Big three face test as Italy’s Enel plots power market move
Enel will target commercial electricity customers and households in the latest challenge to Australia’s big three of AGL, Origin and EnergyAustralia.
Italian clean-energy giant Enel will launch an assault on Australia’s electricity market, targeting businesses and households, part of a mounting challenge to the “big three” retailers amid an accelerating move to renewables.
Enel has been granted a retail licence by the Australian Energy Regulator with plans to target commercial and industrial customers in December and expand to households as its pipeline of wind, solar and battery generation grows.
With energy producer Shell and telco Telstra also aggressively pushing into the retail power market, Enel’s ambition as the world’s largest renewable private player will heap more pressure on incumbents AGL Energy, Energy Australia and Origin Energy.
The big three hold large retail market shares in many states and control more than 60 per cent of capacity in NSW, Victoria and South Australia, but are under pressure with low wholesale electricity prices eroding profitability and dampening their earnings outlook for the next few years.
Enel, which lost out to Shell bidding for Meridian Energy’s Australian assets, said it would offer up to 100 per cent renewable energy supply so customers could meet sustainability goals at competitive costs.
“With access to Enel Green Power’s portfolio of wholly green energy assets, Enel is a one-stop shop ‘greentailer’ delivering energy from Australia’s abundant renewable resources for the country’s clean energy future,” said Enel Green Power Australia country manager Werther Esposito.
“The Enel retail offering will provide exclusive access to Enel Green Power’s innovative renewable energy mix. As Enel’s customer base grows, so too will Enel Green Power’s diversified asset base, which will directly service the growing demand.”
Still, the Italian player will face a battle from other well-funded companies targeting the same markets. Shell has identified Australia as one of six target markets where it will look to create an integrated electricity supply business with the potential to scoop up a “mass market” customer base through dealmaking, while Telstra is looking to use its substantial customer base to pivot into clean-energy offers after receiving a retail licence.
Although Enel only has three solar plants in South Australia and Victoria with 309 megawatts of capacity, it has a 1500MW pipeline of development projects that it expects to roll out in tandem with its growth in Australia.
The company also operates Australia’s largest virtual power plant with 350MW under management through its Enel X offshoot, a system that allows a network of small-scale solar and battery systems to be controlled and fed into the electricity grid.
Large-scale demand management is gaining traction in Australia, which despite its grid complexities is still one of the most advanced economies in transitioning its energy system away from polluting sources such as coal to wind, solar, hydro and batteries.
A new breed of power “aggregators” in the market including Enel claim demand response alone could help bridge any shortfalls in the market with large users collectively tweaking their output as and when it is needed, adding a new source of revenue to their businesses.
Customers “connected to our virtual power plant can provide instant, dispatchable capacity to support the grid’s fluctuating power needs,” said Enel X’s head of Asia-Pacific, Jeff Renaud. “For participating businesses, this generates a significant new revenue stream, contributes to sustainability targets and supports Australia’s path to net-zero emissions by balancing more renewable power sources on the grid.”
Coal, which currently provides up to 70 per cent of electricity, will contribute less than a third of supply by 2040, Australian Energy Market Operator forecasts show.
Up to 5500MW of committed new large-scale generation and storage projects is expected to come online over the next three years, according to the Australian Energy Market Commission, in addition to 4130MW of new rooftop solar capacity.
Up to 19 gigawatts of firmed dispatchable resources such as gas, pumped hydro and batteries will be required in the next two decades to back up renewables in Australia, forecasts show.
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