Origin Energy managing director Grant King

23 October 2013 – A new report from green energy campaigners claims that Origin Energy, the country’s largest energy retailer, is actively blocking the advance of renewable energy and campaigning for a lower renewable energy target for Australia.

This was in the face of growing popularity of renewable energy and nearly 2.5 million Australians now with solar panels on their roofs – about one million households in total. And falling costs.

The report, Strangling Renewables: Origin Energy’s campaign against renewable energy, produced by 100% Renewable and Greenpeace Australia Pacific, was timed to be released during Origin Energy annual general meeting today [Wednesday 23 October].

National director of 100% Renewable Lindsay Soutar said Origin was threatened by the spread of rooftop solar and other clean energy, and was now “leading an industry campaign to undermine renewables in our community”.

Ms Soutar said, “Origin’s managing director, Grant King, has repeatedly said the renewable energy target is a primary driver of increased energy costs. But, that is inaccurate, with the main cause of price rises – at over 70 per cent – due to over investment in poles and wires.”

Ben Pearson, head of program at Greenpeace Australia, said Origin has also underinvested in its own renewable energy portfolio and was blocking other clean energy developers.

“Origin has invested heavily in gas projects, including developing new LNG projects and gas generating plants, and it also generated 75 per cent of its profit through its retail arm,” Mr Pearson said.

However, these investments were threatened by the emergence of cheaper, cleaner wind and solar.

Ms Soutar said: “In truth, renewables are working. As this report shows, renewables are reducing energy bills and producing clean energy in an efficient way. Not only that, but wind power is lowering wholesale power prices. And other countries are surpassing us with more ambitious renewable energy goals.”

A panel discussion on energy hosted by GE on Tuesday backed up some of these claims.

Panel members agreed that the spread of renewables – and their falling cost – had taken the conventional energy industry by surprise.

The mood was one of an industry under threat that had to protect its assets.

Panel members included Origin Energy chief executive energy markets Frank Calabria, director energy flagship CSIRO Alex Wonhas and GE energy management digital energy Matt McKenzie.

In a recent interview with The Fifth Estate University of NSW professor Alistair Sproul said that average cost of electricity from the grid is 25 cents a kilowatt-hour while the levelised cost of solar energy could be as low as 6 cents a kWh.

Professor Sproul, photovoltaics lecturer and postgraduate coordinator in the School of Photovoltaic and Renewable Energy Engineering at the UNSW, said this was based on the average cost of a 1.5 kilowatt PV system, now about $3100, which equates to 6 cents a kWh for electricity produced if the PV panels were paid for upfront, or  12 cents a kwh if the cost of interest payments  were factored into the investment over a 25 year lifespan of the product.

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“What Origin is failing to recognise is that Australians overwhelmingly support renewable energy. Survey after survey finds that 70-80 per cent of families want more renewables – not less. At this time we need to be increasing our ambition – not falling behind,” Ms Soutar said.

She warned that Origin needed to be careful as it risked consumers “walking away as they learn about what they are up to”.

Origin denies claims

A spokeswoman from Origin Energy denied the claims and said, “Origin is one of the largest investors in renewable energy in Australia, and any suggestion that we do not support renewable energy is simply not supported by the facts.

“Origin has long supported Renewable Energy Target.

“We buy and sell more than 800 MW of renewable wind energy, we hold the largest market share of green energy products sourced from renewables and we are the one of largest installers of rooftop solar panels in Australia.

“We have raised concerns about the costs that consumers face in overshooting the original RET.

“We are acutely aware of the important role we play everyday, providing energy for our economy and the comforts we expect in our homes. In doing so we face increasingly complex challenges as we seek to deliver a reliable and competitively priced energy supply, while ensuring this is produced and consumed on a more sustainable basis.”

But the report said Origin offered conflicting messages on renewables:

“On the same day as signing one of the biggest power purchase agreements for growing renewables (the StockYard Hill wind project in Victoria), [managing director] Mr King managed to make headlines by offering nothing but criticism of the renewables industry and the RET, arguing that “the level of the RET [should] be reduced by more than a fifth – from 45,000 gigawatt-hours to 35,000 gigawatt-hours in 2020”.

“King has argued that because energy demand is falling, the 41,000 GW target means Australia will ‘overshoot’ its 20 per cent goal, and has tried to use this as justification for cutting back the target. Such a cut would be ‘the equivalent of not building some 220 50-megawatt solar PV plants or around 60 two hundred megawatt solar thermal power stations with four hours storage” according to the Australian Solar Council.

The Climate Change Authority “rejected Origin’s claims, finding that lowering the target ‘would have no significant impact on reducing average household electricity bills’ and would ‘result in an extra 94 million tonnes of greenhouse gas emissions coming from the electricity sector by 2030?”.

The Authority recommended the target should be kept fixed in terms of gigawatt hours to provide confidence to investors, the report said.

The report also said that the company was overplaying its investment in renewable energy.

 Currently, Origin’s only operating wind farm is the 30MW Cullerin Range wind farm, and the StockYard Hill wind project in Victoria is the only wind project in their investment pipeline.

 In regard to small scale solar, Origin has installed panels for 70,000 Australian homes since offering solar systems in 2002. Origin used its retail arm to develop a strong presence in the space, and it dominated the solar market up until 2010, when it reached the position of #1 installer in Australia – producing around 34 MW of energy.

But, in spite of great success in solar, the company has gone quiet about it intentions to expand this component of its business – recently falling out of the top ten list of solar installers. In fact, when solar has been mentioned, it has been to disparage it, with Mr King recently stating that “solar has, in my view, had a terrible impact on consumers and has been overstimulated by feed-in tariffs. It’s just wrong and a consequence of poor policy.”

In addition Origin has walked away from one of its only major investments in emerging technology – writing down its 50 per cent investment by $134 million in its Sliver Cell technology project.

Potentially more damaging than Origin’s lack of investment in its own renewable energy projects, however, has been its unwillingness to issue power purchase agreements for other project developers.

A power purchase agreement is a contract between an energy generator and a retailer to ensure that developers of renewable projects have a guaranteed customer for the energy they produce. These are essential to the financial viability of most projects and to making the economics of a project stack up.

Over the last three to four years when the market experienced an oversupply of renewable energy certificates, Origin (and other major energy retailers) bought up big. They have since been sitting on these certificates, and using them to meet their obligations under the RET, but making no moves to enter negotiations with other project developers for new projects.

Pacific Hydro, a renewable energy company based in Melbourne, has outlined the challenges it has had in gaining a power purchase agreement with large energy utilities, including Origin Energy, with the company’s Executive Manager of Corporate Affairs, indicating the energy giant has managed to “[halt] the signing of long-term power purchase agreements with wind and other renewable energy suppliers, in effect blocking developers from securing loans for new projects.”