Australian Renewable Energy Market Update Highlights Need for Policy Change
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Tristan Edis has 13 years’ experience analysing energy and climate change policy issues and the associated markets, industries and technologies. He is one of Australia’s most prominent expert commentators on the renewable energy industry and climate change mitigation policy. His experience most recently was as the editor of Australia’s leading daily news and analysis website on the business and politics of climate change – Climate Spectator. This publication acted as the key reference source on market, policy and industry issues affecting the renewable energy sector in Australia. In addition Tristan Edis has also been involved in leading research on carbon abatement certificate markets and renewable energy through his time working at the Grattan Institute, Ernst & Young’s project finance advisory division, the Clean Energy Council and the Australian Government’s Greenhouse Office (which then became the Department of Climate Change).
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Australian Renewable Energy Market Update Highlights Need for Policy Change
- 1. Australian Renewable Energy Market Update Tristan Edis – Director Analysis & Advisory Nov 2016
- 2. Outline • Australia’s coal love affair • Policy support for renewables • Trends and outlook • The sad story of remote/small grids 2
- 3. About Green Energy Markets • Green Energy Markets produces analysis on supply, demand and prices in Australia’s major carbon abatement certificate markets. • Tristan Edis: – Climate Spectator, Grattan Institute, EY, Clean Energy Council, Australian Government Greenhouse Office • Subscribers include power co’s, developers, equipment suppliers and government. 3
- 4. Australia’s coal love affair • Australia’s biggest export earner has been coal. • Australia’s electricity mix dominated by coal. • The carbon emissions intensity of Australia’s electricity supply is the highest in the OECD (excepting Estonia) and higher than China. • The wholesale cost of generating electricity (not delivered cost) in Australia has historically been some of the lowest in the developed world approx. US$32/MWh or $40AUD • We also have good solar and wind resources but $40 insufficient. 4
- 5. Policy support for renewables • Government policy known as the Renewable Energy Target scheme underpins project viability. • For solar below 100kW it provides an upfront rebate of up to $40 per MWh for imputed generation over next 15 years. Equates to: – Vic: $700/kW – NSW, Southern QLD, WA, SA: $800/kW – Northern/Inland Aust: $900/kW • By comparison you can buy a system pre-rebate for about $1300/kW - $2000/kW 5
- 6. Policy support for renewables • For larger than 100kW you receive financial support per MWh after it is generated. Financial value varies up to cap of $65 non-tax deductible or $92.86 tax effective. 6
- 7. Trends & outlook 7 Monthly renewable generation in NEM
- 8. Trends and outlook • Supply of renewable energy falls short of demand 8 Large-scale RET demand-supply balance
- 9. Trends and outlook • We need an awful lot of capacity and quickly 9 Historical MWs committed versus required to meet RET
- 10. Trends and outlook • The cost of renewables is less than available prices 10 • ACT wind auction results (nominal): – Hornsdale I – $92 – Hornsdale II – $77 – Sapphire – $89.10 – Coonooer Bridge – $81.50 – Ararat - $87 Combined value Power + LGC Power price - 2019 Plus LGC @ $85 SA $99 $184 QLD $68 $153 NSW $67 $152 VIC $68 $153
- 11. Trends and outlook • Solar PV market gone through two booms and then slow decline and now may be stabilising. 11
- 12. Trends and outlook • Growth in system size has offset large drop in system numbers 12 Proportion of systems installed by size category
- 13. Solar share of total generation 13 Sunday 20 Nov 2016 32% 24% 16% 8%
- 14. Solar share of total generation 14 Monday 21 Nov 2016 32% 24% 16% 8%
- 15. Solar share of total generation 15 32% 24% 16% 8% Tuesday 22 Nov 2016
- 16. Solar share of total generation 16 Wednesday 23 Nov 201632% 24% 16% 8%
- 17. Solar share of total generation 17 Thursday 24 Nov 2016 32% 24% 16% 8%
- 18. Solar share of total generation 18 32% 24% 16% 8% Friday 25 Nov 2016
- 19. Solar share of total generation 19 Saturday 26 Nov 2016 32% 24% 16% 8%
- 20. 20 Darwin 12.7% dwellings Outer Melbourne Suburbs 20%+ dwellings
- 23. Huge cost difference 23 REALITY 100kW system: $1.20 10kW system: $1.40 5kW system:$1.55 Note: based on landed module prices @ US$0.40 (AUD$0.53) Using Fronius/SMA+ Jinko/Trina NT Power & Water Experienced urban solar retailer Cost per watt - remote utility vs urban retailer
- 24. Conclusion • Policy settings require big step-up in investment in utility-scale. • Rooftop PV now a big player in major cities and grids. • Cost of solar PV now very attractive but can it be replicated outside urbanised areas. • But uptake lagging well behind in remote/smaller grids. 24
- 25. Presented by: Tristan Edis Bcom (Hons) Director – Analysis & Advisory T +61 3 9805 0777 Tristan.edis@greenmarkets.com.au greenmarkets.com.au