The RET and STCs. Ric Brazzale, May Solar Council Solar 2017

Transcription

1 The RET and STCs Ric Brazzale, May 2017 Solar Council Solar 2017

2 Contents Review of solar market STC target, market and pricing Solar power stations LGCs Outlook for 2017 and beyond 2

3 Who is Green Energy Trading? Independent REC Agent Provide competitive pricing and payment Commercial solar and lighting specialists Celebrating 10 years in business Sister company: Green Energy Markets Analysis, consultancy and advisory associate Visit website for research notes and other market information

4 Review of Solar Market

5 PV Market recovered late was tracking well behind 2015 until last 2 mths 2016 ended up 1.3% higher than 2015 (3.2% short of target) Surge in activity continues into 2017 Small-scale systems (MW) claiming STCs by month (commercial = <10kW) 5

6 Surge in small-scale installations What has been happening? Reduced deeming in 2017 (creates urgency) Rising power prices (bill shock) Electricity is in the news (SA outages / rising demand) Hazelwood closure Increase in number of commercial systems 6

7 Wholesale power prices have increased dramatically We have a gas crisis Difficult to contract Very high prices Coal plant closure Northern Aug 2016 Hazelwood Apr

8 Capacity by state Qld still the biggest market NSW has highest commercial % 8

9 STC Modelling dvisory/reports-to-industry/ 9

10 Residential systems saturation high levels of saturation in Qld/SA Greater than 40% saturation Vic at nearly 20% Proportion of owner occupied, detached and semi-detached homes Source: Green Energy Markets: STC Modelling Report, Jan 2017 Number of residential installations expected to decline 10

11 STC Target, market and prices 11

12 2017 Target of 12.5 million Consultants Estimates for STCs Jacobs Jacobs Green Energy (Method 1) (Method 2) Markets Solar PV 14,045 12,075 13,846 SWH 1,931 1,663 1,883 Total 15,976 13,738 15,729 Regulator arrived at 12.5 million by: -Estimated STCs to be created in ,147,667 -Estimated STCs above or below previous years creation estimate -2,649,809 Nominal Target 12,450,191 Nominal weekly target of 239,000 STCs 12

13 43% higher than target so far in 2017 Clearing House used extensively to date Spot price at or near $40 but hardly any trades Deficit of 0.55 million STCs at end 2016 (now extinguished) 13

14 Clearing House in deficit all

15 STC Prices Current spot price of $39.90 reflects Clearing House in deficit (1.4m end April) Clearing House expected to go back into surplus before end of May Currently on track to exceed target by 7 to 10 million STCs by end 2017 Fwd STC prices in Q3 and Q4 of $38 15

16 Large-scale solar market PV system >100kW register as a power station Create certificates (LGCs) as the power is generated AGLs Nyngan Solar Farm (WA) 102 MW 16

17 Combined PV market of more than 1.25GW Assuming current rate of STC creation 17

18 Large scale solar is small at present - but growing fast Expect solar to create 863,000 LGCs in 2017 (4.6% of total) 242 projects MW operating at end Feb more than 3000 MW under development or construction (incl ARENA and other Government programs) As at 28 Feb 2017 NSW 62 solar power stations with 225 MW capacity 18

19 Spot LGC price over $78 Price in short term determined by tax effective penalty as we will not meet the target for a number of years LGC Price for Jan 2020 delivery is $

20 Implications for RET Government has made it clear that it will not change the RET (sovereign risk) Large scale renewables will continue to be rolled out as supported by the RET (hard to see any new fossil fuel investments) Will be paying significant level of LGC penalties ($150m paid for 2016 LGC shortfall) this will rise significantly SRES BAU (deeming to progressively reduce) 14 years in 2017, 13 years in 2018 etc 20

21 STC value to reduce to 32c/watt by 2025 Equiv to 17% of total install cost 21

22 How will we go in 2017 and beyond? 22

23 2.5 GW+ market by

24 Conclusion STC creation tracking 43% above target Clearing House to remain in Surplus STCs to be traded through wholesale market at below $40 Don t expect any changes to RET and solar market expected to flourish Higher LGC prices and higher wholesale power prices supporting dramatic roll-out of solar power stations and growth in commercial market 24

25 Thank you Presented by: Ric Brazzale BComm, MBA Managing Director T or ric.brazzale@greenenergytrading.com.au greenenergytrading.com.au