A NSW start-up with plans to become Australia’s first community-owned renewable energy retailer – as well as its cheapest – is hoping to win local support for its venture ahead of a public share offer.
Enova Energy, which was formed last year by residents from the Northern Rivers Region, aims to retail renewable electricity, while also providing advice and professional services for those who want to install solar, and/or leave the grid entirely.
It also hopes to generate decent returns for investors. To this end, the not-for-profit group behind the venture, Enova Community Ltd, said on Tuesday it had prepared a detailed prospectus for an Initial Public Offering (IPO), and would host a series of information events throughout the Northern Rivers region in coming weeks.
Not short on ambition, Enova Energy wants to offer the cheapest retail price for green electricity in Australia, pay the highest feed-in tariff for rooftop solar exported to the grid, and provide consumer-targeted advice and technical support for people who want to go off-grid completely.
However, the company has conceded it will only proceed with these plans if capital funding can be sourced from within the local community.
“We are very excited about the upcoming IPO and providing potential investors the opportunity to attend these events,” said Enova Community Energy Chair, Alison Crook on Tuesday.
“We want the community to to find out more, and get involved in Australia’s first community renewable energy retailer.
“Our goal is to reduce carbon emissions by retailing renewable energy by encouraging and facilitating the development of local renewable generation. We aim to be a model for other communities in developing a renewable energy future,” Crook said.
According to the Byron Echo, the company also plans to provide community benefits through direct employment and flow on jobs.
“This has already started with accountants, auditors, printers, graphic and web designers all being contracted,” Enova said in a media statement.
“Dividends will return to the community, and a constitutionally guaranteed 50 per cent of profits will flow back into projects that benefit the community,” it said.
This article was originally published on One Step Off The Grid and Renew Economy
Over the past two years I’ve put in several big and fairly costly energy efficiency measures into our home and I’m now in a position to start evaluating how well they have worked and if they were good investments.
How well they have worked is clear – our family’s annual gas usage has fallen a massive 94 per cent and our annual electricity usage has fallen a very useful 23 per cent. On the money side, our gas bills have fallen 66 per cent and our electricity bills have fallen by 15 per cent. Combined, our gas and electricity bills have fallen 32 per cent or one third of what we used to pay.
The annual saving to May this year was $832. That’s good money that no one is going to argue about. I haven’t added up the greenhouse gases saved but it’s a lot as I switched our electricity to hydro power and our gas usage is now negligible. So what technologies did I use and how worthwhile are they from a pay-back point of view?
The first big energy saving measure in July 2013 was changing our old 5-6 kW reverse cycle airconditioner for an inverter based air conditioner with the same output. At the time the Government’s energy rating website put the Mitsubishi Heavy Industries model I bought as the most energy efficient in its class. There are now even better ones.
The aircon can get a big work out in some parts of winter and on some days in summer. But the savings were almost immediate. Although we had it for nine and a half months in the 2014 billing period, our electricity usage fell 1,094 kWh or nearly 18 per cent. Our annual electricity bill fell $235 or 13 per cent. I’m sure most if not all of that is the aircon.
The next big improvement was the replacement of our very old gas hot water system with an Apricus evacuated tube solar hot water system with electric boosting. I wrote about this at the time in the May 2014 Eco Investor.
The solar hot water system has done well and we are happy with it. The fall in our gas usage was immediate and vertical. The last full year of gas hot water was 2013 when we used 23,118 megajoules (MJ). 2015 is the first full year of solar hot water and our gas usage was a mere 1,335 MJ for cooking only. The plummet is 94 per cent. Yes, I am a little happy with that number.
Our annual gas bill has fallen by $613 from 2014 and by $558 from 2013. That’s 72 and 66 per cent respectively.
The reason it has fallen less than our usage is the service charge. In 2015 we paid only $52 for gas and a huge $234 on the service charge. One of my upcoming improvements is to go off the gas grid entirely by switching to an induction cooktop. That will eliminate the service charge, improve the return on our investment in energy efficiency, eliminate our remaining greenhouse gas emissions, and make a future switch to rooftop solar more viable.
