Rooftop Solar Panels 'Won't Worry Australia's Electricity Generators For Years'


Increasing use of solar panels on homes will lower energy consumption levels from the power grid but this won’t impact the big power companies for many years.

Moody’s Investors Service says any adverse impact on utility networks, generators and retailers is not likely to be significant over the next five years.

“Notwithstanding the increasing popularity of rooftop solar, regulated networks will remain essential to electricity users until more affordable storage equipment becomes available to allow users to switch off from the power grid,” says Moody’s vice president and senior analyst Spencer Ng.

“For electricity retailers and power generators, we expect their earnings to face gradual downward pressure over time, as output from rooftop panels lowers retail demand and reduces occurrence of peak prices in the wholesale electricity market.”

Solar panels account for less than 5% of total electricity generation in Australia.

However, per capita energy usage from the grid declined between 2009 and 2013 because of improvements in household energy efficiency, as well as increased production from rooftop solar panels, as this chart shows:

Moody’s says retailers will need to grow their customer base just to maintain sales year-on-year.

“Such pressure is already evident in the falling retail revenues reported by large integrated energy retailers in recent years.”

Moody’s says the future growth in solar installation will be driven by changes in the net cost of solar panels, which in turn will be subject to changes in technology, the network-pricing model, and the feed-in tariff; the last factor of which relates to the tariff that households can earn from sending electricity they generate back into the grid.

Uptake for solar panels moderated in 2014 after state governments reduced the rebates and tariffs that households can earn from sending electricity they generate back into the grid.

Moody’s says the centralised network is still essential to individuals who produce their own solar power because most solar household still need the grid to supplement and back up their rooftop generation as well as to sell any excess energy during peak production times.

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