Renewable Energy Index - July 2018
To assist the Australian community in understanding the role and contribution of renewable energy to meeting our energy needs while also providing an important source of employment and reducing pollution, Green Energy Markets produces the monthly Renewable Energy Index.
The index tracks the contribution of the renewable energy sector broken down by fuel type and state on a series of metrics that are intended to translate abstract concepts such as megawatts and tonnes of CO2 into concepts the community can understand and appreciate such as number of households powered, and number of cars’ pollution avoided.
The surge in renewable energy supply is reversing the spike in power prices
- According to analysis for the Energy Security Board, wholesale power prices are forecast to almost halve over the next four years thanks to the addition of 7,200MW of extra large-scale supply from renewable energy since October 2016. Australia’s recent political chaos has been has been heavily influenced by politicians that claim increasing the amount of renewable energy in our power mix has been the cause of rapidly rising power prices. It is actually the opposite and a simple case of supply and demand.
- Prices began to rise upwards when large amounts of supply was withdrawn. In South Australia this began around October 2015 due to Alinta’s withdrawal from the contract market in advance of its announced closure of Northern Power Station (546MW). For the rest of the National Electricity Market prices began escalating in mid-2016 as Engie withdrew supply from the contract market in advance of its announced closure of Hazelwood (1,600MW).
- In the period leading up to these large power price rises investment in additional large-scale renewable energy supply had largely dried up as a result of Abbott Government threats to wind back the Renewable Energy Target.
- It was only after prices began spiking upwards with the announced closure of Hazelwood that we saw significant commitments to construct new large-scale renewable energy supply. 7,200MW has been committed to construction since October 2016.
- Power prices have since begun to decline. This started initially in mid-2017 with an instruction by the Queensland Government for its generators to stop withholding supply that was pushing up prices. Prices have since continued to decline in anticipation of increasing amounts of renewable energy supply reaching construction completion and contributing power to the grid.
- Likewise rooftop solar PV installations were actually in decline in the period preceding the spike in power prices. Installations only rose up above 2014 levels once wholesale power prices starting spiking upwards. As these have flowed through to end-consumer retail prices households and businesses have rushed to install solar at all time record levels as a source of cheaper electricity.
- Other consumers have also benefited as this additional supply of electricity from rooftop solar has acted to provide a source of new competition in both wholesale and retail electricity markets, rather than the illusion of competition through confusing discounts.