Australian solar farms, with no long-term supply contracts, are making a lot of money despite rising electricity prices from fossil fuels in September, 2022.
Genex Power has reported that the Jemalong solar farm located in New South Wales (NSW) got an average price of $180/MWh throughout the second quarter of the year until the end of September.
Approximately 62 per cent of the company’s revenue was due to high electricity prices, while $52/MWh came from Large Scale Generation Certificates (LGCs).
The soaring cost of fossil fuels in Australia
The rising electricity costs are driven by the higher fossil fuel costs that are even more triggered by several outages. On the other hand, the higher LGC costs reflect corporate buyers’ decision to surrender instead of cashing in on their green energies.
A report from The Australian Financial Review’s Energy and Climate Summit states that retail energy prices could rise at least 35 per cent next year due to the “unprecedented cost” of wholesale energy as Australians transition to renewable energy amid a global crisis.
Some energy officials and companies also said that the country doesn’t have any more time to set policies that would support the investment in the new firmed renewables capacity that can replace coal power plants’ thus, this pushed energy prices to rise.
It is known that most of Australia’s fossil fuels are exported, including gas and coal. Gas, coal, and oil prices are increasing globally, along with transportation costs, leading to an increase in wholesale energy prices.
The price spikes are also associated with the disruption in the supply chain due to multiple outages at some coal plants and extreme weather events.
The Russia-Ukraine war should also be considered, as this brings instability to the global energy market.
Although Australia has its own resources for coal and gas, it is still impacted by the Russia-Ukraine war as it’s still part of the global trading market and has exportation supply agreements for its fossil fuels.
The impact on rooftop solar panels
Consumers are worried about rising energy prices, and many are considering and returning to rooftop solar panels. This is also one reason solar farms benefit from high energy prices.
Green Energy Markets showed an increase in rooftop solar PV installations for homes and businesses in September, a total of 253MW. 204MW of installations were in homes, whilst 49MW were commercial.
It also shows that the installed rooftop solar system sizes are getting bigger, ranging from 7.3kW to 11.2 for Western Australia and Northern Territory, respectively. Meanwhile, Queensland and ACT are installing more than 9kW of solar systems for the month, whilst NSW is at 8.9kW.
The continuous rise of solar farms
In 2016, ARENA kicked off the solar boom in Australia that helped drive down renewable energy costs. This is due to their investment in large-scale solar. When they started, there were only 12 solar farms that were 5 MW or more that were operational across the country.
However, as the year began, renewable energy now delivers 33 per cent of electricity generation, and more than 12 per cent comes from solar.
There were 42 solar farms under construction by the end of 2021, which shows fast growth in this sector. Thanks to ARENA’s $100 million competitive funding round that triggered the rise of solar farms.
Indeed, these large-scale solar has come a long way. However, it should be noted that despite the success of the technology, there will always be an ongoing challenge due to the inevitable changes in the energy markets and physical constraints.
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