Origin says energy future lies “beyond” the grid

Australia’s biggest electricity retailer Origin Energy says it expects Australia to “lead the world” in the transition to a low-carbon energy system, but expects to see much of its business growth “beyond the grid” and in solar, storage and energy services to households and businesses.

In a further sign of the transition that will inevitably occur – and some say way too slowly – Origin says the global climate agreement in Paris has delivered a clear signal for the economy to reduce carbon emissions.

“There is a great transition in the way the world uses energy,” CEO Grant King told analysts and media in Origin’s results presentations on Thursday. “Australia will lead that transition from a more carbon intensive system to a less carbon intensive system.”

King insists that gas will play an essential role in that transition, but his company also recognises more fundamental change in the way that customers use and source their energy.

Origin’s head of energy markets, Frank Calabria, described the future as “beyond the grid”; King prefers to use the term “beyond the meter”, but both essentially deal with how Origin engages with consumers wanting to install solar, battery storage and smart technologies.

Origin’s solar and energy services division remains a very small part of its overall business, but it is growing rapidly. In the last financial year, revenue from this division jumped 42 per cent to $138 million, and gross profits jumped by 31 per cent to $55 million, although its operating result remained a loss of $4 million.

In the latest year, Origin says its sales of rooftop solar doubled to 21MW, still a fraction of the overall market of more than 700MW. Of this, 8MW of these sales were for systems owned, installed and maintained by Origin, and two-thirds of this was for business customers.

Origin is also rolling out battery storage offerings, including Tesla Powerwalls, albeit slowly. King says that the household interest in battery storage will come a great deal earlier than it will for grid-based storage, where he can’t see the technology competing with gas-fired generators.

And even though the company sees its market moving “beyond the grid”, or “beyond the meter”, it doesn’t expect consumers to be leaving the grid in big numbers.

“We don’t see large amount of customers going off the grid,” King said in response to a question from RenewEconomy. “Grid connected electricity will continue to play the fundamental role.”

He also said it would be a long time before batteries played a “considerable” role on the grid, although he did appear to be referring to their use as “peaking plants”, and not as opportunities to defer spending on network upgrades. He described storage as a “hugely expensive” way of providing firming. (See story on soaring gas prices and impacts on wholesale electricity markets).

“On the other side of the meter, we see battery storage being adopted more quickly,” King said. “We sell Tesla (Powerwalls), they will more quickly play a role in households.”

Last month, the head of Origin’s “new energy” division, Phil Mackey, said he did not expect the household solar market to significantly rebound until 2020, which is about when it is expected that the cost of battery storage will fall far enough to become a mass market commodity.

Mackey suggested that battery storage is now only an “early adopter” market. “The residential battery storage market is ticking along,” Mackey says, “but payback is slow.”