Do I feel any qualms about going off the gas grid? Sorry, big oligopolistic retailers with the same gas price, not one iota.
The other aspect of the solar hot water is the electric booster. I was concerned that it would use a lot of electricity and so I was pleasantly surprised when our electricity consumption went down instead of up. This was due partly to the new aircon and partly to the switch to LED lights in our house, which I wrote about in the July 2014 Eco Investor. The savings from both have been enough to offset the additional consumption by the electric booster. In that sense we are getting our hot water free from the sun and our electric boosted hot water free from the savings from the air con and LED lights.
Soon after I installed the system I had a timer put in to control the time the booster kicks in and a meter to measure how much electricity the booster uses. This shows that over 12 months the booster consumed 1,392 kWh for a total cost of $342. I’d expected about $200 so that was a fair way out.
It means we saved $281 on the cost of consumables by switching from gas to solar with electric boosting. It’s not a big saving and it means the system has a long payback period.
But there are several things can be said about that.
I could have reduced the payback period a lot by opting for a much cheaper thermosiphon unit but the roof wasn’t strong enough for the tank, and I could also have gone for a flat plate split system which was $1,500 cheaper than the evacuated tube system that I chose. So cheaper options and faster payback are possible.
I did make one mistake with the solar hot water system. In my research I was told it is best to install them at a high angle to maximize winter solar collection. But I have since found Bureau of Meteorology based data that says it is most efficient to instal them at the same angle as the latitude of their location. In Sydney that is 33.5 degrees but our collector is at 48 degrees. The report says the annual loss of efficiency is 3.9 per cent.
Now it’s not quite that simple as each day the hot water has to get to 60 degrees C to kill Legionella. Much of the extra efficiency comes in summer when the water usually gets to 60 degrees without boosting. That’s very hot and any more than that is only good for storage so some of the efficiency could be wasted.
Also, the Bureau of Meteorology says that Sydney actually has less average cloud cover in winter and I don’t know if that is part of the efficiency numbers given for the angle of inclination. Either way, the loss of efficiency due to the winter angle of my collector is likely not as high as 3.9 per cent but if may still be enough to make a difference. I may one day look into whether it is worthwhile to change it.
Another factor is that the only place we could put the collector means the collector starts to get a shadow at 2.30 in winter, so we lose half an hour in the all important 9am to 3pm period.
What I can say is that there is no substitute for a clear day and in winter when the sun is shining the water heats up quickly. But in winter it’s not enough to reach 60 degrees and kill the Legionella.
I can still shorten the payback period for the solar hot water system by going off the gas grid and eliminating the hefty and now useless service charge. In this way, switching to solar is an expensive but necessary step in taking energy efficiency as far as possible.
This would change the numbers dramatically. As induction cooking is more energy efficient than gas, I would assume that cooking with induction will cost us no more than the $52 per year that we currently use.
That means we can lose our gas bill entirely and save the full $899 we paid in 2014 while increasing our electricity bill by around $394 – $342 for the booster and $52 for the induction cooktop. The saving is $505 per year. That is a good saving and induction cookers are inexpensive enough to reduce the otherwise long pay-back period for the hot water system.
But the real, longer term benefit of going off the gas grid is that it would set up our house to maximize the benefit of a future rooftop solar PV and battery storage system.
The other big energy efficiency measure was replacing the glass in the four sliding doors and two window panes at the back of the house with Comfortplus glass to keep in the winter heat. I calculated this would keep that part of the house about 2 degrees warmer than it was with the old glass.
The new glass keeps in more of the heat when the aircon is on, so perhaps the aircon gets used less, but overall I don’t think it makes a huge difference to the energy consumption and bill. Its main role is to improve comfort, and as my wife spends a lot of time in that part of the house, it is as valuable if not more so for its role in marital harmony.
