27 September 2018

Renewable energy to drive power prices down?

The renewable energy surge in Australia continues, with the most recent Australia Institute’s 2018 quarterly Emissions Audit reporting grid energy such as hydro, wind and solar added to rooftop solar accounts for 25.6% of the August national electricity market.

Deborah Allan - Colour CroppedThe audit states that over the past year grid supply of renewable energy reached 19.7%, putting Australia on track to easily reach its 2020 renewable energy target (RET).

Gallagher Client Manager, Energy, Deborah Allan (pictured) comments: “Investment in the renewables sector shows no sign of losing momentum and Gallagher has a role to play in helping position these types of businesses for optimum growth and returns.”

South Australia leads the charge with wind providing 55% of power generation in August, gas supplied 45% and wind and rooftop solar combined accounting for 60%, enabling the state to sell off its surplus to Victoria.

South Australian energy is also cheapest, at $72/MWh, followed by Victoria at $79/MWh, while New South Wales has the costliest at $93/MWh. Deloitte Australia Energy, Resources and Industrials National Lead Partner Michael Rath says SA, along with China, has the lowest unsubsidised, levelised cost of energy (LCOE) for concentrating solar power.

The Australian Institute predicts continued renewable energy growth over the next two years and suggests wind generation capacity will increase by 41% and total solar will grow threefold. The report author Dr Hugh Saddler says the significant increase in energy supply competition will apply downward pressure to electricity prices.

“This is the kind of news Australian consumers have been waiting for,” Allan says.

New energy Minister Angus Taylor announced on 19 September that the Morrison government will not replace the Renewable Energy Target, since the 26% reduction in emissions will be achieved by 2020.

Strong business prospects

According to Deloitte’s latest Global Renewable Energy Trends report, ‘investor-owned utilities have begun to demonstrate how distributed, renewable generation in a microgrid setting can be a cost-effective alternative to traditional transmission and distribution investments’. The report also notes that renewable energy can improve grid resilience to weather-related outages.

Rath says that the price for utility scale onshore wind and solar photo-voltaic (PV) generation has dropped to grid price parity and is moving closer to performance parity with conventional sources, noting that the Deloitte Global Renewables Energy Trends report shows Australia has the lowest cost for solar PV worldwide.

“Australia is at the forefront of advances in renewables usability and this puts us in a strong position for developing effective business models,” Allan says.

Allan is a specialist in the renewables market and has led advisory and placement services for some of Australia’s most notable recent solar and wind farm projects.

Learn more about Gallagher's Energy Practice