WILL A “SUN TAX” SLOW DOWN ROOFTOP INSTALLATIONS?

Look around the suburbs and you will see rooftop solar PV installations have taken off. But Australia’s love of using the sun to power our homes has led to increased pressure being put on the distribution network. The high share of intermittent generation on the network, such as rooftop PV, has seen network operators warn consumers of an increased risk of congestion on the grid and possible blackouts. The increase congestion and the increase risk of blackout has led to the call for more market reform.

As part of ARENA’s Distributed Energy Integration Program, the Australian Energy Market Commission (AEMC) have rolled out their next phase of market reform in response to the increase congestion on the distribution network. The proposed changes include:

  • Changing distribution power networks’ existing incentives to provide services that help people send power back into the grid
  • Officially recognising energy export as a service to the power system.
  • Allowing power networks to develop new tariff options including two-way pricing.
  • Flexible pricing solutions at the network level.

The latest raft of reforms are designed to allow more solar and new tech energy into the grid. But Solar advocates have focused on the rule change that will allow distributors to charge solar households to export power.

Solar advocates have labelled the new legislation a “Sun tax” and have called upon state energy Ministers to “protect solar owners from this discriminatory charge’’.  The proposed reform, released for consultation last week, has been labelled a ‘‘sun tax’’ by community interest group Solar Citizens. Solar Citizens also called on state energy Ministers to ‘‘protect solar owners from this discriminatory charge”. It must be highlighted that this legislation is not a tax, and the new energy rule will include extra safeguards to ensure existing and new solar customers – and non-solar customers – are protected. The proposal does not mandate default charges for exporting power.

Market participants, including the distribution companies, agree the proposed reforms will allow more rooftop solar systems and batteries. This reform will also allow the smarter use of the network with distributed energy resources (DER) linking together to optimise the grid. This reform will enable more DER and how DER is managed. Currently as high levels of rooftop solar PV generation increase distribution companies restrict the power exported to prevent voltage spikes, frequency changes and in some cases blackouts.

Modelling by the AEMC shows a typical household with a roof top PV could lose out on $70 each year if this market reform goes through. The AEMC modelling also showed the reforms could impact around 20% of households. 80% of households will be no worse off and many may be better off by $15 as they would not be paying for the higher cost of distribution associated with building a grid to accommodate excess solar energy.

The AEMC have highlighted that these reforms are fairer as late adopters of rooftop PV are not disadvantaged with the current “first in, best dressed” structure.  AEMC CEO Ben Barr emphasised that the proposal would not mean that every kilowatt of energy exported into the grid would be charged, he believes distributors to offer a variety of options for solar households, which could include free exports up to a certain limit.

Energy Consumers Australia, which represents retail energy users, said the proposed reform was only the first step in a process that needed to focus on talking to consumers and putting their needs first.

EDGE IS HELPING BUSINESSES TO STEP UP THEIR CLIMATE EFFORTS

The world is changing……………………. you only had to look out the window this week, to see the impacts of this.

No matter how you think it is occurring or who you think is contributing to it, climate change is real.

Over the last decade it has been more evident that Australia is being impacted by climate change. We have seen higher temperatures, worsening droughts and most recently parts of Australia have been impacted by the worst floods in a decade.

Australia has always been affected by extremes in the weather, but science shows the impact and regularity is increasing.

At Edge part of our role is to advise our clients on how to best manage risk. This is not always financial risk as most people would assume but, indirectly climate risk. This is the biggest risk many companies are facing, and this directly relates to financial risk.

Investors are starting to push companies to align their operations towards emission reduction targets and the use of sustainable practices. Many companies across Australia are pledging to reduce emissions to ‘‘net zero’’ by 2050 however, many do not have a clear strategy to reach this target.

Edge has and is currently assisting our clients with the development of low carbon business models.

When investors are weighing up the performance of a company, they are now allocating more weighting to how the company manages it sustainability.

Edge works with a range of clients including, some of the largest mining and utility companies worldwide and over the last couple of years we have developed strategies to decarbonise their businesses.

The procurement of renewable energy is just one way in which Edge is assisting clients.