Something I regret is that we did an extension in 2010 and that would have been the best time to install double glazing in those doors and windows. Had I done so, our payback time would be dramatically reduced.
Likewise, if we had installed an electric cooktop during that renovation, switching to induction would now be easier and cheaper. But at the time gas was the more environmental choice.
In the two years I’ve been making the house more energy efficient, a couple of things have become clear to me. On the environmental side, we as consumers and businesses can reduce and eliminate our greenhouse gas emissions without having to wait for the government or the energy industry to take the lead. In fact, given the current political climate in Australia, it would be foolish to wait for them.
And on the financial side and the pay-back period for investing in energy efficiency, it is important to take a whole of energy consumption point of view. Some technologies, like LED lights and air conditioners, are relatively cheap and can give a big and quick pay back. Others like solar hot water are more expensive and can take much longer to return their investment, but they are just as important to achieve the best outcome.
And with the rush of technologies now upon us, the best outcome is not far away. Other things on my to-do list are the induction cooktop, insulating the ceiling of my office, and replacing our ailing dishwasher and 19 year old fridge with more energy efficient models. By then I’m hoping battery storage for rooftop solar will have enough affordable options to make it worthwhile.
Further down the track is the electric car and doing away with petrol.
No coal. No gas. No petrol. No greenhouse gases. And a lower electricity bill. All from the comfort of our own homes. It’s a great future worth investing in.
Victor Bivell is editor of Eco Investor magazine. See www.ecoinvestor.com.au
Article sourced from One Step off the Grid
The PV Flash is a new communication that is additional to the PV Industry Alerts, and
is designed to provide brief and timely information for the Queensland PV Industry
Metering changes for PV units commence 1 August
The Australian Energy Regulator (AER) has recently changed the way in which metering services are classified, and you can find further information on this decision on their website.
The change means the electricity industry is transitioning to a more transparent way of billing metering costs that will support future competition and customer choice. Ergon Energy customers have always paid metering service charges, however they were previously spread across all customers and wrapped up into network costs.
The AER has determined that Primary Network Tariffs, controlled loads and solar connections should attract metering charges from 1 July 2015. Each charge is different and made up of the cost of the meter and the ongoing cost of operating, maintaining and reading the meter.
In addition, from Saturday 1 August 2015 Queensland electricity distributors Ergon Energy Corporation Ltd and Energex Limited will implement Upfront Meter Charges for all customer initiated meter changes requested when the Form A is lodged. The fees apply to any new or replacement meter requested for a customer, including solar PV and other micro embedded generating (micro EG) units.
These fees will be charged by the distributors to the electricity retailer for the premises. Retailers will charge customers for these fees via their bills. Ergon Energy Retail is taking a phased approach.
For more information on the fee structure, please visit the Energy Retail website.
Copyright © 2015 Ergon Energy, All rights reserved.
Sent by email to Driftwind Electrical.
Three years ago, even before Prime Minister Tony Abbott was elected, Bernie Fraser, the former RBA governor and chair of the Climate Change Authority, warned that an Abbott government would be beholden to fossil fuel interests, particularly regarding the renewable energy industry.
“I think that that lobbying that is being made to us, and the views being expressed by the fossil fuel generators and some other groups will be pretty powerfully directed towards the Coalition,” Fraser told RenewEconomy in an interview in December 2012.
The Abbott government did not disappoint, and now his team are at it again. Not content with putting the renewable energy industry on hold through an interminable review, and then cutting the large scale component by more than one third, and then declaring wind energy to be offensive, ugly and unwelcome, the Coalition government has now decided to try and nobble the Clean Energy Finance Corporation.
Not for the first time. But the attempts by Treasurer Joe Hockey and finance minister Matthias Cormann to impose bizarre, contradictory and mystifying restrictions on the $10 billion institution are designed to achieve one outcome – to prolong the drought in large scale renewable energy and now to extend that drought to small scale renewables as well. And, of course, to stop a clean energy gorilla that the government has tried unsuccessfully to close down from doing its job.
