Solar and efficiency take big bite out of sales from Australia’s biggest utility

Origin Energy, Australia’s biggest utility, sales the combined impact of growing solar production and energy efficiency measures took a big bite out of its electricity sales in the September quarter.

Origin is the subject of an $18.7 billion takeover offer, with the utility business due to be taken up by global asset management giant Brookfield, and its LNG business by US-based Mid Ocean Energy. However, some key shareholders are pushing for a higher price, so the success of the bid is not certain.

In its update on Tuesday, Origin said electricity sales volumes had decreased by six per cent from the same quarter a year ago, a situation it blamed on reduced demand from milder weather, increased energy efficiency and strong solar uptake.

The data reflects the accelerating trend of rooftop solar and its ability to eat out demand on the main grids, particularly during the daylight hours where, in some states such as South Australia, it can produce enough to meet all local demand.

Its share of generation in other states with bigger grids and a lingering dependence on coal power rates between 50 and 60 per cent.

The gradual eating away of electricity sales has been happening for a decade, but as households and businesses add more consumer energy resources such as battery storage and electric vehicles, sales to retail customers is tipped to fall to next to zero in coming decades, prompting a major rethink of utility business models.

The growth of electrification among consumers is also having a major impact, with gas sales falling 21 per cent in the latest quarter, compared to the previous period, again blamed on milder weather.

But Origin said it also reflected a 22 per cent decline in gas generation, indicating the pressure on gas generators in the face of growing wind, solar and battery storage. Gas generators are expected to be relegated to the role of peaking generators, switching on only when needed to help meet demand surges.

Origin, meanwhile, noted that it has begin construction of the first stage of the 460 MW, two hour (920 MWh) Eraring big battery, and confirmed it had bought land in the New England renewable energy zone for a proposed wind farm.

“In a milestone for Origin, construction of the first phase of the Eraring battery has begun, and we progressed several brownfield battery development projects, as part of our strategy to accelerate renewables and cleaner energy,” CEO Frank Calabria said in a statement.

Its statement provided no update on the status of talks on the Eraring coal generator, the country’s biggest, which is scheduled to close in August, 2025, but may be extended if agreement – and a funding deal – is reached with the NSW government.