We have developed sophisticated mechanisms to provide the client with access to:

  • renewable energy
  • environmental certificates
  • emission offsets

and……………..we are still able to manage the price risk and uncertainty in the energy market.

IS GAS THE TRANSITIONAL FUEL?

 

Following feedback from industry that gas is not the transitional fuel for Australia to help move from Coal fired generation to renewables, AEMO is grappling with their plan to model a ‘gas led recovery’ scenario for the 2022 Integrated System Plan (ISP).

AEMO are now calling the ‘gas led recovery’ the ‘diversified technology’ scenario.

It appears that not all is dead for gas as an option as the transitional fuel and a fuel used into the future. Methane (CH4) is commonly thought of as the gas to power generation, however in this case it looks like ammonia (NH3) could be used. This carbon free fuel can be made by renewable hydrogen and is commonly used in fuel cells and rocket engines as a propellant.

Gas turbine generators are essentially modified rocket engines so it’s not hard to imagine ammonia to be used to fuel power generating gas turbines. Mitsubishi Power have developed gas turbines to operate on hydrogen but now they have gone a step further to develop ammonia-fired technology.

Mitsubishi Power is currently developing a version of its 40MW H-25 series gas turbine that would operate using ammonia, this commercial scale gas turbine is the first in the world to operate on ammonia as a fuel and is expected to reach commercialisation by 2025.

Ammonia is the chosen fuel as it is a highly effective transporter of hydrogen, using readily available nitrogen molecules to create a stable compound able to be easily stored and transported.

Apart from the usability of ammonia as a fuel source it comes with the added benefit of achieving a carbon neutrality fuel.

As with any technology there is always a downside, the combustion of ammonia results in the production of Nitrogen oxide (NOx).  NOx can have harmful effects on the environment by creating smog and in some cases acid rain. The NOx by-product can be reduced using catalytic similar to the ones used in car exhausts to reduce the level of emissions.

AGL BUYS TILT

 

In a $2.7B deal AGL has taken control over Tilt Renewables. The deal between Powering Australian Renewables (PowAR) a futures fund, which is 20% owned by AGL will buy Tilt Renewables.

Queensland Investment Corporation (QIC) is also a partner in PowAR. The futures fund together with Mercury NZ, paid $NZ7.80 per share in cash for Tilt Renewables. Tilt Renewables is a New Zealand company,  which owns wind and solar farms in both Australia and New Zealand.

The PowAR and Mercury consortium outbid APA Group, Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) and Australian fund manager, Infrastructure Capital Group which is associated with Engie.

PowAR will take Tilt’s Australian portfolio of projects, while Mercury NZ will take over the New Zealand business.

As Mercury NZ is currently a partial owner of Tilt Renewables with a 19% share they have been committed to the sale. The majority owner Infratil, with a 65.5% stake in the business has also  committed to supporting the sale.

The deal, which will make PowAR the largest owner of wind and solar generation in Australia, was funded by $341 million from AGL.

AGLs Chief Executive Brett Redman described the deal as “an exciting opportunity for PowAR to further extend its leadership in renewable energy generation”.

As the largest owner of coal fired generation in Australia, AGL will use this deal to complement its recent acquisitions of commercial solar companies Epho and Solgen. This will allow the company to move towards its climate commitments.

Happy 2021 from Managing Director, Stacey Vacher

Intertwined with Christmas and New Year celebrations, Edge2020 capped off the ‘year that was’ with excellent news regarding a 58MW renewable power purchase agreement (PPA) we brokered, and the re-signing of our longest serving and largest client.

With more renewable PPAs in the pipeline, we hope to share more good news in the coming weeks. This year we are more committed than ever to deliver consumers and generators ‘win-win’ energy solutions.

For years Edge2020 has been working with leading renewable developers, financial institutions and wholesale trading counterparties to deliver consumers renewable backed products that rival standard market contracts. Whilst complex to structure and broker, they offer consumers low-cost, low risk, highly flexible and simplistic energy contracts that cannot be rivalled. We are currently aggregating loads for deals in New South Wales and Queensland, with limited opportunities available to join these transactions in early 2021.

