Solar is very cheap, but the model is broken, says Origin Energy

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Origin Energy says solar is the cheapest form of energy for households, but warns that sub-standard systems – particularly inverters – are causing problems for consumers. It even suggested a “pink batts” moment could trigger the removal of remaining subsidies. But the company has also been at fault.

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“At the risk of being a little bit controversial, I think today’s rooftop solar market is broken.” That was major message that the head of Origin Energy’s solar business, Phil Mackey, delivered at RenewEconomy’s Disruption and the Energy Industry conference in Sydney on Tuesday. And it was, just a little, controversial.

Mackey said solar is great, and cheap, and that it’s great that it’s cheap: “Solar is the cheapest form of energy” to get in the house, he said.

But Mackey said there had been a market failure, the result of an incentive-driven boom that he said had been under-regulated, and left a legacy of problems – namely, underperforming solar systems – that has been built into the market.

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“Many solar systems out there that just aren’t working, and unfortunately customers don’t know that.” Mackey told the conference. “A lot of systems won’t last 15 years, even though subsidies assume they will.”

Mackey’s main concern seems to be for the customers out there with rooftop solar systems installed by what his boss Grant King sometimes describes as “fly-by nighters”, or solar companies that have since disappeared into the ether, leaving customers with no line of service if things go wrong.

Those “Things That Could Go Wrong” range from underperforming systems, mostly due to sub-standard inverters, to systems that he said could even pose a danger to customers, including the risk of fire.

But Origin Energy is also at fault, as it has admitted. In its last accounts, it wrote off $17 million from the cost of having to replace sub-standard inverters installed by its own people. Like many in the industry, the initial solar boom encouraged a lot of customers to install the cheapest and quickest products.

While Origin is being congratulated for stumping up the cash to fix the problem, its apparent attack on the broader industry is seen by some as a little disengunuous considering its own rating for quality was criticised by Choice magazine, who noted that 20 per cent of consumers gave the company a negative rating.

Muriel Watt, a former chair of the Australian PV Institute, and solar expert at the UNSW, asked Mackey if the real problem was not the overall quality of the systems, but the fact that major players such as Origin Energy and AGL Energy had such a low market share.

“Both AGL and Origin – who campaigned strongly to reduce the RET – are now re-badging themselves as the trusted retailer who can provide a safer solar option, compared to third party suppliers,” she told RenewEconomy on the sidelines of the conference.

“Origin says the solar market is broken – maybe this is because third parties have largely captured the market and not them?” (According to Mackey, Origin currently has so far installed just 1MW of solar PV capacity under its new power purchase agreement scheme.)

“They also say they are seeing lots of non-performing systems, due to poor quality product and installation – maybe this is because Origin was one of the companies that used low cost products and installation and, according to Choice, has the highest complaint rate.”

But Watt says this does not reflect Australia’s whole PV market, which is still going strong with low installation faults and few serious accidents.

Although there had been relatively few incidents in Australia, none of which has not resulted in any serious injuries or damage, Mackey even raised the prospect of a repeat of a  “pink batts” moment, and said that could force intervention in the market and the removal of incentives.

“A lot of people buying solar systems in Australia than banks wouldn’t buy,” said Mackey.

“We need to get ahead of these risks. Energy retailers and providers have a big role to play in that, supporting customers , sending the right signals to the market.

“We’ve already lost a lot of bark in this game, so we’re very sensitive to inverter and panel quality.

“There are a lot of poor signals, and sources of information out there. We need to fix that …to manage the risk. Leave it in our hands, we’re in a better position to manage it.”

AGL’s head of New Energy Marc England stopped short of calling the rooftop solar market “broken” – although he did describe battery storage systems as “the most dangerous things we’re ever going to put in our houses”.

He agreed, however, that a lot of the PV systems on roofs today were not operating as well as they should, and said that because of this, the risk of “bad disruption” had been heightened.

Australia’s is in the “dumb distributed energy” phase of the market transformation, England told the conference on Tuesday: “like a gold rush,” he added, driven by incentives, and delivering a one-off boon to a select few, including electricians.

“Nothing is connected, and people with solar systems on their roof have no idea if they’re performing.”

According to data cited by England, 80 per cent of installed rooftop solar systems in Australia were not performing as they should, and 19 per cent were performing below par.

Solar systems that with a shorter life than was promised, he said, “could be a ticking time bomb that could damage the solar industry.”

In order to avoid this kind of “bad disruption” (England himself prefers the term “transformation” to “disruption”), the new phase must have a focus on differentiation and sophistication; integration, management, explanation and value creation.

Watt says it would be wrong to put rooftop solar on par with the “pink batts” debacle.

“The PV roll-out most definitely can’t be compared to that – it was done with standardised grid connect procedures, trained and licensed installers, many with years of experience with PV, using products meeting Australian standards,” she said.

“Sure, there were some shoddy products and operators, but the Clean Energy Regulator inspection system soon got bad companies and products out of the market and ensured poor installs were fixed.”

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20 Comments
  1. trackdaze 4 years ago

    In some respects this is true. Inverters should be a minimum standard etc. Trouble is the great unwashed think that as soon as a subsidy applies all veting gets thrown out the window and if things go wrong they blame tye govt for their poor choice.

    I suspect the big gentailers got caught up in the trap too and rushed to market. The solar industry is mature enough now to ensure it manages its and customers risks.

