fess certificates. However the report does mention that already purchased LGCs will have an effect on bills into the future depending on the length of the contracts that have already been put in place.