Edge Utilities isn’t resting either, as we dive into 2021 providing both financial and physical renewable energy solutions.  We’re bringing Edge2020 renewable backed deals to smaller businesses, Strata and Body Corporates.  We’re also beyond excited to have partnered with a number of exceptional like-minded companies during 2020 that will allow us to deliver behind-the-meter solar solutions to low and medium rise commercial and residential strata complexes. We’ll be combining these financial and physical products to deliver unprecedented renewable energy solutions to this segment of the market.  And to say we are excited about it, is an understatement!

We want to make our goals for 2021 crystal clear. We want all consumers to be more informed. We want you to genuinely understand the energy deals that you are presented with – the good, the bad, and the downright ugly.  We want you to pursue opportunities that deliver genuine cost savings, not just perceived savings. And in doing so, we want you to help save our planet.

Let us do the hard work for you. Let us bring you the benefits of decades of energy market expertise and strategic relationships, and trading and brokering billions of dollars of energy deals for some of the largest names you can think of.

Let us save you, and our planet.

Reach out using any of the following, and one of our team will be in touch. save@edgeutilities.com.au info@edge2020.com.au 1800 334 336

Alternatively contact our National Sales Manager, Lolita Sillars, directly at lolita@edgeutilities.com.au or our Managing Director, Stacey Vacher, at stacey@edge2020.com.au

To say 2020 has been a colossal year………… is an understatement!

As the year rounds to an end, we would like to take the time to reflect and give thanks. Our sincere thanks to all those who have supported us during this difficult year. Our thoughts and best wishes go out to the individuals, families, and businesses who too have been adversely impacted by the events of 2020. We wish you well as you pivot and rebuild.

The year that was…

Big picture:

  • Trump does, well Trump things – drones, tweets, fails to manage COVID-19 better than anyone, apparently wins an election that he didn’t actually win.
  • China flexes its military muscles in our backyard, their international trade muscles get a workout too.
  • Oh, China also “seemingly” gifts the world COVID-19.
  • A global pandemic follows – 59.7 million cases worldwide, over 1.4 million deaths.
  • Entire industries and businesses are decimated as governments deliver unprecedented incentives.

Close to home:

  • Australian bushfires rage – 46 million acres burn, 1 billion animals perish, 6,000 buildings go, 34 people die.
  • Australia locks down to the threat of COVID-19 – 27.8k cases, over 900 deaths.
  • State and federal governments start spending, leading us into 2021 with a propped-up economy.
  • The RBA drops the cash rate to 0.10%.
  • Energy prices crash – only recently starting to rebound.
  • Many equity and commodity markets crash – most having firmly recovered.
  • Victorians are banished, for months.
  • The AFL grand final is played in QLD – and during the night! Go Tigers!!!
  • The State of Origin is played in three weeks, with the “worst QLD team ever” winning the series.
  • Northern NSW and QLD property prices soar, as they are deemed the safe space to be by cashed up southerners?!……… along with Chris Hemsworth and his mates.
  • Anna has “kept us safe” so she lives to torment Gladys another day.

 Closer to home:

  • Edge Energy Services turns 13 years young and is rebranded Edge2020.
  • Our team trades over $627 million in energy and environmental products.
  • Over 5.7 TWh  approximately $283 million in energy.
  • Over 800k Large-Scale Generation Certificates (LGCs), 1.2m Small-Scale Technology Certificates (STCs), and 33k Energy Savings Certificates (ESCs), totalling over $77 million in environmental certificates.
  • We facilitate over 775 GWh p.a. of renewable power purchase agreements (PPAs), with terms from 5 to 9 years and a total value of over $267 million.
  • We dive deep into the Safeguard Mechanism and deal in several Australian Carbon Credit Units (ACCUs).
  • We continue to structure competitive renewable deals, and we blend and extend as we knowingly fall on our progressive portfolio management sword.
  • We say a temporary goodbye to a few large clients, as they bed down with fixed term fixed (COVID friendly) prices and + 30% savings.
  • We re-contract a number of larger clients, as they continue to support us as a valued business partner and energy management team.
  • Our team expands, then contracts, as we ride the wave of uncertainty.
  • Edge LIVE gets a welcomed facelift and a few new features, including deal capture.
  • Edge Utilities is reborn, officially launching on 1 July 2020. With a tenacious new National Sales Manager and some valued service providers, we deliver a shiny new website edgeutilities.com.au.
  • We dive into the world of strata / body corporate and all things embedded networks – determined to bring value to a “smaller” large consumer.
  • Our journey in this new world uncovers the good, the bad, and unfortunately, the ugly.
  • New products and business opportunities arise, pipelines grow, new trading partners present, new alliances are formed.

