Have you noticed the strong recovery in electricity prices? This is a change to the experience of the past few years. In this changing market what are your organisations options? Well, they vary depending on your organisation’s risk appetite. But regardless, unless your organisation is proactive, brace yourselves to be on the receiving end of much higher electricity prices.
Analysis by the folks at Energetics last month advise it is essential to review existing budget assumptions for energy. For an organisation consuming 50 GWh per annum going to the market for a two-year electricity contract, the 2017 budget may need to increase by as much as 35% compared to 2015.
This same analysis recommends one strategy to mitigate this price risk is on-site generation. The high price of LGCs challenges the previously held view of sizing on-site solar projects <100 kW to maximise upfront Small Scale Technology Certificate (STC) benefits. While this is still a good option is many cases, consideration should also be given to up-scaling solar systems to self-generate LGCs, which are trading at more than double the price of STCs. ROI for commercial solar is between 3 – 7 years …… for an asset with a useful life of >20 years.
Alternatively, here at Perdaman Advanced Energy we will provide organisations a significantly lower electricity price than the grid under a power purchase agreement (PPA), whilst taking the long term LGC price risk.
The use of clean energy technologies has even more to offer energy users if energy market reforms occur. These reforms are not guaranteed but if sense prevails they will ensure energy users reap the benefits of lower costs.
The key changes being considered include:
- network tariff reform
- the establishment of updated grid connection processes
- fair and independent commercial connection terms
- fairness when choosing to be off the grid
- the development of consistent standards for connection to the grid
All of these, but particularly network tariff reform is critical to ensure your organisation has the ability to control, produce and on-sell the electricity it generates and/or stores.