Origin Energy says storage will trigger new wave of solar installations

Origin Energy predicts that battery storage will trigger a new wave of rooftop solar PV installation in Australia, although it is not likely to happen until the cost of battery storage falls to interesting levels for consumers. And that could take a while.

In a presentation made during its “analysts day” in Brisbane, by CEO Grant King and line executives, Origin Energy said it believed it was well placed to manage the big changes happening in the energy market now, saying it was position to take advantage of solar and storage, the changing energy mix as coal retired and more renewables were installed, and in managing its renewable energy obligations.

On the issue of solar, Origin Energy expected the rooftop market to be subdued, with continued falls in the domestic market to be offset by an increase in the commercial market, as more businesses turned to solar to offset grid costs.

But Origin said battery storage could trigger a new wave of solar investment, from about 2020 – echoing general comments in the solar market in recent months about the likely link between solar and storage in new installations.

However, Origin Energy – while making solar and storage offerings to consumers and moving into the energy services business – is not expecting battery storage to deliver short paybacks any time soon.

It says it will be a while before there is mass market appeal, and paybacks of less than 10 years may not be realised for the average customer until nearly 2030.

Some in the industry agree, others do not, suggesting that the interest in battery storage will not be decided only by pay-back times, and/or that costs will fall quicker than expected.

Still, Origin was keen to quote Bill Gates, the man who says the world’s energy challenge won’t be met without new inventions, who said storage is likely to triple the cost of electricity. That’s not everyone’s take. Indeed, Bloomberg New Energy Finance suggests costs are comparable now in certain situations and particularly with smaller storage systems.

Origin, though, is in the Gates camp on costs, and reproduced this graph below suggesting that using storage to go off-grid, or even nearly off grid, are prohibitive. There is plenty of debate about those estimates.  

As for its overall business prospects, Origin Energy expects to do fine in the LNG business, despite predictions from the International Energy Agency that the global market will be flooded post 2020.

In Australia, Origin expects any reductions in revenue from its direct customers to be offset by gains in the wholesale market, where it expects its mostly gas-fired fleet to benefit from the need to meet the gap in renewable energy generation. Recent jumps in the wholesale price appear to support that theory.

Origin also expected, unsurprisingly, that there will be no new coal fired generators in the country. Indeed, it suggested that coal retirements could be greater than expected, and renewable energy installations also higher, depending on the outcome of elections and policy.