On a more personal note:

  • R U OK? Day coincides with me going public in support of kinder client relations with staff – too many lives lost, too many reasons why.
  • We focus on our people, as individuals that instinctively operate within our core values – with integrity, honesty, trust, loyalty, and respect.
  • With increased working from home arrangements, we become even more focused on cultivating a cohesive, supportive, and collaborate team culture.
  • We watch David Attenborough’s witness statement “A Life on Our Planet” and ask ourselves – How can we use our expertise to contribute to the “road to recovery?

2021 looks busy, but oh so sustainably bright!

  • We will shift our focus even more to renewable solutions, products, and markets.
  • Edge Utilities will move to become a fully renewable backed brokerage service.
  • We will soon be offering physical renewable solutions behind the meter and getting more involved in managing Frequency Control Ancillary Services (FCAS) and Virtual Power Plants (VPPs).
  • Edge2020 will continue to play a key role in assisting our clients to achieve their sustainability objectives and proactively manage energy market risks.

With renewable solutions exponentially gaining momentum, we’ve never been more excited about where our market and products are headed!

We hope you take a well-earned and restful Christmas break with loved ones.

Our team look forward to sharing much more detail with you soon and working with you in 2021.

Stay safe and well.

Stacey Vacher
Managing Director, Edge2020, Edge Utilities

What is a VPP?

Many of you would have seen the acronym VPP floating around the energy industry, in AEMO documents and publications like the Integrated System Plan (ISP). So, what is a VPP? A Virtual Power Plant (VPP) is basically an aggregation of resources. These can be generation, storage and controllable load from decentralised sources.  All being coordinated to deliver services to the power grid including electricity, FCAS and other power system services.

Last week battery manufacturer Sonnen reached the magic threshold of 1MW to operate in the National Electricity Market (NEM) and plans to operate a VPP.

The German based company, Sonnen, now owned by Shell, has built a network of customers to allow their Sonnen branded home batteries to participate in the company’s new virtual power plant.  This has been designed to provide frequency control services. The customers will receive a financial benefit through cash payments. Sonnen’s new program will also provide grid stability services.

The VPP branded, sonnenConnect is Sonnen’s first VPP worldwide.

Each Sonnen battery will not be heavily relied on due to the nature of the VPP aggregating all outputs. To operate in the FCAS market, each household will only be required to supply 4kWh of energy to provide the essential grid stability services.

To be eligible to participate in Sonnen’s VPP and rewards program, households will need to have one of Sonnen’s batteries installed, with at least 4kWh of capacity. No additional equipment will be required to allow batteries to participate in the program as Sonnen batteries incorporate the necessary control systems.

Sonnen has chosen Australia to launch its VPP products as Australia is more open to the establishment of VPPs, along with the high uptake of battery storage system installations compared to other parts of the world.

“With the growing uptake of rooftop solar and home batteries globally, utilities are recognising the importance of home batteries in Frequency Control Ancillary Services (FCAS) or what is known as demand response, to stabilise the grid when there is a surge in the demand for electricity”, Nathan Dunn, Sonnen Australia CEO said.

He also said “through sonnenConnect, we are rewarding customers who are providing us access to their Sonnen Battery when needed for demand response. Not only will they enjoy being energy independent, Sonnen Battery owners are working together as a community to stabilise the energy grid that connects millions of homeowners in the National Electricity Market.”

