As frequent readers to WattClarity would know, we’re a Brisbane-based software company that operates in the Australian energy sector.
As such, we have a team of people who have a higher awareness of the energy sector than would be the case across the general population. This is the case with respect to solar power, as it is with many other different aspects of the energy sector. Particularly with respect to residential solar PV, we have employees who fit into each of the following 3 categories:
Category 1 = we have a number of employees who are fortunate enough to receive the very generous, long-lasting 44 cents feed-in tariff (including our CEO, as he noted here);
Category 2 = we have other employees (like Jamey, featured in this article) who missed out on this opportunity, but who has solar PV installed; and
Category 3 = we have other employees who (because of renting, renovating, or other reasons) are not able to access any benefits from their own solar.
The recent demise of start-up retailer, Urth Energy (suspended from the market by the AEMO on 1st February) was an unfortunate development on this path of the energy transition. Back in September 2016, Urth launched its “Urth Trader” product that provided the opportunity for residential customers with solar PV installed to receive spot pricing for their solar output.
One of our employees, Jamey, is one of the 780 customers referenced in this AFR article as affected by this demise. Given Jamey’s unique position in this development, we thought that Jamey’s perspective on the demise of Urth Energy would be informative in terms of this particular situation – but also in more general terms with respect to a number of broader topics including:
1) the general push for a “fair price for solar”;
2) the increased volatility inherent in the market – and hence the increased risk faced by all retailers, but particularly new entrants, leading to increased likelihood of failure.
This week I have asked Jamey the following questions, and have included his answers below:
Q1) When, and why, did you install your solar system at home?
Jamey: In around October 2013, I installed a 5kW Solar PV array which included x20 qCell G3-Pro Panels and a SMA Sunnyboy Inverter. I had only just purchased my home so unfortunately I had missed the deadline to register for the QLD Government’s 44c Feed in Tariff.
Like most people who have installed solar, I did so to offset my energy costs. At the time of my installation, the QLD government were offering a feed in rate of 8c, and my chosen retailer was also offering 8c, which meant I was getting a total of 16c per kW – not the greatest return compared to others, but still a sufficient reimbursement. A few months later, the government stopped the 8c tariff altogether and the retailer dropped down to 6c which meant a 10c per kW (or 62.5%) drop.
Q2) What do you think, about not being eligible for the 44c Feed in Tariff?
Jamey: It seems obscenely unfair. Those who were lucky enough to sign up before the deadline for the government tariff are still eligible for a retailer feed in meaning that most are receiving more than 50c per kW, which is over seven times more than I am being paid. It is crazy to think that these people are being paid twice as much as what it costs them to import a kW AND they do not have to pay tax on their profits either.
Q3) What options have you looked at to secure your best return for your solar investment?
Jamey: I was previously on Click Energy’s ‘Shine Reward Plan’ that offered an 11c feed in but also raised usage charges to 6% and raised the daily supply charge to 14% above their standing offer and also included a solar metering charge.
I originally switched to Urth Energy as they offered a similar feed in rate as Click without inflating the usage and daily supply charges. I export twice as much energy as I consume so this option made the most sense for me at the time.
Q4) How did you learn of the demise of Urth Energy?
Jamey: I found out through our CEO, Paul McArdle on the 1st of February who had seen the notice in an AER (Australian Energy Regulator) mail out. After hearing the news through Paul, I immediately called up Urth Energy and did not get through after 45 minutes of trying. I then tried to email the company but did not receive a response, so a couple of days later I called the AER who told me that I was automatically going to be transferred to Origin Energy as part of their ‘Retailer of Last Resort’ process. I was not happy with this arrangement, as I knew that based on the way in which I import and export electricity, Origin Energy was not going to offer me the best return for my specific situation. As such, I called Origin Energy who told me that they did not have an account for me to cancel with them.
By this time I had decided to move back to Click Energy to secure their 11c feed in but found that their staff had no idea about the Retailer of Last Resort arrangement. After several days of getting the run-around from Click Energy’s staff, I finally arrived at a resolution after contacting the Queensland Energy and Water Ombudsman who facilitated me getting in contact with the correct person at Click Energy who could help.
