Australian Renewable Energy

Market Update

Tristan Edis – Director Analysis & Advisory

Nov 2016

Outline

• Australia’s coal love affair

• Policy support for renewables

• Trends and outlook

• The sad story of remote/small grids

2

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

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

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

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

Trends & outlook

7

Monthly renewable generation in NEM

Trends and outlook

• Supply of renewable energy falls short of demand

8

Large-scale RET demand-supply balance

Trends and outlook

• We need an awful lot of capacity and quickly

9

Historical MWs committed versus required to meet RET

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

Trends and outlook

• Solar PV market gone through two booms and then

slow decline and now may be stabilising.

11

Trends and outlook

• Growth in system size has offset large drop in

system numbers

12

Proportion of systems installed by size category

Solar share of total generation

13

Sunday 20 Nov 2016 32%

24%

16%

8%

Solar share of total generation

14

Monday 21 Nov 2016

32%

24%

16%

8%

Solar share of total generation

15

32%

24%

16%

8%

Tuesday 22 Nov 2016

Solar share of total generation

16

Wednesday 23 Nov 2016 32%

24%

16%

8%

Solar share of total generation

17

Thursday 24 Nov 2016 32%

24%

16%

8%

Solar share of total generation

18

32%

24%

16%

8%

Friday 25 Nov 2016

Solar share of total generation

19

Saturday 26 Nov 2016

32%

24%

16%

8%

20

Darwin

12.7% dwellings

Outer Melbourne

Suburbs

20%+ dwellings

21

Esperance

9.3%

Karatha

4.1%

Derby

2.7%

Canning Vale

37.6%

22

Brisbane

30+%

Karumba/

Normanton

4.5%

Birdsville

8.2%

Inland of Cairns

11.6%

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

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

Presented by:

Tristan Edis Bcom (Hons)

Director – Analysis & Advisory

T +61 3 9805 0777

Tristan.edis@greenmarkets.com.au

greenmarkets.com.au