In my world, Santa will arrive on an all-electric motorcycle and according to my kids he’s on his way down an outback dirt track as we speak.
What Just happened?
According to the Chinese calendar, 2013 was the year of the Snake. Whether you put a lot of credence on Chinese astrology or not, it’s quite telling that the year was forecast to be strongly influenced by its main element (fire) and in short, to be a year of mixed fortunes which was certainly the case for the solar industry around the world. Here’s our wrap on the year and our tips for 2014.
1 – The solar world
As the year started, most PV manufacturers were in a world of pain, suffering frommassive price erosion in 2012 and negative or very slim profits. Compounding this, the world was getting used to trade tariffs in Europe and the US. However, over the year average prices rose slightly, industry consolidation continued and profits started to rise for most major players. By the end of the year, global PV industry revenues are forecast to be around $65B compared to $68B in 2012 (and $92B in 2011). Despite a slow start, global shipments are looking like 35GW compared to just over 30GW the previous year and most have finished the year very strongly.
Definitely a year of mixed fortunes and crucially, a year of rationalization and recovery for the upstream industry.
2- Meanwhile, down under
When we released our Forecast for 2013 earlier in the year, we predicted a mid-range result of around 870MW for the total market and according to latest numbers, it looks like we were pretty much spot on.
Our market also reflected mixed fortunes, with FIT’s being cut, utilities making connections harder and foreign exchange rates changing dramatically. On the positive side, despite these barriers, the STC price stayed strong all year, PV prices remained low and the market didn’t run and hide; it was almost 20% bigger than our worst case scenario. TheState of Queensland for example can now claim that it has more installed PV than 22 countries around the world.
It was undoubtedly a tough year after just over 1GW in 2012 and this was reflected incourt cases, closures, exits, restructuring and (I reckon) some of the slimmest margins I’ve ever seen. Let’s hope everyone has fine-tuned their businesses and the hugely promising commercial pipeline starts flowing even more strongly.
3 – Fill’er up
All around the world storage was the hottest topic of the year and the German market (as usual) showed the way with its incentives for distributed storage systems. On the plus side, California mandated a storage policy for electricity utilities and prices fell again with several launched down under. The storage market reminded me of when we could see Grid Connect was about to happen but wasn’t quite there 10 years ago; it has an exciting feel and I am now convinced that big things will happen next year, sooner than I originally anticipated.
On the downside, we saw some local and international utilities blocking the roll out of storage systems. The complexity of the opening up an arbitrage market and developing new policies to allow us to roll out storage are significant.
However, with price drops, record sales for electric vehicles, new performance records for electric motorcycles, and the launch or pilot trials for bi-directional EV energy storage I just can’t wait for next year.
4 – From the land of the stump-jump plough
I travelled to Intersolar in San Francisco earlier this year and saw solar farms being installed and washed by robots, plastic solar modules and a suite of other innovative solar products. Locally, we saw the launch of a Live Solar map, SolarCitizens really hit their stride and a bunch of new solar finance providers hit the market in Australia. I saw the launch of fantastic support for solar from local councils and even a real estate giant jumping in boots and all to more accurately value solar and liveability in Australian homes.
On the industry service side of things, the CEC’s Retailer Code of Conduct, Installer Appand Commercial Solar Guide were launched, the Australian PV Institute launched a bunch of awesome research reports and its live Solar Map and the Australian Solar Council’sSolar Gold Program all got rolling.
I’ve written about several amazing advancements in household and commercial scale monitoring systems and watched prices plummet while capabilities rise and also how some utilities are really missing the boat. I haven’t told you about the latest and greatest one yet! (that’ll be early next year..).
I also hit the road talking about the AC PV revolution, witnessing first-hand how micro inverters can deliver savings, performance gains and more sales in high penetration markets like ours. It’s going to keep growing and they are going to keep getting better.
5 – Dirty, dirty politics
After a tumultuous year in Federal politics (mixed fortunes again!) I couldn’t contain myself and wrote to both former Prime Minister Gillard and also Prime Minister Abbott. They didn’t write back yet.
