Rooftop Solar Surge Sees Record Low Grid Demand in Australia

(Bloomberg) --

Australians’ love of rooftop solar drove daytime demand for power from the grid to record lows in three states in the third quarter, the market operator said Thursday.

The nation’s abundant sunshine, and the promise of reduced power bills, has seen households rush to install panels, with about 29% of abodes now fitted for solar. That is playing havoc with the business models of traditional utilities reliant on coal-fired power stations, which still account for about 60% of total generation, or gas plants as the hollowing out of daytime demand forces wholesale prices lower.

“The uptake of residential and commercial solar continues at record pace, which was largely responsible for new minimum operational demand records in Victoria, South Australia and Western Australia,” said Audrey Zibelman, chief executive officer at the Australian Energy Market Operator, which began recording the data in 2005.

Rooftop solar met 71% of South Australia’s total energy needs on Sept. 13, driving minimum daytime demand to a record low 379 megawatts, according to AEMO’s quarterly report on market dynamics. Victoria state, which includes the country’s second-biggest city Melbourne, posted a minimum demand record on Sept. 6, with nearly a third of underlying demand met by household panels.

The trend is set to continue, with AEMO reporting that South Australia and Victoria have already set fresh demand records in the fourth quarter.

Spot power prices in the mainland National Electricity Market, which covers the country’s southeast urban centers, fell by as much as 48% in the third quarter compared with the same period a year earlier. Changes in energy use due to coronavirus were also a factor, AEMO said, particularly in Victoria, which has been subject to a strict lockdown since July following a surge of new infections.

“With wholesale costs making up around a third of a residential electricity bill, these low prices are welcome relief for Australian households and small businesses facing financial hardship because of Covid-19,” Energy Minister Angus Taylor said in a statement, adding that the government’s “big stick” legislation would ensure energy companies pass on lower costs to consumers.

Large-scale wind and solar farms increased their share of the generation mix to 14% in the third quarter, up from 12% a year earlier, as the network continues to accommodate a surge in new facilities. Meanwhile, gas demand fell 5% due to reduced exports from the liquefied natural gas sector and lower domestic generation using the fuel, sending wholesale prices down 50% on the prior year to the lowest level for the quarter since 2015.

©2020 Bloomberg L.P.