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Market Recap | January 2024

In case you missed it, here’s a recap on what’s been happening in the energy market over the last month.

Australia’s Rooftop Solar Market: A record-breaking 2023 and outlook on 2024 

In the throes of 2023, Australia’s rooftop solar market came tantalizingly close to surpassing its own growth predictions, falling just shy of the anticipated record-breaking year (2021). Despite this, the year was far from a disappointment, marking substantial achievements and signaling a transformative era for the nation’s PV capacity and output.

The total small-scale solar installations for the year reached approximately 3.17GW, representing a 14% increase from the previous year and falling short of the 2021 record of over 3.23GW. Australians continue to embrace rooftop solar at a rapid pace, with average system sizes hitting a new high of 10.5kW per system in December. The output from these solar installations also reached noteworthy levels, breaking records as Victoria’s rooftop PV share hit 65.8%, and South Australia’s soared to 101.8%, meeting the entire region’s demand for the second time.

$200 Million energy efficiency package announced for NSW homes.

This week saw the Australian Federal and New South Wales State governments tip a combined total of $206 million into energy-saving upgrades for social housing properties in the state and a solar sharing scheme, to help address the cost of living for more than 30,000 disadvantaged households. The move aims to upgrade some of the least energy-efficient homes in the country as part of the NSW government’s aim to slash its greenhouse gas emissions in half by 2030 and by 70 percent by 2035.

The four-year, $200 million package was received well with the Energy Efficiency Council (EEC) Head of Policy Jeremy Sung commenting “Energy efficient homes are cheaper to run, more comfortable and healthier to live in, so this funding will deliver real improvements to people’s lives,”. The program is expected to boost the energy performance of properties via heat pump hot water systems, ceiling fans, reverse-cycle air conditioners, insulation, and draught proofing, as well as solar systems.

A tough start to 2024 for the Victorian energy grid

Victoria’s energy utility grid has made the headlines again this week with one of its coal-fired power station towers being offline four times in four days last week following an eight-day outage over the holiday period. The power station provides at least 5 percent of Victoria’s’ electricity and whilst the outages were fortunately timed and coincided with cool weather avoiding a blackout, large energy users say they highlight the perilous nature of the state’s power grid, which is still dependent on fossil fuels. This news was coupled with last week’s decision by Environment Minister Tanya Plibersek to reject the Port of Hastings port expansion, an expansion listed as critical to Victoria’s offshore wind industry. The result has left many critiques concerned with the state of Victoria’s’ utility decarbonization, noting much of the states needed decarbonisation is likely to come from end-user upgrades in the near term.

Tasmanian hub set to begin

The Albanese government says the development of one of Australia’s greatest green hydrogen hopes, The Bell Bay hydrogen hub in northern Tasmania is expected to start development start this year. The project is set to receive close to $300 million in commonwealth and state funding – $70 million of it directly from the federal government. The government contribution was announced by federal energy minister Chris Bowen on Thursday, as part of an agreement made with the Tasmanian state government. Bowen says the new investment from the two governments will be in “Common User Infrastructure,” or those things necessary to create a hydrogen hub, such as hydrogen storage, transport, and export infrastructure. Perhaps of most interest to many hydrogen critiques was Bowen’s press conference in Bell Bay where he stated “What I’m particularly excited about in this in this hydrogen hub is the opportunity for using green hydrogen for decarbonising maritime transport,”. Despite the global decarbonisation push maritime transport emissions have been calculated to be up to 858 million tons per year with a growth of 20% over the past decade. While hydrogen isn’t yet widespread in commercial maritime transport, it holds significant potential for decarbonizing the industry.

Australia’s Wholesale Power Prices Plummet, Renewables Surge, and Challenges Emerge

In a significant development for the Australian energy landscape, wholesale power prices in the National Electricity Market (NEM) experienced an almost 50% decrease at the close of 2023, dropping to an average of $48 per megawatt-hour (MWh) in December, according to the Australian Energy Market Operator (AEMO). Despite warmer temperatures leading to a 1.6% increase in average electricity demand, renewables, particularly rooftop solar, played a crucial role, with output rising by 17%.

However, challenges lie ahead as spot prices surged in Queensland due to ongoing warm temperatures, breaking previous records in demand. AEMO issued “lack of reserve” notices for Queensland and New South Wales, illustrating strains on the power grid during heatwaves.

The decline in black coal-fired generation and fossil gas demand further drove down East Coast wholesale prices, averaging $10.83/gigajoule—almost 40% lower than the same quarter in 2022. Daniel Westerman, AEMO’s CEO, sees these events as “snapshots of the transition,” and while presenting a great sign of a growing opportunity, he highlighted the need for additional storage, like large-scale batteries, to prevent curtailment of solar farm output.

Navigating the Carbon Offset Landscape with Clean Cookstove Projects

In a recent study published in “Nature Sustainability,” the University of California, Berkeley, explored the potential overestimation of clean cookstove projects, a prevalent form of carbon-offset project under the voluntary carbon market. The study suggested overestimations of up to 1,000%, prompting a critical examination of the projects. However, Gold Standard, a key certifier of carbon credits, expressed reservations about the study’s conclusions, emphasising that the study did not find actual over-estimation and contested its alignment with broader academic consensus and data.

Gold Standard asserted the effectiveness of their clean cooking solutions, highlighting CO2e reductions of between 2.4 to 3.2 tonnes per stove per year, in line with broad academic literature.

The response underscored the significance of clean cooking projects, as about 2.3 billion people rely on open fires, impacting health and contributing to an estimated 2% of global climate emissions. While acknowledging the challenges, Gold Standard are committed to collaboration with experts and industry bodies to optimize processes, ensure accurate impact measurement, and invest in capacity development.

The study, while prompting scrutiny, offers an opportunity for the industry to refine methodologies and enhance transparency and it’s evident that the commitment to a sustainable and impactful carbon credit market remains strong.

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.

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