of a shortfall of gas-fired electricity by as early as next summer.  Retailers have not been immune. Stakeholders who IRW spoke to have reported experiencing an uptick in energy costs in the last half, with AEMO data indicating that average wholesale prices have increased between nine and 58 per cent in 2017, depending on state. Beacon Lighting executive chairman Ian Robertson said the electricity bill in South Australia has increased by as much as 60 per cent recently, noting that he expects prices in New South Wales and Victoria to increase by a further 10 per cent. “We’ve got a power bill in South Australia of $30,000 per store. Soon it’s going to be something like $55,000 per store,” Robertson told IRW. With both Woolworths and Wesfarmers also flagging increasing electricity costs as a factor weighing on earnings last month, Australian Retailers Association policy director Heath Michaels confirmed that an increasing number of retail members are complaining about energy prices – recent spikes are likely just getting started. “It’s fair to say that there are some big picture energy issues,” he told IRW. “I don’t think all the impacts have washed through yet, so depending on the state, you are going to find retailers are affected in various ways.” “There’s no doubt, the high energy users will start feeling the pinch.” Michaels expects energy costs to be an increasing issue for at least the next 12-18 months, as larger industrial companies like BHP Billiton contemplate the future of major projects in South Australia. Queensland University of Technology research fellow Ryan McAndrew said rising prices for energy inputs and increasing demand for electricity were underpinning the issues. But both he and Michaels agree that ultimately wider legislative change will be required. “All the industry players really want is for everyone to be onboard, regardless of politics, to sort out a standard policy nationwide,” McAndrew said. Unfortunately with state governments, federal policy makers and the wider community still in disagreement over what type of action should be taken to resolve underlying NEM issues, legislative change will take time and is not certain. Making the switch Instead, pressures are likely to culminate in an acceleration of market disruption, with the business case for solar improving with each successive power bill, noted McAndrew Signs are beginning to show that retailers are investing in making the switch. Beacon Solar – a division of Beacon Lighting established in 2008 that works with retailers to install solar solutions – recorded a 222 per cent increase in sales in the last half, emerging as the company’s fastest growing division in the year so far. Robertson said the company is working with a “number of large brands” looking to roll out various solar packages under power purchasing agreements, which became available in Australia last year. “It suits retail, particularly large format retail, because you have lots of roof space and are operating seven days a week,” Robertson said. “Power is being generated at the same time you are using most of it.” Under the agreement, retailers are able to remove the need for capital outlay, with the provider fronting the cost for equipment and installation and then charging the retailer for power used over a fixed contract period – after which the solar panels are given to the retailer. Philippa Kelly, CEO of the Large Format Retail Association said that the availability of the agreements have spurred on solar adoption in the segment, noting the rising cost of energy as well as sustainability concerns from members. Ikea is also rolling out solar. As part of a plan to be 100 per cent renewable by 2020, the company is plans to install more than 16,000 panels on stores across the country. However, as Michaels noted, installing solar is not always an option, particularly for retailers in shopping centres that are tied to arrangements set up by landlords. The GPT Group, which runs as many as 14 centres across the country, including Melbourne Central and Highpoint, said that retail tenants have shown a “direct interest” in solar as part of centre energy strategy. “Solar has an important role to play in meeting the energy needs of GPT’s buildings, especially the retail centres with their long hours of use and expansive roof area,” said Bruce Precious, the group’s national manager of sustainability and property services. GPT has already started experimenting with solar power at its Casuarina Square centre in Darwin. The 1.25MW system set the operator back $4.5 million and now generates 20 per cent of the building’s base/common area electricity at no cost to tenants. But another set of regulatory hurdles is hampering widespread adoption, with a separate source telling IRW that approval processes are lengthy because energy suppliers are weary of commercial adoption taking demand off the grid. “While the business case for solar continues to improve, there are quite a few regulatory changes that need to happen before we can gain the maximum benefit from on site solar,” explained Precious. Both the Australian Property Council and the Shopping Centre Council of Australia are working on different regulatory angles to lower the barriers to further commercial solar implementation. SCCA executive director Angus Naardi said that the nature of solar regulation is evolving, with a strong competition and consumer policy focus. As the politicisation of power issues emerges as a potential election issue, Turnbull and SA premier Jay Weatherill have been busy trying to address general issues with Australia’s power grid, with the likes of Tesla and Zen energy fielding proposals for battery farms. But whether tech entrepreneur Elon Musk emerges as a saviour for power grid reliability could be of less consequence to retailers keen to utilise roof space and daytime trading to maximum effect.