We saw the quietly and staggeringly successful Clean Technology Investment Program start, stop, start and then stop again in the last year or so. This terribly underrated program is now delivering big savings for the manufacturing sector across the country and it may just be that over Christmas you will drink solar powered wine, while sitting on a solar powered stool all delivered in solar powered packaging thanks to the CTIP program, which is now effectively dead. Awesome work there by the Government.
We also demonstrated in no uncertain terms that three million SolarCitizens are to be messed with at your peril, defeating the Western Australian Government’s plans to axe the FIT in a record time of four days. It was undoubtedly the shortest and most successful campaign I have ever been part of.
On the downside, we continue to see lies and mistruths being spread by our country’s leaders and those with vested interests in non-renewable energy. I can understand and almost forgive a coal lobbyist for this but I have never witnessed such blatant propaganda as I have seen this year from our leaders, including our own Prime Minister. Claiming that the RET is inducing “pretty significant price pressures” (this week) is a lie and an utterly inexcusable manipulation of facts for political gain. It is an abhorrent, clumsy and un-defendable example to set to our children of how a leader should behave.
6 – The death spiral made me dizzy
Behind much of the political and corporate positioning this year was the dizzying rate of the death spiral this year. Over and over again we saw statements that reeked of desperation as the wheels started to fall of the big dirty coal fired power model. It’s happening abroad in some markets but Australia is at the forefront of this spiral due to (ironically) the massive and apparently completely unexpected success of the programs that set out to reduce demand and increase the uptake of renewables.
The electricity industry has been largely caught by surprise and is completely unprepared, unwilling or unable to adapt. I’ll say it again – they deserve our gratitude for delivering low cost and reliable energy and I offer everyone in the industry my utmost respect for their achievements in helping to build Australia.
However, it’s time to shape up or ship out fella’s because we are coming. You can either get on board or get wiped out as the energy models in the world evolve – it’s that simple. My kingdom for an innovative utility.
If you would like to keep track of the changing state of the non-renewable versus renewables transformation in Australia, you can see our “New-Normal-O-Meter” on the front page of our web site which keeps track of coal fired plant closures and new renewable capacity additions.
7 – What now?
According to Chinese astrology, 2014 is year of the horse, one of their favourite symbolic animals. Characterized by speed, intelligence, passion and winning battles (amongst other things) it looks like a slightly more promising year.
In the industry context, consolidation is well underway locally and upstream in the PV industry which should help by offering improved economy of scale and will hopefully allow for some improved margins. Without doubt, everyone will be a little older and wiser after a tough year.
The global forecast is for 45-55GW in 2014 which is a return to growth for manufacturers. In Australia the story is quite different with some substantial changes in which markets we see growing and contracting. Which ones? Ah, you’ll need to buy our Forecast report for that little nugget but the good news is, we have proven ourselves as highly accurate forecasters year after year.
Storage will gain some ground but will still be tough. Next year, I will help sell Australia’s first household solar systems using a Zero electric motorcycle as the storage medium and utilising bi-directional charging. Micro inverters will gain more share. In home monitoring and analysis will become affordable to a far wider segment of the market, opening the way towards more integration of energy efficiency and solar.
Using solar PV to generate and store hot water could well outsell conventional flat plate hot water in some markets including Australia because it will be cheaper, simpler, faster and more flexible.
The utilities and Governments with vested interests will dig their heels in even more. However, the Government will be forced to admit that renewables are not the major problem and in fact are a major part of the solution. We are lowering wholesale prices, generating more than 6% of National capacity and in some States already generate as much as 16% of demand from PV alone, at times of peak commercial demand.
PV isn’t a silver bullet, but they can’t deny the truth forever and the increasingly free flow of data and facts will help us win more battles in 2014, with the help of our friend the Horse.
As someone said to me today “I can’t wait, if they want a fight – bring it. We are low cost, fast and only getting better and stronger.”
This is an edited version of a post from Solar Business Services, of which Nigel Morris is director. Reproduced with permission.