Much of the uproar over the last 24 hours has focused on the apparent targeting of wind technology and household solar – the two most successful renewable energy sectors in Australia to date.
But the intent of the Hockey/Cormann letter is more insidious. It attempts to forbid the CEFC to invest in any “mature” technology, which it identifies as “extant wind” and rooftop solar, but which could arguably include energy efficiency initiatives (such as LED lights and insulation), large scale solar PV, small hydro, land fill gas and waste to energy and numerous others technologies.
By potentially restricting the CEFC’s mandate to “big solar” – and particularly parabolic troughs and molten salt storage – and as yet undeveloped technologies such as wave and tidal energy, as suggested by environment minister Greg Hunt, the government is not just confusing the CEFC’s role with that of the Australian Renewable Energy Agency, but also making its task of achieving double the government bond rate return impossible. It is asking it to take on the riskiest technologies and put all its eggs in just a few baskets. The experienced finance team on the CEFC board, including chairperson Jillian Broadbent, will tell them that that is just nonsense.
But it’s not really the details that count. It is the big picture and the optics that matter in global financial flows. The Abbott government has long declared its interest in technologies that are “on the horizon” – hence the interest in wave and tidal – and its horror of technologies that are being deployed in scale now, and threaten the primacy of fossil fuels. And having tried everything else to stop renewable energy, it has now turned its focus on big financial institutions. The message it wants to make to domestic and international banks is clear: Don’t finance that stuff down here.
Almost everywhere, and from nearly every corner, we hear the refrain: The solar revolution is coming and it is unstoppable. There is now general agreement – from analysts, researchers, the industry, market pundits – that energy markets are being transformed, and half our power needs will be self-generated within a few decades.
Unstoppable thought this force may well be, it seems it can certainly be slowed. And recent Australian pricing decisions suggest that the incumbents are doing their level best to make hay, not so much while the sun still shines, but while policy and pricing regulators are happy to keep moving the goal posts to protect revenue streams.
The forecasts seem emphatic. The Australian Energy Market Operator predicts that rooftop solar will amount to 25,000MW by 2025. Bloomberg New Energy Finance predicts 37,000MW by 2040.Investment banking giant UBS suggested, in one “dream” scenario, solar could provide half the world’s power needs by 2050.
Even the owner of Australia’s biggest coal-fired generator concedes that half of all demand will be met by distributed energy, mostly solar on rooftops of homes and business, and through battery storage. The big “gentailers” – both in Australia and overseas – are busily revising their business models to make sure they are not left behind.
Over the last few weeks, however, there have been some disturbing trends, suggesting that the solar industry has a major battle on its hands, even if the flagship policy, the Renewable Energy Target, remains untouched for small-scale installations, the Abbott government seems intent on giving big solar a boost.
The problem occurs at the meter, and on consumer bills. Across Australia, pricing regulators and utilities have taken action to protect their revenues and make rooftop solar less appealing for consumers. They have done this through a bunch of different means.
In South Australia, the grid operator has applied to slap solar households with higher charges, and West Australia’s state-owned utilities have been considering a similar measure.
The Australian Renewable Energy Agency is planning another round of funding for large-scale solar plants, in a bid to bridge the gap between the cost of large-scale solar plants in Australia and the US and elsewhere in the world.
ARENA chairman Greg Bourne flagged the new round at the NSW Solar Breakfast event in Sydney on Monday, suggesting it would be included in the next general funding strategy it will release soon.
The initiative is likely to be welcomed by the Abbott government, which is keen to push large-scale solar as hard as it can, to ensure it displaces out-of-favour wind generation in the renewable energy target.
The Abbot government, whose senior ministers have described wind turbines as ugly, inefficient and possibly harmful, is asking the Clean Energy Finance Corp to also direct finance to large-scale solar projects.
