Wind and solar struggle: unable to squeeze more revenue out of the market

The revenue solar and wind developers can squeeze out of the wholesale electricity market has flatlined. See the graphic.

Roof-top and large-scale solar developments have flooded the daytime market, stalling renewable revenue growth.

Renewable energy generators’ ability to squeeze more revenue out of the wholesale electricity market has come to a standstill, sitting at just 30 per cent for the past three years.

Renewable electricity is flooding into the daytime market, forcing prices into low or negative territory, which then stifles further investment without large government subsidies.

At the same time the value of large-scale generation certificates that subsidise wind and solar developers have collapsed, from $46 a year ago to just $20 today.

The value of renewable electricity, as a share of the wholesale market, has plateaued.

But when the sun goes down and wind dies it is coal, gas and to a more limited extent battery and hydro generators that are able to command high prices and maintain a greater share of the revenue.

Federal and state Labor government ministers have repeatedly highlighted the growth in renewables, which now makes up 40 per cent of the nation’s electricity generation.

But Centre for Independent Studies energy program analyst Michael Wu said: “The capture price for renewables, particularly for solar, moved into negative territory in the middle of the day.”

Even the Australian Energy Regulator’s most recent quarterly wholesale market report found “electricity prices were very low or negative during times of high intermittent renewable output”.

In contrast, the AER reported “dispatchable generation (coal, gas, hydro and battery) continued to set prices at higher levels in times of tight supply-demand conditions”.

The market analyses comes as the Victorian government last week declared that by July 1 the SEC would “power Victorian government operations with 100 per cent renewable electricity – with all profits being invested back into projects that will deliver more renewable energy and lower power bills for Victorian families”.

When asked about the claim, Victorian Energy Minister Lily D’Ambrosio’s office said “to meet our 100 per cent renewable electricity target for Victorian Government facilities and operations, the SEC has bulk purchasing contracts for renewable energy the equivalent to the amount of electricity the government will use over the next financial year.

“The SEC will accelerate the build of new renewable energy in Victoria, helping to push down power prices for all Victorians.

“Victoria is already producing up to 40 per cent of its electricity with cheap renewable energy, giving us the lowest electricity prices in the market - with a strong pipeline of projects to keep the lights on when our coal fired generators retire.”

But Centre for Independent Studies director Aidan Morrison said that while the SEC might sign large enough contracts to offtake renewable energy, “it will be coal powering the grid directly when it’s still and dark, so it’s really just a marketing ploy”.

“The big tech companies in the US claimed that they were 100 per cent clean energy years ago doing this same trick.

“But now they’ve kinda grown up enough to admit that it’s really just a marketing trick and they need steady continuous electricity.”