Australian energy utilities at the brink?

In case you hadn’t noticed, there is a lot going on in the Australian solar energy industry right now.

In fact, I’ll rephrase that – there’s a lot going on in the Australian energy industry right now and in case you hadn’t noticed, solar is a major player.

Australia loves solar

On the one hand, we are battered and bruised from the incessant winding back of support programs (while support for fossil fuels rise) and the federal government’s solution to climate change is defined as not putting a price on carbon. Virtually the only remaining program we have (the Renewable Energy Target) is going through a pointless review headed by a panel who don’t think that emission reductions are required and want to lower the cost of electricity so we can all use more.

Luckily we also have an invisible, non-defined new program without any funding in Direct Action, which will apparently save us.

As I have said before, all the government and utilities can do is stall because solar is inevitable. So although we seem to have go through this (potential) dip, you just can’t beat a good man down. We aren’t down yet (sales have been slightly higher than forecast, so far) and we’ve learned a few tricks along the way to make it a damn good fight.

The RET Review submission process is a good example. The review process has to run its course and then submit its recommendations to government, which will take at least a couple of months. Then government has to decide what to do with the recommendations and what, if any, legislation they want to change – and then get it through the Senate. News in this week is that the review panel received a staggering 22,000 community submissions including 12,500 from renewable energy supporters, 250 from wind farmers and workers concerned about drought-proofing their farms and communities, and 1500 from people in community organisations trying to develop community owned wind and solar projects.

Well done to everyone who invested their time and money in stating the case for renewable energy support. It’s not just companies or those with vested interests, the bulk of submissions came from Australia’s Solar Citizens and they love their solar.

I would be surprised if any Australian Government has ever,  in our national history, received so many submissions on a single issue.

Sure, many are simple submissions but I know for a fact that many people and organisations put in very detailed and complex submissions, too. Many (including ours) were focused on encouraging the panel and government to seize this opportunity to not only continue supporting renewable energy, but to transform the energy sector. I vote we buy the panel a coffee maker, because they have an awful lot of reading to do and a battery of fine facts to understand.

Utility gamesmanship

Because we are affecting the energy industry, we are now materially part of the energy industry. And that, as we all know, is not going down so well with the majority of incumbents who are on the brink of major upheavals.

Not a week goes by when I don’t hear another story about something that the utilities are doing (retailers and DNSPs) which is either leveraging their monopolistic power or simply slowing the uptake of solar in crude, blanket-like maneuvers.

Take Queensland’s proposed new Draft Connection Standard for Small Scale Inverter Energy Systems. This was released a few weeks ago and the ramifications are still rippling through industry. The principle is fantastic; introduce a technical standard that better manages voltage rise issues and, thus, allows more solar on the network without introducing problems. I commend Energex and Ergon for this.

However, it's also clear that this has some profound implications. Both these government-owned utilities know that standard AS4777 is under redevelopment and has these very issues in mind, but rewriting a significant standard that is almost 10 years old is a huge task. Currently, the PV industry is driving its reform but it s a slow task run by volunteers who, quite frankly, face re-engineering of their products as an outcome (at significant expensive in most cases).

The utilities on the other hand, will benefit from improved power quality if reactive power correction becomes standard in inverters; solar systems will benefit their networks and potentially deliver financial gains for them. Even worse, there is a potential energy loss for solar owners, if we start playing around with power factor.

AS4777′s revision is underway so what possible justification is there for the Queensland Government-owned utilities to drag the process forward? With around four weeks to respond they have set a potential implementation deadline of the first of July. This is a grossly inadequate timeframe for distributors to clear stock and order new compliant stock, even if the technical specifications were concise and complete (which they aren’t), let alone educating the market and customers about how the potential loss of energy affects their proposition. To top it all off, enforcing the proposed reactive power specifications would actually put installers in breach of the Clean Energy Council, Clean Energy Regulator guidelines and a bunch or associated rules and regulations.

So what does bringing it forward achieve? It wastes industry's time, will potentially cost a huge amount of money on an issue they were already working on, and delivers potential savings to the government-owned utilities while potentially adding cost to solar systems. I am assured it’s designed as a process of discussions and negotiation, which is great. But in all honesty, if they wanted this fixed faster then they could simply have invested in accelerating the revision of AS4777, or convening urgent working groups, instead of shoving the issue up our clacker with a deadline they know damn well is utterly ludicrous. (By the way, you can take this as my submission if you like).

Then there is the quite stunning case of Actew/AGL. Actew/AGL are a private-government partnership who provide energy to the majority of the ACT’s 300,00 electricity customers. There is contestability in the ACT, but with the country's lowest energy prices, few others bother to sell energy there. In a confounding example of the manic behaviour of utilities in recent times, the private part of this partnership (AGL) switched its position on the RET from 'sounds ok, we can live with that' to 'its unattainable and should be completely axed' in its RET review submission.

Ironically, this about-face was only days after a lovely story in which Actew/AGL announced that: 

“Today (May 6) marks an exciting milestone for the organisation as we officially launch our Actew/AGL Solar product.” 

Now AGL have been playing in solar for some time so I was a bit confused about what was new, but the irony of blaming solar for the rising cost of electricity and negative impacts on their business models in their RET submission, while simultaneously launching a solar offer was not lost on me. But what really got me was the rather frank admission that looked to me like a potential abuse of market power or, at minimum, certainly leveraging their market power for competitive advantage over every other solar provider.Their story and webpage says: 

What this statement infers to consumers is that this government-private partnership (who are uniquely DNSP and retailer in one) can get this data more easily, faster and do the sums better than a solar company who is not a utility. If that is not raise questions of abuse of market power I don’t know what does. Given that most ACT residents don’t have interval meters, I also wonder what real advantage they do have?

Now I look forward to being corrected but regularly experience the aggravation, hassle, time and, in many cases, cost of getting billing data from utilities, and what I hear from installers is that the ACT is no different. If I’m wrong, I’m sure Actew/AGL will let me know what their process and advantages are, and in the spirit of openness and transparency make that same process and data access available to all solar installers.

Leaving solar just for minute, it’s worth remembering that consumers can all “switch and save”; the government (no less) has told us all that’s the best way to buy electricity. Negotiate a contract, get a discount and everything will be sweet. Except for the catch, which we have highlighted before. The catch is that if you don’t pay astounding detail to what the renewals say, you’ll find yourself losing your discount very quickly, as one very astute customer noted yesterday in The Sydney Morning Herald. Geoff Dunsford noted that he had a 12 per cent discount under contract and was urged to “renew and get 4 per cent off”. What his persistence showed was that this was not an additional 4 per cent but rather, a total of 4 per cent discount meaning his price would go up by around 8 per cent or around $600 a year

It’s really no wonder there is an energy revolution underway, is it?

Nigel Morris is director of Solar Business Services.