New South Wales bucks trend to go big on solar

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Just days after Australia’s federal government scrapped the country’s carbon tax, the state government of New South Wales has announced its intention of becoming “Australia’s answer to California,” when it comes to renewable energy. The statement from minister Rob Stokes goes against a trend around the country where conservative governments have not supported renewable energy and solar – winding back schemes, deploying thermal generation capacity and backing utilities’ efforts to restrict solar deployment.

The conservative Liberal Party – the same party as Prime Minister Tony Abbott – currently governs in New South Wales (NSW) but it appears the state party has decided to take a markedly different course on renewable energy to its federal counterpart. At the Clean Energy Week event, the state’s environment minister said that NSW was committed to the 41,000 GWh by 2020 goal, mandated by the Renewable Energy Target (RET). The RET is in the crosshairs of the federal government and is currently under revue.

NSW will look to energy efficiency, clearing the way for wind development and solar PV to deliver on its renewable energy aspirations. The state government plans to install solar PV on as many of its buildings as possible and has set aside a budget of AUD$290 million (US$272 million) over 10 years to realize this ambition and carry out energy efficiency measures.

Political campaign to support solar

Mr Stokes’ speech comes at a time when the Australian solar industry is trying to turn widespread public support for solar into political action. John Grimes, the Chief Executive of the Australian Solar Council told pv magazine that the egregious policies of the federal government, when it comes to renewable energy and solar, has spurred the industry into action.

“The [federal] government has underestimated the popularity, the acceptance and the positive impact that solar is making and I think that they do that at their peril,” said Grimes. “When you have a government that is so dedicated to shutting the industry down, then unfortunately we can no longer be complacent. This is now a threshold issue for the industry, we need to stand up.”

The Solar Council’s Grimes said that it would target marginal electorates to put pressure on local politicians to come out in support of solar. The first focus will be the seat of Petrie in Queensland, located in the suburbs of Brisbane.

“Petrie is the most marginally held [conservative-held] seat in the country,” said Grimes. “It also is one of the global leaders in terms of household solar PV penetration and we will mobilize the community to send a strong message to the government. The message is that Australians are not with you on this; we want a better future, we want cheaper electricity, we want more control, and we won’t stand with you backing the vested interests instead of backing the interests of ordinary Australians.”

As the statements by NSW’s environment minister demonstrates, there is support for renewable energy and solar amongst the conservative parties in Australia, however in recent years as renewable penetration has increased, this support has faded. Particularly on a federal level, conservative Liberal and National party politicians have repeatedly blamed renewable energy for driving up electricity prices. By pressuring marginal electorates, the Australian Solar Council clearly is hoping to turn that sentiment around and engender support for solar not only amongst the community but from within of the conservative parties themselves.

“The great myth and the great lie that has been promulgated by the big power companies and by state governments is that it is green programs that have been pushing up the price of electricity,” said Grimes. “Poles and wires account for more that 50% of the average person’s electricity bill and rooftop solar PV accounts for less than 2% today and by 2016 it will provide a positive return

Grimes said that the Australian Solar Council is working to get that message out. Along with the seat of Petrie in Queensland, the Solar Council will focus its political campaigning efforts on the Western Suburbs of Sydney and three electorates in Victoria. During the Senate by-election in Western Australia in April of this year, the Australian Solar Council campaigned vigorously for policies in support of solar. Greens Senator Scott Ludlam, the most outspoken supporter of renewables amongst the Senate candidates, was returned in that election with an unprecedented high primary vote.

Utility death spiral?

Also in Western Australia, the state-owned utility Synergy has been left with a lack of board level leadership, with the unexpected resignation of chairman Mike Smith and three of its board members this week. This leaves the utility at a standstill as it now lacks a quorum at board level.

The utility has recently had its retail and generation arms remerged, making it a “gentailler” – with retail and generation capacities under one roof. It is currently not profitable, requiring subsidies of around AUD$500 million (US$469 million) annually from the state government to deliver electricity to households at around AUD$0.23/kWh. Commercial customers frequently pay higher rates.

Given this predicament and ever increasing levels of residential and commercial PV, questions as to the sustainability of the utility are increasingly being raised. The utility currently relies largely on thermal generating capacity, comprised of coal base load facilities and gas peaking generating capacity. Further complicating matters Western Australia operates a capacity electricity market, meaning some peaking gas plants were built and receive payments yet, with falling electricity demand, they are rarely used.

Synergy has owns and operates nine wind facilities and one 10 MW solar park, although it relies on diesel generation in remote parts of the Western Australia and large coal fired plants in the state’s south west. Controversially, Synergy also undertook refurbishment of the 47-year-old 240 MW Muja AB coal fired power plant. According to a review of the refurbishment by KPMG, the project has cost the utility and taxpayers AUD$308.4 million, more than AUD$200 million than was initially planned.

KPMG produced an indicative base case valuation of the refurbished Muja power plant, as of April 2014. With a 10-year lifespan, KPMG has given Muja a valuation of AUD$88 million, increasing to AUD$132 million if the plant is operational for 15 years. These valuations are increased, according to KPMG figures, by AUD$6 million and AUD$15 million respectively with the removal of the carbon price.