The Northern Territory’s government-owned energy generation company has admitted to facing an “existential risk” from the rise of cheap solar power.
The frank assessment was offered in Territory Generation’s 2019/2020 Statement of Corporate Intent, making it perhaps Australia’s first energy utility to openly concede that lower cost solar could bring its traditional fossil fuel business undone.
The utility said it predominantly gas-fired generation portfolio was losing out to the lower cost solar alternatives being embraced by NT homes and businesses.
It estimates solar generation on its grid will rise four-fold in coming years – growing from around 30MW now to more than 140MW by 2022/23 (not including the massive 10GW solar project proposed for exports to Indonesia).
“The introduction of solar power on residential and business rooftops as well as large scale solar farms provides a threat to the viability of [Territory Generation].” Territory Generation says in the report.
“This is because the cost of producing solar power is below the marginal cost of producing power from gas in the Northern Territory. This is the existential risk to the Corporation.”
There is hope, however, in the form of a big battery, which Territory Gen is planning to install in either Darwin or Katherine to reduce its reliance on spinning reserve, and so save on the fuel costs that cripple its budget.