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Australia’s solar boom has only just begun – Bloomberg

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Australia is expected to spend some $55 billion on new electricity generation over the next decade and a half, but two thirds of this will be in the form of solar technology, and nearly half in rooftop solar PV.

These forecasts are included in Bloomberg New Energy Finance’s Market 2030 outlook, which includes detailed forecasts for Australia and Asia, both of which have major implications for the coal industry – exporters and local generators.

The most striking prediction is that for solar PV, which BNEF says will dominate capacity and investment over the next decade and a half. It expects 15.8GW of rooftop solar to be built in Australia out to 2030 – mostly on the basis of fundamental economics.

It suggests the payback for rooftop solar will halve to just three years by 2030. That is based on no subsidies and no carbon price, but it argues that it is still a compelling proposition to households.

bnef australia build“Australia, like Japan, has high retail electricity prices which, combined with continuously reducing technology costs, are the main reasons for the small-scale PV adoption rate,” it writes.

“The favourable economics of the small-scale PV technology – ie, the reduction in payback period – will drive the sixfold increase in small-scale PV capacity and the technology’s contribution to total capacity additions between 2013 and 2030.”

BNEF expects households and businesses will invest another $24 billion on rooftop solar (a similar prediction was made by ),

While the speed and breadth of the rooftop solar deployment will be influenced slightly by policy changes, the deployment of large-scale renewables is almost entirely dependent on the state of policies such as the renewable energy target.

Assuming that it stays in place, BNEF believes that nearly 8GW of utility-scale PV will be built out to 2030. Two thirds will be driven by the LRET – presuming it stays in place – and a further 2.7GW to cater for increases in peak demand, particularly in Western Australia and the Northern Territory.

bnef additions

It also predicts that 6.4GW of wind capacity is built to meet the LRET. Extraordinarily, this build out occurs until 2020, but then no wind energy is built at all after that because the only new capacity installed will be designed to meet summer peaks – hence the focus on utility scale solar. BNEF’s analysis suggests little solar thermal will be built.

Coal is not built at all, but gas enjoys a boom in the middle of next decade to also cope with summer peak demand, and to replace 6.2GW of retired capacity.

BNEF says coal’s total share of Australian generation capacity is projected to fall from 45 per cent in 2013 to 27 per cent in 2030. Gas also falls from 30 per cent to 23 per cent. In contrast, renewable capacity increases from 24 per cent to 48 per cent, with wind rising from 5 per cent to 10 per cent and solar from 5 per cent to 29 per cent of total capacity.

Fossil fuel generation falls from 85 per cent to 64 per cent, but most of this is at the expense of gas, because of the removal of the carbon price and high gas prices.

But the solar boom will not be limited to Australia. BNEF expects solar to form a significant part of the power generation build in the major economies of Asia, to the exclusion of coal-fired generation in particular – a bad sign for Australia’s aspiring coal exporters.

BNEF capacity invstment

 

This graph above illustrates the point. BNEF says the expected capacity build for the Asia-Pacific region will require an investment of a cumulative $3.61 trillion by 2026.

Of this, nearly $1 trillion will be in the form of solar, $0.62 trillion for hydro and $0.55 trillion for wind.

And this graph below illustrates what it means in terms of capacity additions.  Coal declines rapidly, nuclear has the bumpiest ride, and eventually falls as India will allocate no more financing to the technology from 2023 due to policy uncertainty and fuel restrictions.

China will invest $38 billion a year on solar (utility and small-scale) and $28 billion a year on onshore and offshore wind, Japan will throw $11 billion a year on solar (mostly small-scale), India $10 billion (mostly utility-scale, off-grid or micro-grid), while Indonesia and the Philippines will each invest $3 billion a year in geothermal.

BNEF Asia capacity

 

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  • Barry

    Hi Giles,
    Does the report include projections on GHG emissions to 2030? Such a change in generation mix should have a profound impact, although any decline in emissions from the electricity sector may or may not exceed the growth in emissions from other sectors.

    • aussiearnie

      Barry,
      BNEF data is finance and economics – not emissions. However in their 2013 fact pack there is a slide that you can use to make your own estimate by using average emissions by technology.

      http://about.bnef.com/presentations/global-renewable-energy-market-outlook-2013-fact-pack/

      For the mid scenario, using 800kg / MWh for coal and 400kg / MWh for gas, and no emissions for all renewables and assuming that the numbers are TWh not GWh (they align quite nicely with IEA WEO 2103 except for that), emissions in 2030 from the power sector are 11.6Gt CO2-e, vs 9.1Gt CO2-e in 2012. Not sure that I got that right. I hope not….

      • http://www.reneweconomy.com Giles

        As it turns out, BNEF does calculate emissions, and it is bad news, thanks to the removal of the carbon price, reversing all recent gains cos coal will be priced so low. BNEF says Power sector CO2 emissions are expected to rise from 175Mt in 2013 to a peak of 184Mt in 2016 and ease down to 164Mt in 2030 because not many coal plants will retire. Compared to 2014 levels, power sector carbon emissions will only be 5% lower in 2020 and 6% lower in 2030. The only way to solve that is to raise short term marginal cost of coal – a carbon price.

        • Barry

          Thanks Aussiearnie and Giles

  • Tony Pfitzner

    Great information Giles.
    I guess trend projections like this are based on assumptions about the technology, and clearly can’t include the effects of disruptive innovations that haven’t happened yet!

    One thing I am interested in is how the whole rooftop pv thing is going to evolve, and I am not just referring to improved efficiency and battery storage.

    Existing technologies could be combined e.g. the internet, smart metering and pv, so that we home and business owners could form a distributed power company in our own right. That way we could generate our own feed in tariff with real-time connection to the market, weather and grid loads etc.

    All it would take would be a bit of software, some smart meters with nice futuristic logos, and a small army of lawyers to keep the existing power generators – and the Abbott government – at bay.

    I fact, why don’t you organise it Giles.

  • Chris Sanderson

    I’ts being organized at the user level (ie, us) by: Lindsay Soutar – see Google: ‘Solar Citizens’ and John Grimes – see ‘Australian Solar Council’
    ……./Chris

  • sean

    Why does BNEF suppose that small scale PV will remain stagnant at 1GWpa?

    Are they assuming that the regulator will force down retail energy prices? or that the cost of PV wont track with its current declines?