Sonnen has established a manufacturing facility at the former Holden factory in Adelaide. This allows Sonnen to be branded Australian made. They plan to use the Australian facility to produce other components and software for the energy industry including electric vehicle charging units.

Engie Expands in Australia

The influx of multinational’s into the Australian renewable energy industry is increasing with historic oil and gas producers such as Shell, BP and Total entering the market.

These global energy giants are making large acquisitions to expand their local presence in the clean energy sector. In a world where developers are struggling to bank projects the strong balance sheets of these companies is a welcome addition to the industry.

Engie is the most recent multinational company to expand in Australia with the purchase of development rights to the $750 million Hills of Gold wind project in northern New South Wales.

This project is the foundation development in the newly created Renewable Energy Zones (REZ) in New South Wales’s New England region. This REZ is the first REZ to be created under Australian Energy Market Operator’s (AEMO) vision.

The acquisition of the Hills of Gold Wind Farm will add 420MW into the region. The project was previously developed by Wind Energy Partners.

Engie is one of the world’s largest electricity utilities, with the French multinational operating more than 115GW of generation capacity globally, including a 19GW portfolio of renewable energy projects.

The project will consist of 70 6MW wind turbines and will be connected to the transmission network between Liddell and Tamworth.

Engie has previously owned power assets in Australia, being the operator of the brown-coal Hazelwood power station in Victoria that was closed in 2017. They have ambitious targets for Australia, hoping to develop 2,000MW of Solar and wind projects.

Engie has recently set up the Australian Renewable Energy Trust with Infrastructure Capital Group and Mitsui as a renewable investment vehicle. The trust contains Engie’s 119MW Willogoleche wind farm and it is likely the Hills of Gold project will be added to it.

Electric Vehicle’s to Power the World

Greenpeace have published a report outlining that batteries from Electric Vehicles (EVs) could meet the worlds energy storage requirements. The report highlights the problems emerging from decommissioned lithium-ion batteries out of EVs.

The report also examines the impact of the growing EV sales across the world will have on the supply chain Ore that is mined to produce the minerals to then produce lithium-ion batteries.

There are critical supply chain risks for primarily the lithium and cobalt required for the batteries. Countries like China, South Korea and Japan manufacture 85% of the worlds EV batteries however do not have the large quantities of raw materials available locally.

It is forecast that over the next 10 years the global Lithium battery market will expand at such a rate that 30% of the worlds Cobalt reserves will be exhausted. During the same time 10.35 million tonne of lithium, cobalt, nickel, and manganese will be mined.

EV batteries are replaced once their usable capacity drops below 80%, this normally occurs within 5-8 years from manufacture. Although not useful in EVs, the batteries can be repurposed to meet other needs.

The report finds that repurposed EV batteries could cover all global demand for energy storage in 2030, calculated to be around 368GWh of capacity.

Decommissioned EV batteries could be repurposed and used as backup power systems in telecommunication infrastructure and data centres. They can also be used for energy storage devices across the National Electricity Market (NEM) and remote area power supplies.

 

Written by: Alex Driscoll, Senior Manager, Markets & Trading

Green Star Building Rating Reject Gas

In a major overhaul of the Green Building Council of Australia’s (GBCA) Green Star rating system, Australian buildings hoping to achieve the gold standard for sustainability will now have to ditch gas.

For buildings to achieve the highest 6 star rating, the building will be required to be fossil fuel free and 100% renewable powered.

The Green Star rating system was launched by the GBCA in 2003 as an independent and voluntary certification system that assesses the sustainability of construction projects across all stages of their life cycle.

Green Star rated buildings have been recognised as having a higher standard of sustainability and energy efficiency than buildings that meet the National Construction Code.

The industry has supported the need to eliminate carbon emissions from buildings and construction to meet obligations under the Paris Agreement, this has resulted in the new focus.

Atlassian, the company behind energy-savvy billionaire Mike Cannon-Brookes has signed on to use Green Star Buildings for its flagship new Sydney headquarters.

The new ratings will push for electrification however emerging technologies, such as green gas will be beneficial to reaching the higher standards as it aligns with Australia’s goals in energy transformation and emissions reduction.