Coal industry, Coalition take aim at household solar

The fossil fuel lobby and the federal Coalition government have shifted the sights of their anti-renewable campaign from the wind industry to household solar as the divide deepens between the left and right on climate change and clean energy policies.

The release this week of the parliamentary report into the retirement of coal fired power stations has highlighted the ever deepening divide between the Coalition and Labor on energy policy. A bi-partisan approach to energy policy seems no closer than it has since Tony Abbott took over as leader of the Liberal Party in 2009.

If anything, it has widened since Malcolm Turnbull regained the part leadership, and the divide has been sharpened since the shock presidential poll win of Donald Trump.

Energy minister Josh Frydenberg has used the release of the parliamentary and the recommendation of the Labor and Green representatives for an orderly transition out of coal power, a course of action that is even recommended by the International Energy Agency if climate targets are to be met.

“Labor has revealed its true colour – and it’s green,” Frydenberg said in a media statement issued on Wednesday, before citing the Labor-Green statement that so shocked him: “The question is not if coal-fired power stations will close, but how quickly and orderly these closures will occur”.

It is clear that the Coalition and the fossil fuel lobby are “digging in”, for want of a better term. We’ll take a closer look at the Coalition’s dissenting report, and its reliance on submissions from the Institute of Public Affairs, in tomorrow’s edition. Today, though, we are going to take a look at their argument that household solar is the new big energy issue.

The scene was set last week by the Australian Energy Council, which issued its own report into the South Australia energy transformation, and its response to issues raised by the recent blackout, and the growing share of variable renewable energy sources such as wind and solar.

The report is striking for two reasons. One is that it completely ignores storage as a technology solution, giving it one scant reference on the last page of its 15-page summary. The other is its focus on the perils of household solar, which it says could meet all of the state’s minimum demand needs as early as 2013.

“This is significant for a number of reasons: rooftop solar PV systems cannot be controlled by the market operator, so they will generate depending on the weather conditions at the time,” the AEC writes.

“They do not provide power quality services, indeed solar PV systems can be very volatile under intermittent cloud conditions, meaning power quality would need to be potentially provided as a pure service, not in addition to the provision of generation.

“It is unclear how available power would be distributed across the grid, given the high penetration of rooftop PV in some post codes and lower penetration in others.”

You can see what’s happening here. A scare campaign against the impact of rooftop solar. The fact that rooftop solar installations could be so big as to meet minimum demand was first raised by the Australian Energy Market Operator, and WA has made similar forecasts.

But this is simply a reaction from consumers to the extraordinarily high cost of grid energy, which has been significantly high in both South Australia and in West Australia (where it is heavily subsidised) for more than a decade.

The costs imposed by excessive network generation and the market exploitation by fossil fuel generators is simply adding to those costs. But this is never addressed by politicians or regulators. Instead, the blame is shifted to wind and solar.

And ignoring battery storage in a supposedly in depth analysis of the issues facing South Australia is extraordinary, not least because the state is the scene of some ground-breaking initiatives, such as the virtual power plant, the network-cost saving batterys storage trial by SAPN, and incentives from the Adelaide City Council and the state government.

Indeed, as Bruce Mountain has pointed out, the cost of rooftop solar and a battery storage device such as the latest Tesla Powerwall 2 is 25 per cent cheaper than the cheapest grid offer from the state’s retailers.

That is likely to create a boom in the market, and having battery storage will provide not just add stability to the grid, but spread the solar power into the evenings and morning peaks.

But Frydenberg also had a go at rooftop solar, making mention of the so-called “duck curve”, which emerges when rooftop solar hollows daytime demand, the time when fossil fuel generators traditionally exploited “peak demand” to charge higher prices to boost their profits.

Frydenberg also raised concerns about rooftop solar and meeting demand peaks. But as the local network operator has already made clear, rooftop solar in South Australia has already narrowed the peak, and pushed it several hours into the late afternoon, and early evening. Battery storage will push it even further into the evening, or may even eliminate it.

Frydenberg said however, that “rooftop solar is creating challenges for fairly sharing the costs of supplying electricity.

“While solar PV and battery storage can offer significant benefits to households and the network as a whole, it is important to get the pricing framework right, otherwise some households will be unfairly forced to pick up the tab for other people’s choices. ”

Let’s hope he is not talking about even higher fixed charges or penalties for those with battery storage, such as mooted “solar tax.”

“While solar PV and battery storage can offer significant benefits to households and the network as a whole, it is important to get the pricing framework right, otherwise some households will be unfairly forced to pick up the tab for other people’s choices. ”

Frydenberg is right to point out that solar and battery storage will change the nature of the electricity market, and the the NEM was “designed for another world.”

The point that this ignores is that the only way to bring down electricity prices for all consumers is to reduce network costs, which make up half the bill or more in most states, and the only way to do that is to write down the value of the assets built for redundant business models.

Ignoring that reality, and insisting that consumers continue paying for an asset being bettered by competing technologies. Which is not to say that networks themselves will become redundant. They shouldn’t. But their purpose will change along with the technologies and business models. And they need to be priced accordingly.

Frydenberg is also kidding himself about the cost of wind and solar. Despite admitting that the cost of these technologies had fallen further and faster than any pundits predicted even five years ago, he still seems to believe they can’t compete with new build coal and gas plants.

He cited the 2016 Australian Power Generation Technology report that wind and solar PV are “cost-competitive” with fossil fuel generators with carbon capture and storage, but wouldn’t be competitive with new build technologies generally until 2030.

This assessment is laughable. For a start, CCS doesn’t exist in any practical form and its cost estimates put it way out of the ball-park. Wind power is being built in Australia for around $60/MWh and solar for less than $100/MWh. No one in the energy industry seriously believes you could build a new coal or gas plant for lower prices.