Solar PV Rollout 10 Times Forecast…Energy Retailer Reaction?

Giles Parkinson of Renew Economy writes that the greatest barrier to the rapid deployment of solar in Australia will not be about cost or a lack of demand – it will be the ability to get connected.

A Common Theme From Expert Inquiries

The following reports indicate that solar panels are offering cheaper power:

• The Victorian Competition and Efficiency Commission’s (VCEC) inquiry into feed-in tariffs in Victoria
• The Australian Energy Market Operator’s (AEMO) landmark report on solar and the accompanying analysis from Sunwiz and Solar Business Services
• The Australian PV Association’s (APVA) annual report for 2012, released 1 June 2012

Solar PV Nearly 10 Times Treasury Forecast

The AEMO report talks about a high scenario of 18GW of installed PV on the National Electricity Market (excluding WA, NT and other off grid areas) by 2031 which is nearly 10 times the forecast of Treasury and other government advisory bodies.

Sunwiz suggests an even more rapid deployment of PV, and predicting that:

“If off-grid, utility-scale, and WA and NT solar installations are included, the installed capacity in Australia could reach 18GW by 2022 – or around 30 per cent of total capacity, and approaching 10 per cent of production.”

With this scenario Sunwiz head, Warwick Johnston, says:

“This will have a disruptive influence on generators and retailers – the merit order is changed, transported volumes decrease, and peak pricing events alter in their timing and frequency..

Indeed, though deployment on this level may threaten current vested interests, PV can deliver outstanding benefits to the Australian community, environment, and economy..

On the basis of PV’s inevitable financial favourability within a decade, it is likely that today’s owners of fossil fuel generators will be heavily invested in the deployment of solar power in the not too distant future..

It means that home owners (and their capital) can take a more active role in climate mitigation..

Rather than relying entirely upon government or the top 500 Australian energy users to address climate change, most of the investment in solar electricity generation (and associated emissions reductions) entailed in the forecast would come from home and business owners, leveraging billions of private dollars to mitigate climate change and improve the financial sustainability of businesses..

In the long run, the fewer barriers there are to solar power, the sooner solar power can distribute its benefits, to the betterment of current and future generations.”

Grid Parity or ‘Socket Parity’?

The APVA report says:

“Most parts of Australia have reached grid parity, which might better be described as “socket parity,” meaning that solar panels now offer a cheaper alternative than power from the grid – a reality that will become increasingly obvious to the public as more solar leasing products and programs are rolled out to consumers..

In 2011, a total of 837 MW of solar PV was installed in Australia, more than twice the capacity of 2010, taking the total installed capacity in Australia to 1.4 GW.

36 per cent of the new electricity capacity installed in Australia in 2011 was rooftop PV – even if it still only accounted for 3 per cent of total electricity capacity and 1 per cent of actual generation.”

A Reluctance To Provide Connections

It seems the actions of retailers and gentailers, as well as distribution networks, is an issue. This was also identified by VCEC, which noted that utilities were often reluctant to provide connections while the AEMO said there may be physical constraints to the network.

No solution has been suggested.

Big Issues – The Right To Connect & Appropriate Tariffs

The ‘right to connect’ and appropriate tariffs being fed back to the grid are big issues.

The APVA wants:

• restrictions to be placed on anti-competitive actions of electricity retailers and gentailers (power retailers who generate electricity AND selling it on the retail market)
• more emphasis and support for energy storage to enable higher PV penetrations
• encouragement for customers on the on fringe of grids (who faced costly network upgrades) to convert to off-grid systems (an interesting statistic is the increase in domestic off-grid installations, which more than doubled to 101MW in 2011)

Will we see fossil fuel generators investing in solar???