  2. Rob Campbell 4 years ago

    Pink Batts moment my arse! This would have to be the most regulated industry out there in terms of building services. The failure rate is near identical for Euro and Chinese inverters, service has improved greatly whilst the replacement costs have plumetted. Yes there have been inverter failures, none I believe have caused fires or electrocutions as the batts did (and they’re not even electric!) Isolators have been the biggest problem and the idiots from the 12 volt end of town think it is best solved by throwing more onto the roof for emergency use. Name we one fool who wants to stroll across a roof in an emergency! All I see is another cynical attempt to distract us from the ultimate goal of stymieing the renewables industry to ensure it doesn’t get traction against the corporate s. They had better get used to it though, like the US Army found out, you’ll never win against the Viet Kong.

  3. Stephen Winters 4 years ago

    Shonky installs have been driven primarily by Solar Retailers offering the installation component as part of the package. They dictate and insist on the lions share of the install price and pray on accredited installers need for work. These operators should have no input into the cost of the install if they are not accredited, or do not have accredited people employed. Remember think before you ink!

  4. Mags 4 years ago

    After years of trying to kill the solar industry, Origin have realised the truth and now they want in on the money.

    Years ago, I installed a solar hot water system through Origin, they installed it badly, they didn’t upgrade my electricity supply as they should have and I had to pay an electrician thousands to put it right.

    They care not for their customer, only their bottom line.

  5. Jacob 4 years ago

    This is why we need to rent solar panels instead of buying them.

    SolarCity FTW.

  6. Richard Mason 4 years ago

    Why would a electricity’ company worry about non operating solar systems they sell more product maybee to scare off people who are still to install solar

    • nakedChimp 4 years ago

      Exaclty, make joe average that’s not on the train yet insecure about his decision from WHO he is going to buy a PV system..

  7. Andrew_Nichols 4 years ago

    Probably time for the regulators to 1. Finish off FITs and/or
    2. Test and certify inverters offered for sale here and ban crappy ones.

    • nakedChimp 4 years ago

      Newsflash, they already do. You don’t get STCs or approval for installation of your system if the components aren’t on a list for tested panels and tested inverters..

      What caused a lot of systems to fail where breakers on the roof with no form of protection from the elements that is suitable for 24/7 outdoors in the Australian sun and some shady installers in the wild days that didn’t get caught fast enough by compliance checks..

  8. Chris Fraser 4 years ago

    As far as industry expertise and renewable attitude and credibility goes, I put Origin near the bottom.

  9. onesecond 4 years ago

    Nice fearmongering you greedy bastards.

  10. Pink batts debacle! What a load of codswallop. That was an extremely successful program that not only got money circulating during a time when the economy needed stimulating, but also led to many thousands of Australian homes being insulated. It was terribly sad that some deaths were caused by negligence and ignorance of some contractors. But overall the results were hugely positive.

  11. ChrisEcoSouth 4 years ago

    We’ve been installing for 15 years, and we find customers soon pipe up if they get a larger bill, due to any problem with their system. They put it in to reduce their bill, so that is what you can be sure they will monitor.
    Prospective buyers should ask specifically what *labour* is covered in the event of failure of an inverter or panels, *and* ask how do they tell if the system is underperforming. The answers will be very revealing!
    Otherwise, I’d agree with most of the comments here.

    • john 4 years ago

      Chris
      a simple excel program with the readings from install day with the import, export and inverter production will show at any time, if there is a problem.
      People should keep a close watch on the Voltage of the system especially if the supply line to the household is old size copper.
      If not able to get on the roof have the panels inspected by a reputable installer to look for any suspect panels, as well as doing an earth leakage test on the system.

  12. john 4 years ago

    If a long standing company does the install here is the result.
    Because of a pump up in the HV by the energy supply company the LV then going to 254 Volts resulted in a outage by the inverter operating exactly as it should.
    I rang company before finding the reason for the shut down, then rang back inside 2 hours to explain what had happened.
    Too late they had already shipped a replacement inverter.
    The isolation switches are shielded from the elements.
    One of the panels was damaged replaced at no cost.
    I think the damage was caused by a rock from a slasher hitting it.
    This is the kind of service a reputable company does no question asked.
    One installer who had been found in breach of fair trade and fined continued to send the same misinformation about its products to prospective customers.
    Once again only deal with long standing companies is the best advice.

  13. VictimsFamily 4 years ago

    I’ve been installing PV for 16 years now, and I have heard (nearly) every horror story under the sun.
    Almost all of the dissatisfied existing PV clientele that come our way (after giving up in frustration) are now previous clients of larger providers, and not just the ones associated with the energy cartels either.
    It would be interesting to see how a targeted advertising campaign selling the benefits of smaller, local and experienced installers would go. I think the time is ripe for this approach, as most of the public have a growing level of distrust towards larger enterprises.

  14. James Wallis 4 years ago

    Bull shit! We are very experienced and reliable installers, training customers in system monitoring and management and providing labour warranties for 20 years. This is Origin trying to position themselves as an authority in an industry they know fuck all about. Trust me my colleague just completed further technical training with Origin’s lead technical engineer…. hopeless. Origin you are a big company, but roofs are small and demand detailed attention and thinking… which is lacking in this article.

    Batteries are the best thing to happen to Australian consumers-giving you a range of quality choices. To neutralise high peak charges.

    In short, Origin is proving to be a scared, inefficient bunch of trough suckling executives.

    • david H 4 years ago

      Sounds about right!

  15. Ian 4 years ago

    Phil Mackey is exactly right we should never trust any regulated industry with Australian trained and certified installers unless they are corporatised and working for the likes of trustworth Origin, no conflict of interest there. Look how shaky our democracy is with the common people having the vote.

  16. juxx0r 4 years ago

    Awww, somebody cut their grass.

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