It wasn’t until the 16th of February, which was more than two weeks after Urth Energy was suspended from the market that I finally got an official email from the appointed administrators of Urth Energy telling me that they were no longer in operation. The Urth Energy website still has a ‘Sign Up Online’ button on their homepage, and it wasn’t until recently that they’ve added a note to confirm that the business has gone into voluntary administration.
The Urth Energy website as at the 28th of February, 2017
Q5) How much communication has there been about this, through official channels? Has this been sufficient?
Jamey: As noted above, if it was not for my employment within the energy sector, I would not have known about these arrangements until more than two weeks after my retailer had ceased operations. The communication that I have received from all parties involved including Urth Energy, the AER and Origin has been totally insufficient.
Q6) What are your thoughts on the “Retailer of Last Resort” arrangements?
Jamey: Customers should have been notified of the situation much earlier than they were in this situation. Nobody should be automatically forced onto any particular retailer, unless perhaps they do not organise a replacement retailer within some reasonable time frame.
Q7) What are your next steps, in terms of your next retailer?
Jamey: As mentioned above I decided against moving to Origin Energy as their 6c feed-in meant that I would receive a lower return than I could get through Click’s 11c feed-in (even after adjusting for their higher usage, supply and metering charges). After researching different rates from all of the retailers in the market, I concluded that returning to Click Energy was going to make the most financial sense for me.
Based on Jamey’s experience it seems as though the ‘Retailer of Last Resort’ arrangements need to reviewed and the process improved. Given the disruption under way, it is almost guaranteed that more retailers (and maybe even some of the bigger ones) will go bust, which means we need to be better prepared as an industry for what to do when this happens. This is something we first talked about on WattClarity in late 2014.
There is still no real information available regarding Urth Energy’s demise, which might lead some to conclude (probably wrongly) that it was due to spot priced solar exports. The more likely reality is that Urth Energy went bust for either of two reasons:
a. Not enough cash flow (a problem for most small businesses); or
b. Spot volatility hurt them badly (we expect that the high volatility of late is hurting a number of retailers).
Given Jamey and others’ keenness to shop around for what is, in fact, a pretty small benefit in financial terms (i.e. comparing plans), we wonder what this means in terms of market opportunities – is this part of the reason why there have been so many new retailers join the market in the past 12-18 months?
We hope to post more specific commentary about the “Urth Trader” business model (spot-priced-solar) in the near future.
Hi,
I note Jamey’s comment (below – from todays topic) that those on the $0.44c feed in tariff are still eligible for a further retailer feed in. Is this in fact the case. If so, I would really appreciate some info re the application process.
Hi Sean
In my case, I am one of the lucky 400,000 in QLD on the 44c FIT and I do receive a bit more than that (50c or 52c in total, can’t remember specifically) with a particular retailer whose name I won’t mention. I believe pretty much all of them do it, so shop around.
Paul
Re the 44c FIT. The people who received this had a higher exposure to finance costs of construction, a higher exposure to risk (knowledge of the life of PV installed was lower confidence) and made commitments in a time where government *had* to encourage activity to build a market.
If you compare people who squeezed in ‘under the wire’ at the end of the 44c FIT to somebody who applies shortly after its cancelled, yes, it “looks” unfair. I think the government could have done a sliding scale tail-off, or a number of other things.
But this is really no different to somebody who gets first round shares, before float, and somebody who buys at market rate post float: there are winners and losers, there advantages and disadvantages, there are risks and rewards.
I don’t have solar. I value PV and wind immensely, and I am delighted that part of my bill goes to a social offset and equalization to people who have invested in PV and yes, that includes the 44c early adopters. I’m glad 44c ended: it wasn’t sustainable. I am sad 11c has been dropped to 6c and lower, I think its disincents people, from long term capital investment in PV to all our benefit.
But this really isn’t “fair” and “unfair” -it just feels like it is. If you want “fair” and “unfair” then lets talk about how people get to invest in coal and gas, and are not exposed to the longterm remediation costs because of systematic rorting of the cleanup cost.