Synergy posts profit despite revenue loss from solar PV uptake

Despite economic hardship caused by record numbers of solar PV installs that have led to a fall in residential demand, Western Australian state-owned retailer Synergy has posted an after-tax profit of $24.3 million for 2017-18.

September 21, 2018 Marija Maisch

The 10 MW Greenough River Solar Farm is among the assets transferred into the Bright Energy Investments fund.

Image: First Solar

Highlighting a marked improvement on the previous year it finished in the red, Western Australia’s power provider Synergy has posted a profit for 2017-18. The result has been achieved in the face of soaring rooftop solar installation figures – showing a 25% uptake increase.

In its annual report, Synergy revealed that rooftop solar capacity has grown to 918.5 MW. This figure includes over 1,000 systems installed under Synergy’s solar offer, SolarReturn, which has been in the market for two years.

Overall, Synergy believes rooftop solar is now supplying seven percent of total southwest grid demand, noting that this trend is forecast to continue amid rising electricity prices.

The changing generation profile in the State, with soaring rooftop solar as well as large-scale additions, are at the heart of Synergy’s challenges, as revealed by the Australian Energy Market Operator (AEMO) earlier this year.

“This major growth in renewable generation, has profound consequences for the dispatch profile of our generation fleet and our cost of generation, as well as our revenue base,“ Synergy Chairman Robert Cole said in the report, adding that due in part to these forces Synergy’s revenue for 2017-18 fell by 2.3%.

On top of that, electricity sales decreased by 5.9% in both retail and wholesale markets.

But, despite the drop in revenue and sales, Synergy posted a $24.3 million profit in 2017-18, a $36.9 million improvement on last year – the result made possible by reducing operating expenses by $50.7 million.

As reported earlier, Synergy’s dominance in the market has acted as a hurdle for all prospective renewable energy developers in the state, as well as a guarantee of high power prices – the situation highlighted by the WA Labor State Government’s decision to back away from plans to introduce full retail contestability in the state’s electricity marketplace.

On top of its rooftop solar system offer, the retailer ensured its slice of the cake in the large-scale RE sector earlier this year with the establishment of a solar and wind power fund – Bright Energy Investments – alongside construction and building industry superannuation fund Cbus Super and the Dutch Infrastructure Fund as major investors.

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