Bourne noted that the current cost of large-scale solar PV projects in Australia is probably around $A140-$A170 a megawatt-hour.
This compares to just $US40/MWh in the US, equivalent to just over $US50/MWh after a tax credit, and tariffs of under $US60/MWh in the Gulf Region and Middle East.
Bourne says the difference comes down to the cost of finance, and to the “nuts and bolts” and the solar supply chain in Australia.
He said Australian banks were “very timid” when it came to large-scale solar, mostly because so little had been built in the country.
To date, only one 10MW has been built in Western Australia, a 20MW plant in the ACT, and a 102MW plant (largely funded by ARENA) at Nyngan. Two other ARENA funded projects, Broken Hill (53MW) and Moree (56MW) are also under construction.
“People say the market should drive everything … but the market here does not supply the capital when it is actually needed. Markets overseas do, but not here. They (the banks) are very, very timid.”
Bourne said the current estimate of large-scale solar PV in Australia was between $A140 and $A170/MWh, but ARENA was aiming for a short-term target of getting to $A110 and $A130/MWh by 2017.
Longer term, by 2020, it was aiming for “wind parity” of $A80-$A100/MWh, and then to try and match the US prices. “We may not get there because of the size of Australian market …. but we need to be able to accelerate our way down there.”
Apart from helping to lower the cost of finance – by getting more projects built – ARENA will target the supply chain. Bourne says 60 per cent of the cost of a project is local.
“It’s the boring stuff,” Bourne said, such as the concrete foundations, the steel bolts, the racking, and the other balance of systems costs.
“We have so much at the distributed level, of PV. In terms of utility-scale, we do lag. Part of it is to do with political history, part of it is to do with financial involvement.
“There is a substantial opportunity to reduce local supply chain and financing costs,” he said.
This article is sourced from Renew Economy
Network charges may penalise uptake of battery storage, as well as PV
The trend among some electricity networks to penalise or discourage the uptake of rooftop solar by imposing fixed tariffs or additional fees is now extending to battery storage, with one network accused of trying to lift charges to households with storage even though they are reducing peak demand.
In an analysis of recent tariff proposals by South Australia Power Networks, which included a since-rejected attempt to apply a surcharge to solar households, the Australian PV Institute says SAPN now seems intent on penalising households that install battery storage, despite their obvious network benefits.
“SAPN admit that batteries will reduce network peaks but still wish to charge PV households that install batteries as if they are increasing the peak,” the APVI, an independent institute, says in a newly released discussion paper.
The issue is important in Australia, which leads the world in the adoption of household rooftop solar. South Australia has the highest rate of adoption in Australia, with 28 per cent of available homes adding rooftop solar, which now contributes more than 6 per cent of the state’s electricity demand over a year.
Official forecasts suggest this will increase at least four-fold in the next decade, to the point where rooftop solar will provide 100 per cent of the state’s electricity demand at certain times.
Hence the importance of battery storage to balance the output, and to ensure some of it used to reduce peak demand. The state government has announced a tender to install battery storage on its buildings, including Parliament House and the key arts precinct, and the City of Adelaide is also providing incentives.
The APVI says its issues with SAPN are applicable to other networks, because they face similar issues in dealing with solar and storage, and their response with tariff design.
The APVI says that SAPN recognises that the next big development is battery storage, and perhaps electric vehicles. SAPN says the “battery storage has the potential to soak up a lot of the excess energy being generated during sunshine and shift that to later in the day when the network peaks”.
But the APVI says: “Given that the most immediate market for batteries is likely to be people who also have PV, will they be charged for increasing network peaks even though, according to SAPN, they will likely be reducing them?”
The APVI criticism extends to SAPN’s proposed “cost reflective” tariffs for rooftop solar, which the APVI argues is not cost reflective at all. That’s because the the proposed demand tariff on household loads shows very little correlation between the costs charged to the customer and the customer’s demand at the time of the network peak.
