Australian market update: outlook for certificate prices

Transcription

1 Australian market update: outlook for certificate prices Ric Brazzale, May 2014 Solar 2014

2 Overview Solar market contracting STC Market now working as expected Outlook for STC prices Implications of the RET Review 2

3 Who is Green Energy Trading? Convert environmental credits and other incentives to cash for solar and energy efficiency businesses in Australia One of largest independent environmental certificate creators Accredited for commercial lighting and other activities in NSW & VIC Created certificates for more than 820 solar and energy efficiency businesses last financial year Our team in Hawthorn Research, consultancy and advisory associate (Green Energy Markets) Check out website for prices, research notes and other market information

4 Financing solar and EE We have implemented an on-line form processing system Have now started to act as a Finance Broker to assist clients access finance solutions for their customers Please contact Green Energy Trading on or benefit@greenenergytrading.com.au 4

5 Up-to-date wholesale prices Wholesale certificate prices Tracking weekly STC creation 5

6 1. Solar market contracting 6

7 PV installs falling for second year Market is contracting with RET (SRES) the remaining policy measure supporting solar PV Residential installs sharply contracting with commercial market increasing (from small base) Note: Commercial = systems of 10kW+ 7

8 Solar PV declining over last year Note: Commercial systems (10kW+) are represented by blue bars in chart 8

9 SWH market steady Victoria and Qld strongest markets though declining slightly 9

10 2. STC Market working as expected 10

11 STP of 10.48% - what it means STP = proportion of electricity sales that a Retailer/Liable Party needs to surrender (as STCs) over the year Actual STC Target is million STCs (implies total liable electricity sales of 178,000 GWh (same as 2013) million includes 1.9 million STCs surplus at end of 2013 Expected level of registrations for 2014 is million STCs Works out an average of 322,250 per week Non-binding estimates for 2015 and 2016 of 10.1% and 10.32% Equivalent to 18 million for 2015 and 18.4 million in 2016 (higher due to impact of Million Solar Roofs) 11

12 STP of 10.48% - what it means for PV If we assume that 1.9 million STCs are for SWH then solar PV share amounts to million STCs This is equivalent to 730 MW of solar PV installations which is 12 per cent lower than the 830 MW that was estimated to have been installed in

13 Getting better at setting the target Clean Energy Regulator sets the annual target based on consultants reports of the expected level of solar installations for next coming three years Record to date of setting STC target is terrible though getting better 22.5m oversupply in 2011 (80% over) 15.0m oversupply in 2012 (67% over) 0.4m oversupply in 2013 (2 % over) What is different now? Don t have multiplier FiTs unwound System prices have bottomed?

14 Consultants used in estimating STC Registrations for

15 Comparison of consultants estimates STCs Registered (million) 22 GEM IES SKM-D SKM-T TARGET

16 Tracking to target Weekly STC creation more stable but trending lower

17 3. Outlook for STC prices 17

18 STC and LGC prices since Jan 2012 Wholesale spot prices at end of week 18

19 STP price moves inversely to creation volumes Current wholesale spot price $38.60 (2 May) 19

20 Outcome of Q surrender 28 April % of Target ( million) needed to be surrendered 6.53m STCs 6.41 million STCs were actually surrendered (fairly close) Approximately 7,000 STCs were purchased from the Clearing House at $40 Were 1.8 million STCs available after surrender of these 0.6 million were queued in the Clearing House STC price of $38.60 is getting close to $40 and it is coaxing withdrawals from the Clearing House 20

21 STCs removed from Clearing House as prices increased 21

22 Outlook for market and prices Absurd tension is currently overhanging market Marketing drive to get customers to sign up before rebates removed Countered by: Unpredictable future so solar businesses cut back discretionary expenditure (scale back activities) 22

23 4. Implications of RET Review 23

24 RET Review clouds future for PV solar industry Range of possible outcomes including: SRES scrapped completely SRES merged back into LRET Clearing House price of $40 reduced Level of deeming reduced (15 years now) System size threshold for STCs reduced (100kW now) No change Looking at 5 to 12 months of unpredictability - Can somewhat manage uncertainty (can contract) - Cant manage unpredictability 24

25 So what does this mean? Manageable in the short term as current target still needs to be met But beyond this year is more difficult What happens to the clearing house price? Can you contract for installations that will take place in 2015? How many (if any) STCs will a system be eligible for? The longer this drags on the more difficult it will be 25

26 Conclusion Solar PV market had grown dramatically but now 2 years in a row that it has been contracting STC market is now working as expected The SRES is important to making solar affordable and is remaining policy measure supporting the industry RET Review represents major challenge to our industry 4,000 + businesses must manage through uncertain and unpredictable future 26

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