Rooftop solar claims its biggest victim yet – Australia’s newest coal generator

We are a few weeks late with this news, but it’s significant enough that it is worth the mention on these pages: Australia’s burgeoning rooftop solar industry appears to have claimed its biggest victim yet, the country’s newest and most “modern” coal generator.

Ever since rooftop solar started making its mark nearly a decade ago, as the first feed in tariffs caused an installation boom, coal generators have been warning about the impact on their business models, because they could see what was coming.

Now, the most recently built coal generator in the country, the Bluewaters coal complex near Collie in Western Australia, has had its value written off completely by one of its joint owners – the Japanese industrial giant Sumitomo – and it appears that the growing impact of rooftop solar in that state is largely the reason.

Bluewaters, which comprise of two 217MW units, has had a rough trot since the first of its units was brought into production in 2009. Its first owner collapsed, and Sumitomo and another Japanese industrial giant Kansai Electric bought out the company.

In its latest six month result filed early last month, Sumitomo says that it has written off its remaining equity and loan investment in Bluewaters, at a cost of 25 billion yen ($A200 million).

In the dull language of its results presentation, it said:

“Sumitomo, through Summit Southern Cross Power Holdings Pty Ltd, its wholly-owned subsidiary, has invested in Bluewaters Power 1 Pty Ltd and Bluewaters Power 2 Pty Ltd, coal-fired power generation companies, (hereinafter “Project”) at 49.99% share ratio respectively.

“Sumitomo recognized losses on the investments, as a result of reassessing recoverable amount of Project in consideration of the difficulty in refinance of senior secured loans, whose due had come in August 2020.”

Bluewaters is not the only coal or fossil fuel generator to feel the pain of WA’s remarkable energy transition, which is taking mostly on rooftops, although it has recently had a spate of large scale wind and solar additions, including the 214MW Yandin and 180MW Warradarge wind farms and the 100MW Merredin solar farm and 30MW Greenough River solar addition.

Rooftop solar is now at more than 1.4 gigawatt of capacity, and growing quickly, and eating into the profits and operational capabilities of thermal generators which are unable to quickly ramp up and down and to whom “flexibility” is a foreign concept.

The biggest generator in W.A., the state-owned Synergy, has posted two consecutive losses, including a massive loss of $657 million in 2018/19 that feature “impairments” of more than $428 million, and has largely blamed “unprecedented and complex changes” caused by the growth of rooftop solar.

Rooftop solar already features on one in three households in the state, and is forecast to be on the rooftops of more than half of all homes – and many more businesses – by 2030.

The WA state government, through Synergy, is planning to install a 100MW battery with two hours storage to help deal with the increased ramp rates and relieve pressure on thermal generators.

See also: Vales Point owners pocket another $62m dividend from coal generator bought for $1m