This means that many households on SAPN’s cost-reflective demand tariff would be paying for augmentation costs at times when their demand was not affecting the cost of augmentation.
The APVI notes that in SAPN’s own pricing proposal, it acknowledges the ability of solar PV – even without battery storage – to delay and reduce peak demand.
The SAPN submissions says: “The network challenges are different today, with problems of low load during days with mild but sunny weather. In summer, the peaks that used to occur between 2pm and 5pm have moved to become slightly lower peaks between 5pm and 8pm.” (APVI’s emphasis added)
Two things can be taken from this, the APVI says. One, that PV delays and reduces demand peaks; and two, that because demand peaks have reduced, there is no need to augment the network and so (from an augmentation cost point of view) whether PV customers increase or decrease their demand peaks is irrelevant, until such time as demand exceeds previously installed grid capacity.
APVI proposes a “real cost-reflective tariff” with a demand charge/reward component that would be applied only over the peak demand months and only for three hours a day – which would create a better incentive for households to implement options that actually reduce their demand during the time of the network peak.
The APVI makes a damning critique of the assumptions used by SAPN, including its claims that solar households have dramatically different load profiles. It says this is not true, and any changes that are evident are probably caused by metering methods than consumption patterns.
This article is sourced from Renew Economy
When Paul Graham was busy writing a report on the future of Australia’s electricity sector, a salutary reminder of the rapid progress of technology landed in his letterbox.
In the mail for the chief economist of the CSIRO’s energy flagship was an advertising leaflet spruiking batteries on the market for solar photovoltaic panels. These are the game-changers in the scenarios he was trying to map out.
"Every now and then, you think you’re doing something futuristic and then things happen faster than you think,” Dr Graham said.
His task at the time was to assess the complex and unprecedented issues confronting the industry, from slumping power demand to the need to slash climate changing greenhouse gas emissions
From the roofs of 1.3 million Australian homes – with about 50,000 added in the first three months of this year – PV panels are already hurting baseload fossil-fuel generators by flattening the peak demand periods that used to deliver windfall profits.
The real disruption, though, will come if batteries linked to solar PV and other renewable energy sources such as wind become affordable.
“The whole system is built on the fact that you can’t store energy,” Dr Graham said. “If electrical storage could actually become a reality that really turns the whole system on its head.”
“If you’ve got that, (consumers) can potentially disconnect from the grid.”
The Clean Energy Finance Corporation has committed a $100 million financing facility to Origin Energy to help the utility giant expand its offerings of rooftop solar and battery storage to consumers.
The 12-year financing facility will initially be used to boost Origin Energy’s recently launched solar offering, where it owns the rooftop solar array and sells the electricity generated to the home owner at a deep discount to normal grid prices. This is known as a power purchase agreement.
Origin Energy is currently offering PPAs with prices as low as 11c/kWh to some consumers, nearly one-third of the price of grid electricity. The attraction for Origin is that it boosts its position in the solar market and locks in the consumer for the length of the PPA, which can be seven, 11 or 15 years.
Origin Energy and the CEFC said the financing could also be used to support battery storage solutions. Origin is yet to offer battery storage in its PPA contracts, but it is currently trialling a battery solution in market and expects to roll out a product later this year.
“Solar as a Service is already proving an attractive proposition to customers since it was launched earlier this year, and the CEFC finance will be used in expanding the offering, so more Australians can enjoy the benefits of solar,” Origin’s head of Solar and Emerging Businesses, Phil Mackey said.
The Solar as a Service offering was launched in May and is currently available to residential and business consumers within a 100km radius of the central business districts of Adelaide, Brisbane, Gold Coast, Sydney and within a 50km radius of Townsville.
The commitment to Origin Energy is by far the biggest so far offered by the CEFC. It has previously committed $70 million to US solar giant SunEdison, $20 million to ET Solar, and another $20 million to Australian solar manufacturer Tindo Solar.
