Electricity utilities could lose half their market to solar and storage

By Giles Parkinson on 3 October 2013

Within a few days of each other, Queensland network operators Ergon Energy and Energex produced annual reports that gave nearly diametrically opposed views of the current state of the play in the electricity market and its future.

Both have been impacted by the proliferation of rooftop solar – both during the generous subsidies and since. But where Energex saw solar mostly as a threat to its business model, as increasing numbers of customers installed modules on their rooftops and consumed fewer electrons from its $10 billion poles and wires business, Ergon saw opportunity.

Or perhaps Ergon saw the inevitable – given that its $12 billion poles and wires business is one of the most far-flung in the world, and customers are already paid a subsidy of $850 each to keep prices down.

Ergon raised the possibility that customers with solar and batteries could serve themselves for less cost and without the grid. In reality, it will probably happen much earlier than that, particularly if the state subsidies are ended. That is why Ergon, like Vector in New Zealand, is less interested now in investing in traditional “poles and wires” and more interested in distributed generation and other “smart solutions” that herald the arrival of game-changing technologies.

The opposing positions of Energex and Ergon, despite their common shareholder is, in many people’s view, a perfect illustration of the sort of choices and challenges being thrust in front of utilities – network operators and generators – in Australia and across the world.