PV in Australia; welcome to the land of beauty and terror

If only solar industry growth was determined by available sunshine.

Despite her fickle weather, Australia would be the centre of the solar world if it was true. But as we know, it’s policy more than anything else that determines a successful solar industry and Australia’s policy environment has been as contrary as her droughts and flooding rains.

In 2010 we had a tsunami of PV due to a variety of unpredictably positive policies and confluent international events. The market grew from around 79MW in 2009 to an estimated 320MW putting Australia back in the radar of top 10 global PV markets for the first time in decades. And with the tsunami came the flotsam and jetsam. We went from 300-3000 installers. From 10 to 250 PV brands. Unprecedented competition. Mergers, acquisitions, collapses and venture capitalists hovering eagerly overhead.

For industry veterans it was (generally) the ride of a lifetime; many had been waxing their boards and sitting “out back” riding the waves up and down for years as the horizon was surveyed for the perfect PV wave. With almost no notice, the industry was forced to its feet in 2010 and suddenly it was away, barrelling down the face of an unstoppable force.

Records were broken and as time passed the wave just kept building and building. Some fell off and were mortally wounded. Others demonstrated their acumen and daring, carving up and down the face, gaining strength and confidence as they went. New players “dropped in” on us, coming from nowhere and threatening to run right over us with their sharpened, flash new fins. It was no place for the faint hearted.

And as the new year starts, here we sit with an eerie silence around us, the adrenaline gradually subsiding.

The switchboards aren’t lit up like they were and many are paddling around aimlessly trying find a new direction. Will another wave come? Unlikely; tsunamis are unique events and rarely repeated. But the landscape has clearly been reshaped and experience has left most wiser and stronger.

Quoting from a report we recently co-authored with Sunwiz, Australian PV Industry Forecast 2010-2015, SolarBusinessServices predicts a year awash with receding tides and dangers from murky waters: “The industry has a strong backlog of demand and some comfort from the new Renewable Energy Certificate mechanism, which offers higher SREC prices and more pricing certainty. However, NSW’ FIT has reached its cap and SA and WA are getting precariously close to theirs.” We suggest that these factors, combined with a surfeit of industry participants and difficult times ahead for State and Federal Governments while they deal with reconstruction and clean-up activities, are likely to reduce the expectations for the year. At best the industry can match 2010 annual installations, at worst a decline of perhaps 10%.

Notwithstanding, the future looks strong thanks mostly the anticipated rise in Commercial and Industrial PV applications, although Residential is predicted to remain very strong. “Although we lack policies for Commercial PV, the combination of declining PV prices, rising electricity prices and competition are driving us towards double digit ROI for Commercial applications; it will come. Assuming it proceeds, the Governments Solar Flagships program will also deliver some very large lumps of PV, and some valuable experience for a small number of winners.”

Under an optimistic scenario, the Australian PV industry could grow from around $1.5B in 2010 to almost $4B by 2015 with annual installations approaching 1GW. Is it finally time to head “down under”? “Perhaps. But pack your sunscreen and your floaties for the next year or so, it’s not an eternal paradise. Both the PV market and nature have recently demonstrated just why it’s referred to as the land of beauty and terror.”

The writer, Nigel Morris, is the Director of SolarBusinessServices.

To find out more about the report Australian PV Market Forecast 2010-2015, please contact Nigel at nigel.morris@solarbusiness.com.au.

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