CEFC CEO Oliver Yates said PPAs offer a clear benefit for residential and business consumers, who can have increased confidence about their long-term electricity costs, while at the same time enjoying the benefits of solar.”
The fact that the loan offering is on a 12-year term also means it can fit in with the maturity of the PPAs. These sort of terms are difficult to get from banks.
The battle lines in the fight to power the nation are rapidly being redrawn as the emergence of domestic solar and storage systems have forced the big utilities to scramble to protect their shrinking fiefdoms.
Six months ago, the big three power companies – AGL, Origin and EnergyAustralia – were spending considerable time and resources fighting to have both large and small scale Renewable Energy Targets (LRET and SRES) either cut or abolished.
In the past few weeks the rhetoric has been all about the lucrative growth opportunities for their small residential solar businesses.
Both the big listed Australian utilities - AGL and Origin - have told their recent investor briefings that their traditional businesses in the National Electricity Market (NEM) do not exactly have bright prospects.
Coal fired generation in decline; demand and prices hit
A recent report from Bloomberg's New Energy Finance division found that, since 2010, electricity supplied by fossil fuel generators has declined by 9.5 per cent.
Electricity demand has fallen by 6.7 per cent over the same period, while the Australian economy has grown by 9 per cent.On NEM figures, prices have fallen on average by 12 per cent a year between 2007 and 2012, making coal generation increasingly marginal.
"Price declines have impacted fossil fuel generators the greatest, as they have fuel and operating costs not borne by renewable assets and are more exposed to spot prices," the Bloomberg research pointed out.
"The market revenue of fossil fuels in the NEM has declined by more than half since 2007, after accounting for the pass through cost of carbon and the wholesale energy sold or offset by renewables," Bloomberg found.
AGL, Origin and the Hong Kong-owned EnergyAustralia – which accounted for more than a third of the NEM's capacity – say they are not contemplating a full scale retreat from coal burning generation in the short term but, at the same time, they are not deploying more resources there.
In a sign of the times, Alinta – another sizeable generator – last week decided to close two uneconomical coal-fired power stations, as well as an associated coal mine in South Australia.
Alinta cited the glut in power supply, driven by falling industrial demand and increased renewable supply, for the closures and the loss of 400 jobs.
Retail conditions hit by customer churn and shrinking margins
In retail, the big three's position is even more dominant, with their market share ballooning from around 50 per cent to 75 per cent between 2010 and 2014.
Bloomberg said the "bold growth strategies have sometimes been poorly executed", with the utilities struggling to counter growing consumer churn, which has risen from around 13 per cent to 20 per cent over the same period.
"In an effort to keep and attract customers, energy retailers have offered discounts in what has become a race to the bottom on margins," Bloomberg argued.
Bogged down in the morass of their traditional business battlefields, and having fired most of their shots – at least for the time being - in the policy war, the vertically integrated utilities have decided to adapt to, rather than fight, the dangerous disruptions posed by advances in home based renewable power generation and storage.
Battlefront now on the other side of the meter
The battlefront has now moved to the other side of household electricity meters - away from the coal valleys, grid and the NEM - and onto suburbia's rooftops.
Shifting the battle just the 15 centimetres to the other side of the meter has massive implications for both the utilities and consumers.
A survey conducted recently by Morgan Stanley's utilities team found there was a strong level of consumer interest in escaping the grid.
Around half the households surveyed expressed an interest in solar and storage systems at around the $10,000 price point with a 10-year payback period.
Morgan Stanley argued the utilities' cost of not adapting to the challenge would be substantial.
The continued financial blood letting from ignoring the growth of domestic solar and storage would see AGL and Origin's earnings cut by $30 to $40 million by 2017 and up to $100 million by 2020.
"We think the incumbents will work hard on a competitive response, leveraging their customer data, relationships and balance sheets, but we think the replacement [revenue] streams may only partly offset the revisions to core earnings," Morgan Stanley told clients.
