Market Update | 12 July

• South Australia is set to reach 100% renewables
• Regional Australia is eager and willing to join Australia’s decarbonisation journey
• NSW Energy Savings Certificates (ESCs) hit lowest spot price in recent history

South Australia Set to Reach 100% Renewables

South Australia is set to become the world’s first non-hydro region powered entirely by renewable energy by 2027. A federal funding deal will support the construction of new wind, solar, and storage facilities. This builds on South Australia’s current world-leading position as a renewable energy dominated power grid, with wind and solar already contributing 70% of its power. Noting the grid is still likely to not be 100% renewable at all times, the state will export and import energy as needed, with backup gas plants available for shortfalls. While not fully powered by renewables at all times, the annual generation and storage will match total consumption, achieving a net position of 100% renewable energy.

Regional and Rural Australia  Supports Australia’s Decarbonisation Journey

Last week saw the National Renewables in Agriculture conference held in Toowoomba. The event saw over 350 attendees attend and a host of speakers discussed a variety of topics from commercial solar, to the business case of biomethane and biogas, how energy and carbon credits are needed to support the business cases of agricultural decarbonisation, to social issues affecting not only agricultural decarbonisation but the whole of Australia. A common thread amongst many speakers was that there is a genuine belief that regional Australia can benefit from the transition towards a decarbonised economy, with the creation of new jobs and improved infrastructure. Key themes brought forward by the event included:

• • The importance of collaboration and organisation amongst regional communities to secure their share of the resources being invested. This included local jobs, fair leasing arrangements for landholders, and advocating for better telecommunications and education facilities to equip these regions for the future.
  • Many large-scale farmers who have solar on one part of their property aren’t able to use it on another part without first sending it through the grid and then paying to buy it back at a higher rate.
  • Current gas & renewables legislation is outdated to the available technologies and imposes a barrier for farmers to develop projects within their capacity. This results in wasteful methane flaring and renewables curtailment.

The event concluded with an agreed consensus of all present wanting to work together to create a clear pathway for decarbonisation that empowers regional Australia, emphasising the importance of not resorting to the divisions and criticisms portrayed by many to support the current political narratives.

NSW ESC Historical Spot Price Low

A historic low has been hit in the Energy Saving Certificate Market, with spot ESCs trading down to a low last seen in Q3 2017 at $17.95. Fuelled by significant over-creation over the past 9 months, the market has seen a distinct negative trend from $30.50 in September 2023 to date. The primary cause of the overwriting is attributed to Hot Water Heat Pump installations conducted under the IHEAB (commercial) method. This method allows the ‘stacking’ of the ESC, in addition to Peak Reduction Certificates under the PDRS, and Small-Scale technology Certificates under the SRES. The stacking effect caused a surge in uptake of the activity as installation companies and consumers alike capitalised on the lucrative rebate. The scheme administrator, IPART, have announced a string of program changes, including the reduction of ESC creation for HEER (Residential and Small Business) and the cessation of PRC creation for IHEAB Heat Pump installations. The changes are anticipated to result in a market recovery to aid the uptake of alternate activities that are currently strangled due to the low spot price.

At Ecovantage, we consistently analyse market activity, policy changes, consultation releases, and creation rates in conjunction with wider landscape activity. This allows us to keep our clients at the forefront of all relevant changes, and to leverage the advantage that this presents. Thank you for your continued support, and please reach out if you have any general or project-specific questions.