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Why energy companies don’t want you to go solar

A recent article on Crikey has highlighted how the surge of solar energy consumption in Germany is having a major impact on the price of electricity.

Germany has been at the forefront of the renewable energy drive, with one quarter of its gas industry due to shut as a result of the widespread adoption of wind and solar. The recent article on Crikey demonstrates that the price of electricity at peak midday times has plummeted by 40 per cent over the last four years.

What does this rapid price drop mean? It means demand for traditional energy is decreasing, and likely spells massive profit losses for energy generators across the country. This consumption shift is unlikely to be isolated to Germany.

If the take-up of solar energy is having a huge effect on the profitability of electricity companies in Germany, imagine the impact it could have on a sunbaked country like Australia? Electricity generators should be concerned.

The cost in household utility bills is steadily rising, as is our nation’s environmental awareness. Together with the government’s green incentive programs and feed-in tariffs, we are shifting towards renewable energy at an accelerated rate.

The reaction by some producers is a clear display of their fear for the future. Take NSW. The government runs the state generators and has abolished the feed-in tariff on the basis that it was too costly. But, as Crikey’s insightful article points out, the cost of these incentives, including the tariff, makes up just 6 per cent of the total retail bill.

Some argue that the real reason is that the take-up of solar energy in the state – which was being encouraged by the feed-in tariff – is going to have a disastrous effect on generator profits. The argument is convincing, especially as the startup and maintenance of energy plants cost the government billions of dollars every year.

Despite some moves to slow things down, energy companies need to recognise that the march towards solar is speeding up, not changing direction. In order to stay profitable they will need to start providing more competitive rates, better customer service and try to become as green as they can to give consumers a reason to stay.

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