Orignially posted on the Daily Telegraph. Written by Kylar Loussikian. Read more here.
TAXPAYER-funded solar projects are proving a gold mine for AGL, with the energy giant benefiting from discount power that it sells to consumers for a massive profit.
The Queensland government’s QIC, along with the Commonwealth’s Future Fund, have struck a deal to supply AGL with electricity and renewable energy certificates for $65 per MWh.
However, the power giant is then onselling this to consumers for almost three times the price.
The pact highlights the way that AGL is failing to pass on to customers cheap electricity it gets because of its market power.
The deal would sell electricity and renewable energy certificates — a type of currency generated by solar and wind projects which electricity retailers are required to buy and use to meet the government’s Renewable Energy Target — together to AGL for between $55 and $65 per MWh from the Silverton and Coopers Gap wind farms for at least five years, and possibly for more than a decade.
The same power is available to smaller retailers — who can’t compete — for $92, according to the energy market, while each renewable energy certificate is separately worth up to around $80.
That means AGL is paying just $65 per MWh where other smaller competitors fork out around $170, leaving it little incentive to lower prices for consumers and businesses.
A major industrial user has told The Daily Telegraph AGL had offered to sell it electricity in which the renewable energy certificate was worth $60 alone. Despite that, it was still cheaper than other competitors.
Green Energy Markets analyst Tristan Edis said: “Clearly the actual cost of power from new renewable energy projects is far lower than the prices consumers are being charged.
“While the cost for a new wind or solar farm is about $60 to $70 per MWh, retailers’ prices are typically tied to the short-term contract and spot markets.
“These are trading at about $65 to $100 per MWh for power plus about $85 for the renewable abatement certificate.”
AGL declined to comment but its latest financial results show its earnings from the “Eco Markets” division almost doubled from $73 million to $145 million.