Western Australia’s government-owned utility Synergy has been hit by an accelerating shift to rooftop solar, as households and businesses respond to rising grid prices and the removal of subsidies that lowered the cost of delivery of the state’s largely fossil fuel grid.
Synergy’s annual report released late last week reveal that company’s generation fell by 10 per cent in the last financial year, and its electricity sales by 5.6 per cent – both due to the increased use of rooftop solar and lower demand for the grid.
Generation is now 20 per cent below 2014 – falling from 9,404GWH to 7,497HWh. This has coincided with the dramatic reduction in subsidies that delivered relatively cheap electricity prices to consumers, but which also boosted the state’s investment in expensive coal and gas generators.
Those government subsidies – paid directly by taxpayers – amounted to $510 million in fiscal 2014, and have been slowly wound back. In fiscal 2018 (the financial year that ended on June 30), the subsidy was still $140 million, half the previous year, and is due to phase out next year.
As the subsidies have been wound down, the price of electricity has been lifted to reflect its true cost – which in W.A is expensive, and customers have been flocking to rooftop solar.
Synergy says the rate of installations in rooftop solar increased in the last financial year, with more than 130MW added in its area to take the total to more than 800MW in fiscal 2018. Across the state, some 183.6MW of rooftop solar was added to a total of 928.5MW
Synergy doesn’t seem too pleased, although it appears to concede the transition to cheaper renewables is inevitable.
“In our state, like elsewhere, this profound change is driven by a number of simultaneous forces,” chairman Robert Cole, the former head of oil and gas producer Beach Petroleum, says in his notes.
“The uptake of rooftop PV has resulted in a challenging daily load profile, and the increasing levels of intermittent large-scale renewables have impacted the critical stabilising role of traditional generation.”
(WA in fact has little in the way of large-scale wind and solar, which account for 7 per cent of the state’s total generation, thanks mostly to the previous government whose policies resulted in just 8MW of added large-scale capacity over three years).
“In this dynamic environment, we at Synergy, have ramped up our efforts over the past year to transform our business, so that we can meet the rapidly changing needs of our customers, while ensuring our business is commercially sustainable and delivering value to our owners, the Government and people of Western Australia,” Cole said.
“At the heart of our challenge is the changing generation profile in the State. Installed rooftop solar capacity …. it is estimated …is now supplying 7 per cent of total South West Interconnected System demand.
“This trend is forecast to continue as customers, facing rising electricity prices, look for cheaper alternatives. In addition, a significant amount of large-scale new renewable generating capacity will be added to the network over the coming years.
“This major growth in renewable generation, has profound consequences for the dispatch profile of our generation fleet and our cost of generation, as well as our revenue base.”
Synergy last year finally closed the ageing and decrepit Muja AB coal-fired generating units in Collie, having spent $310 million in a futile attempt to extend the life of the 52-year-old plant. Two younger units are still in operation.
In his notes, CEO Jason Water described solar energy as one of the “most immediate opportunities for Synergy’s customers to manage their electricity bills and contribute to a cleaner electricity supply chain.”
He said more than 1000 residential solar systems had now been installed as part of Synergy’s solar and battery business, SolarReturn. He gave no information on how many batteries had been installed.