"Assuming 20 per cent market shares, we think Origin and AGL could claw back about $20 million of the lost load earnings each year until the market matures."
The storage scramble is on
Last month AGL made the first significant foray into the 'solar-plus-storage' household market, announcing its Power Advantage product from its New Energy division.
The lithium ion battery AGL plans to sell is capable of storing 6 Kilowatt-hours (kWh) of solar energy and is suitable for mid-sized household solar units.
AGL told its investor presentation that the New Energy division would have a separate culture from its declining core grid electricity business and it would be central to its longer-term transition away from coal.
It is an understandable move given AGL's forecast that the household solar market could worth as much as $2 billion a year by 2030.
AGL said the New Energy business would post a loss of around $45 million this year and should reach a financial breakeven point by 2018.
By 2020 it is expected to churn out revenues of $400 million, although much of this will be coming from low-margin operations such as installations and ongoing finance and service payments.
Days after the AGL presentation, Origin laid out its own plans to become the dominant player in solar.
Since 2001, Origin has installed 80,000 solar units making it the second biggest player in the market.
Origin has been driving its growth using a rather different tactic to AGL.
Its strategy is based on pay-as-go, power purchase agreements with "zero cost" up-front.
Customers will be committed to take electricity off the panels on seven to 15-year terms at prices up to 70 per cent below current tariffs.
The consumer gets immediate financial benefits and Origin locks in long-term relationships aimed at reducing its "churn".
Origin said it expects a loss of $25 million in 2016 before breaking even the next year.
While Origin told investors it has been trialling residential battery storage products, it is yet to commit to bundling solar and storage for its customers.
The third big player - EnergyAustralia - is still testing its solar expansion and has a partnership with US-based Enphase Energy.
It is believed EnergyAustralia has been looking closely at developing a storage package in partnership with Tesla's headline grabbing Powerwall battery next year as well.
Battery storage prices are tumbling
Even without being released, the Tesla product is proving to be a game changer.
The RenewEconomy website has reported that the price of Legato storage system being offered by AGL has dropped by a third over the past six months, largely due to the impending arrival of the Powerwall.
On Morgan Stanley's figures, the estimated payback period on solar and battery installation currently ranges from about nine years in Queensland, to up to 16 years in NSW, and a tedious and uneconomic 20 to 38 years in Victoria, depending on the supplier.
However Tesla's decision to recoup its research and development costs over a much longer period than its competitors has forced a major rethink on pricing in the industry.
One industry insider told the ABC that Tesla's Powerwall battery – at the current Australian dollar level – could be landed and installed at around $1,100 per kWh of capacity compared to the current price of around $2,500 per kWh for mid-range units.
If that pricing regime was adopted across the industry, it would slash payback times and drive an even more rapid uptake.
Morgan Stanley said it does not expect a mass migration off the grid - at least in the medium term - primarily because solar and battery systems will not ensure the 99.9 per cent availability of power currently provided by the grid.
"Put simply … household battery systems won't have enough juice to make it all the way through the winter, especially in Victoria," Morgan Stanley noted.
On top of that, there are a large number of households – such as apartment dwellers and renters - with insufficient rooftop space, money or interest to totally unplug the grid.
Battery storage success not dependent on subsidies
Bloomberg research analyst Hugh Bromley said a big advantage of solar-plus-storage was it was not reliant on subsidies.
"Its growth is organic, unlike the large scale renewable generation sector which is driven by policy and without subsidies is not economically viable at the moment," Mr Bromley told the ABC.
"The utilities are recalibrating their businesses to focus more on the customer and not so much on the technology," Mr Bromley said.
The utilities are now well aware of the threat posed by rooftop solar-plus-storage and the risk of the so-called coal-fired "death spiral" to their businesses.
Rather than fighting or ignoring the threat, the big power companies best hope of survival rests with their ability to adapt.
This article is sourced from The ABC News