Billionaire throws down clean energy challenge to Government

Posted October 30, 2018 14:24:42

Sanjeev Gupta, the British billionaire who rescued the Whyalla steelworks from administration, has called on the Federal Government to do more to make it easier for big companies to access finance to make grand investments in renewable energy.

Mr Gupta said he wanted a “fast track, easy package” that would help businesses fund rooftop solar.

The long-running uncertainty around national energy policy means many major firms have avoided long-term renewable projects like large-scale rooftop solar installations.

But the cost of generating solar energy has come down considerably in recent months.

Industrial market for rooftop solar expected to expand three-fold

For some companies, it is now cheaper to use solar power than electricity sourced from a coal-fired power station and several corporates — including Coca-Cola Amatil, Stockland and Woolworths — are pushing ahead with installing thousands of panels.

Paul Peters, the CEO of energy services company Verdia, said those companies were finding it too risky to do nothing amid rising power costs.

“The cost of doing nothing is more expensive,” he said.

“If I do nothing, I’d rather actually invest and get some cost savings immediately to my bottom line.”

Verdia is managing a rollout of 10,000 solar panels across the bottling operations of Coca-Cola Amatil.

“Corporates are saying, ‘We can actually solve some of this, and are solving it with projects that we will do ourselves’,” Mr Peters told RN Breakfast.

The industrial market for rooftop solar is expected to expand three-fold by next year as more businesses turn the roofs of their warehouses into solar power plants.

Gupta calls for better financing support, not subsidies

But many in the sector said businesses could only go so far in the adoption of renewables without a broader policy framework from the Federal Government.

Mr Gupta wants the Government to boost the fire power of the Clean Energy Finance Corporation, which is tasked with providing financial support for companies to go green.

He has been relying on his own capital from GFG Alliance, which has already been central to the industrial transformation underway around Port Augusta and Whyalla in South Australia.

The work includes 13 clean energy projects, some of which include solar storage.

But he said a lack of cheap, long-term capital was holding him back.

“One of the big constraints in really applying industry at a massive scale is access to capital — and access to long-term capital, and access to cheap capital,” Mr Gupta said.

“Those attributes do not exist in the private market — especially in Australia.”

Mr Gupta said the Government should re-evaluate how industries and consumers could be assisted to develop green energy — not with subsidies, but with better financing support.

Sustainability managers the big winners from spike in electricity cost

However, the Clean Energy Finance Corporation already has enough financial clout to support some companies.

Davina Rooney heads up sustainability at property development company Stockland and, for the past few years, her job has been to lead a national rollout of solar panels on all of Stockland’s buildings nationwide.

Although energy policy inertia and cost blowouts have created challenges, she said the hard work was starting to pay off.

“Sustainability’s often about uncovering the next problem, and then working with the teams to slowly solve them,” she said.

Stockland’s first solar rollout was at Shellharbour in NSW.

“It’s been beautiful to just watch it grow across our portfolio,” Ms Rooney said.

“We started small and we’ve increased across the scale.”

Annabel Wilton is an associate analyst at Bloomberg New Energy Finance, an independent research house that provides analysis on the transformation of the energy sector.

She said sustainability managers, such as Ms Rooney, were the big winners from the recent spike in the cost of electricity.

“Energy bills have gone up, it’s really as simple as that,” Ms Wilton said.

She said businesses had for years been weighing up the cost of sucking power off the grid, versus renewable options like solar.

The result was always the same: it was cheaper to go with electricity or gas — but the market dynamics had shifted.

Coal-fired power plants that produce electricity began to retire, and Australia flirted with the prospect of a gas shortage, pushing supply down and prices up.

“The last couple of years, it’s not been uncommon for large businesses to see bill shocks of two to three times increases when they transfer off one retail energy contract to another,” she said.

Ms Wilton said businesses had started installing rooftop solar just to make their own energy bills cheaper.

Philip Graham, one of the founders of Clean Peak Energy, which builds and operates renewable power systems, is expecting the commercial and industrial market for rooftop solar to reach 300 megawatts next year because the economics finally stack up.

“Solar can be delivered in that $100 per megawatt hour — $110-$120 a megawatt hour,” he said.

“So generally, a behind-the-meter rooftop system should be competitive with what people are procuring power at from the grid today.”

Other big name companies going solar include Woolworths, IKEA, Bunnings and a number of universities.

Slow, but inevitable transition

Bigger companies are getting very restless over energy policy uncertainty, and analysts said it was anyone’s guess as to whether the Government would take any new policy into next year’s election.

“That’s the million dollar question,” Ms Wilton said.

“Policy makers are putting a lot of effort into seeing if they can make the system work better than it does at the moment.”

Mr Gupta said, whatever the mechanism, energy change was not something that could be transformed overnight.

“It’s a transition, a slow but real transition, which must happen and will happen by itself,” he said.

“Because economics now will dictate that it happens.”

RN Breakfast contacted the Australian Energy Market Operator (AEMO) to comment, but did not receive a response.

The market operator has in the past said that it was important to avoid early departures from the electricity grid to ensure the stability of the energy system.

Topics: solar-energy, electricity-energy-and-utilities, alternative-energy, federal-government, australia, whyalla-5600