CEFC loans Origin $100m to boost solar and storage offerings

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CEFC commits $100 million to Origin Energy to help utility giant expand its offerings of rooftop solar and battery storage to consumers.

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The Clean Energy Finance Corporation has committed a $100 million financing facility to Origin Energy to help the utility giant expand its offerings of rooftop solar and battery storage to consumers.

The 12-year financing facility will initially be used to boost Origin Energy’s recently launched solar offering, where it owns the rooftop solar array and sells the electricity generated to the home owner at a deep discount to normal grid prices. This is known as a power purchase agreement.

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Origin Energy is currently offering PPAs with prices as low as 11c/kWh to some consumers, nearly one-third of the price of grid electricity. The attraction for Origin is that it boosts its position in the solar market and locks in the consumer for the length of the PPA, which can be seven, 11 or 15 years.

Origin Energy and the CEFC said the financing could also be used to support battery storage solutions. Origin is yet to offer battery storage in its PPA contracts, but it is currently trialling a battery solution in market and expects to roll out a product later this year.

“Solar as a Service is already proving an attractive proposition to customers since it was launched earlier this year, and the CEFC finance will be used in expanding the offering, so more Australians can enjoy the benefits of solar,” Origin’s head of Solar and Emerging Businesses, Phil Mackey said.

The Solar as a Service offering was launched in May and is currently available to residential and business consumers within a 100km radius of the central business districts of Adelaide, Brisbane, Gold Coast, Sydney and within a 50km radius of Townsville.

The commitment to Origin Energy is by far the biggest so far offered by the CEFC. It has previously committed $70 million to US solar giant SunEdison, $20 million to ET Solar, and another $20 million to Australian solar manufacturer Tindo Solar.

CEFC CEO Oliver Yates said PPAs offer a clear benefit for residential and business consumers, who can have increased confidence about their long-term electricity costs, while at the same time enjoying the benefits of solar.”

The fact that the loan offering is on a 12-year term also means it can fit in with the maturity of the PPAs. These sort of terms are difficult to get from banks.

The solar industry will also likely need to tap into CEFC funds to get finance on similar terms for large scale solar plants, particularly given the federal government’s push for more large scale solar.

Yates said the CEFC is considering more than $500 million in finance for solar projects, totalling more than $1 billion in value.

“We are working with project proponents, major utilities and retailers to expand the range of solar finance options, to deepen solar penetration, diversify the technology deployment and lower costs,” Yates said in a statement.

We hope to be in a position to announce further solar projects in the near future.”

SunEdison announced via The Age on Wednesday that it would offer PPAs at 14.6c/kWh to its customers – which it described as half the price of grid costs.

This brought a curious response from the Energy Networks Association, the lobby group for network operators, which said that customers with solar leasing still needed the grid.

Therefore, ENA chief John Bradley said, the costs of the PPA were only comparable with wholesale and retail charges, which would be lower than 14c/kWh in most states.

Bradley seemed to be suggesting that grid charges will remain, even if fixed to ensure the networks got their return on assets.

And in case anyone was thinking of disconnecting, the ENA repeated its warning that disconnecting would cost customers “5 to 8 times” more to try to replicate a grid service with a stand alone power system.

That number would be subject to considerable debate from those who have already achieved it.

“Significant subsidies have driven world’s highest penetration rates of rooftop solar but they have also unintentionally exacerbated cross subsidies under outdated electricity tariffs, pushing up costs for other customers,” Bradley said in a statement

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5 Comments
  1. Tim Buckley 4 years ago

    Great to see the CEFC extending the maturity of loans for renewables, short term lending does not match long dated PPAs. The most cost effective renewable PPAs globally are getting financing for 20-27 years, so there is still room in Australia for extended duration lending to further lower the financial risk profile of renewables. The CEFC continues to add market depth and finance knowledge to the Australian renewables sector, serving a very valuable and profit-oriented function in the Australian financial system. No wonder Toxic Tony wants to shut it down!

  2. John Bromhead 4 years ago

    This is a sad misuse of public finance. A thinking person would know that solar would be uncompetitive in most grid situations if volume of use was not used as a proxy for demand at peak period. The solar industry and its supporters have been very clever in masking this fact from the majority of energy users and no doubt Origin believes it can as well. What will be the percentage of solar penetration into the grid until the non-solar community becomes aware that the solar community and a lazy regulatory system is responsible for the increase in their electricity bills?

    • Peter Grant 4 years ago

      That is a long bow to draw John. While the volumetric based charge suppresses a price signal for peak generation and so contributes to creating inordinately large consumption peak, the congestion peak is another matter. Grossing out the 10 cent increase for gold plating in response to increased aircon etc would leave a volumetric charge for the grid of 15C – 20c.

    • Jonathan Prendergast 4 years ago

      I think it is fair comment that volumetric pricing is not a good system as it is not cost reflective. A large portion of the cost of supplying energy is capacity based, including transmission, distribution and even generation, sitting idle waiting for peak demand. Our regulation should be updated to be more cost reflective.

      However Solar is not the devil in all this. Air Conditioners add much greater expense to the supply of electricity, as they are all turned on at the same time creating excessive peak demand, which is a cost borne by all in the community. Rooftop solar is just a way of reducing demand, just like switching the lights off or choosing more efficient appliances/plant. An obviously, a way of reducing our environmental footprint, and the amount of coal we have to dig out of the ground.

  3. Ian 4 years ago

    Am I reading this correctly taxpayer money is being used to give cheap financing to large energy corporations so that they can offer PPA’s to individuals, tying them to these corporations for 10 to 15 years. Nice one. Solar power is the one technology that can free people from the bondage to large companies. And now 1/2 billion dollars of our money is to be given to the likes of Origin and sunedison to expand their business reach. If CEFC wants to give away money give it directly to the home or business solar owner not to some middleman. Does no-one see this rort?

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