A look at Australia’s PV market

Remember when video players first hit the market at affordable prices? It just made so much sense to have one; everyone fell in love with what they did for you and off the market went.

It’s a long bow to draw perhaps, but the roller coast ride of roof top solar power is heading in the same direction. Few dispute the idea that solar power is clean, but now it has started to make economic sense, the concept of rooftop solar is becoming compelling to the wider market and we are headed to a high point in the ride.

If forecasts are right, almost 300MW of solar power systems will be installed in Australia in 2010; that’s roughly one 2kW solar system for every person in Cairns as an example. What is really amazing however is that only a year ago, the number was almost four times less, at 75MW installed and in 2008, only 20MW.

Solar power is fast becoming big business. There are a growing number of energy utilities staking their claims in the space like Origin, AGL and TRUenergy, to name a few. And we now have Lend Lease, Bunnings, Modern Roofs and Harvey Norman all trying out the market too. And then of course there is the solar specialist market. Solar specialists (be they retailers, wholesalers or installers) are represented by literally thousands of companies, if the Clean Energy Councils accredited installer list is anything to go by.

And some of them are turning over hundreds of millions of dollars each year.

It’s intriguing that we only have one fully fledged solar panel production plant in operation but as they say, timing is everything. Just a few years ago you could be forgiven for thinking the market was a lame horse, but it’s a sure bet that BP are now wondering if they did the right thing by almost giving away their Sydney factory to new entrant SilexSolar.

Since April this year, SilexSolar have emerged to take a seat on the ride and have already announced an expansion to 25MW capacity by year end. Others continue to talk, experiment and dabble and if the growth and financial rewards continue, we could well see more solar panel assembly facilities in the coming years.

It’s a market worth perhaps $1.4Billion this year and consumer choice in such a market of large and small, old and new suppliers is simply boggling. The fundamental recipe is the same however, get the quality, features and service right and with the support mechanisms we have in place now, homeowners will buy them.

It’s not every home owner; but somewhere between 2 and 5% have climbed on board in the hope that they will do their bit but even more importantly, they’ll protect themselves against inevitable electricity price rises or make a little money. In NSW where we are clinging to a generous Gross Feed In Tariff, paybacks are less than 5 years providing annual returns up to 20%, depending on variety of factors.

Not everyone is getting it right however. In such a fast paced growth market the rush of adrenalin from the upwards ride is leading to mistakes. We have seen several bankruptcies this year, some (thankfully) small batches of quality problems in inverters and solar panels and increasing concerns over installation quality. In September the Australian PV market even saw its first public apology and retraction for misleading advertising, thanks to ACCC attention on the sector.

But with the stakes at an all time high, the majority are earnestly jostling for position and doing their best to get the recipe right. It could seem that with such vast market potential for growth and an increasingly insatiable appetite it would just keep climbing, but it is a roller coaster.

One cannot ignore the industry’s history of ups and downs; when you are largely reliant on Government policy for your consumer appeal you are subject to the whims of political fancy. Analysts originally speculated that the massive growth of 2009 wouldn’t be repeated this year, until the NSW Government surprisingly announced one of the world’s most generous Feed In Tariffs. Combined with other factors we shot off again this year so perhaps 2011 will be the year when growth rates retract to more sensible numbers?

Certainly we are coming off the tail end of rebate programs, some large projects and the REC price should settle at $40 in 2011. And it’s considered unlikely that NSW will extend its scheme, so that leaves a fairly precipitous gap in 2011 unless other factors come into play.

We are also heading for a very significant junction, as the market shifts from a predominately residential to a utility scale market, and it’s already started. Western Australia’s Verve Energy has announced a 10MW solar farm and the ACT and Victorian Governments have announced support for even larger plants over and above the Federal Solar Flagships program.

By 2015 it is estimated that under a high growth scenario, the utility segment could be more than 400MW a year and the residential segment almost 750MW. Interestingly, the revenue growth won’t follow capacity because prices have to decline to get the growth, but it could still equate to a $6 Billion dollar retail opportunity in just five years time.

A couple of things are for sure; If you are consumer take advantage of generous policies while they exist or miss out but, with such aggressive jostling for position by suppliers, remember the old adage; “caveat emptor”.

Nigel Morris is Director/Princpal Consultant at SolarBusinessServices in Australia

Click here to reach out to Nigel.

Like this content? Join our growing community.

Your support helps to strengthen independent journalism, which is critically needed to guide business and policy development for positive impact. Unlock unlimited access to our content and members-only perks.

Most popular

Featured Events

Publish your event
leaf background pattern

Transforming Innovation for Sustainability Join the Ecosystem →