The one thing that almost everyone in the energy industry is agreed on, is that solar will inevitably become an increasingly material part of Australia’s energy mix. The only major point of difference seems to be about when this will happen or perhaps more specifically, when it should be allowed to happen.
This is the headline finding from the recently released report, Australian PV – Market Forecast 2013-2018, produced collaboratively by industry analysts Sunwiz and SolarBusinessServices.
Industry forecasting is a notoriously difficult business and achieving high levels of accuracy requires a blend of constant research, first hand market experience and detailed scenario modelling, says the report’s authors Warwick Johnston and Nigel Morris. Whatever they are doing seems to be working however, given the fact that they forecast last year’s result to an accuracy of almost 98%.
Like almost all solar markets Australia is driven to a large degree by incentives. However, Australia is in a highly unique situation not only because it continues to be dominated by residential installations but also because a confluence of events looks set to tip the market on its head.
Australia has lost almost all its FITs and electricity price rises are set to slow. Foreign exchange has increased PV prices for the first time in years and almost every state and federal solar program is either under intense scrutiny or has already been axed.
Many in the industry cautiously view this is good news because it potentially avoids the highs and lows of knee jerk policy decisions. However, the report authors highlight that almost all energy in Australia is subsidised to some degree and thus solar should also be supported. Rather, they argue, if support is to be removed without wreaking havoc on the industry it must take into account a wide array of direct market and broader economic factors and should be with-drawn in a planned and measured manner.
Residential solar, the foundation of the Australian market is likely to be severely impacted in the near term, they say. The market contracted by around 25% in 2013 and is predicted to contract again in 2014. The impending review of the RET and the language around its theoretical cost to consumers does not bode well and indeed, one of their modelling scenario’s assumes in the worst case that the RET is completely shut down, with devastating consequences.
They note however, that such drastic action will not stop solar in the long term; its rise is inevitable. However, the loss of tens of thousands of jobs and the collapse of potentially thousands of small and medium sized businesses does start to seem like a poke in the eye with a sharp stick from the incumbents. Even worse, the millions of consumers who are flocking to solar to control rising energy costs are rendered powerless to take action if such deep cuts are made; at least in the near term.
The report does allude to growth in commercial solar, albeit in small pockets of economic and geographic suitability. Like residential solar, growth in medium commercial solar is entirely at the mercy of market forces, demonstrated by a wide range of potential forecasts dependent on the level of optimism.
Whilst the near term forecasts for Large scale solar are optimistic, beyond current projects this segment is also on a knife edge with the future of ARENA and CEFC subject to reviews and the CTIP program already axed. Add in the pressure on the LRET component of the RET scheme and external market factors and it may just be a flash in the flagship pan.
Solar Flagships and the ACT large scale programs alone, are forecast to deliver 150MW in 2014, but just how much these opportunities will add in coming years varies considerably, depending on the market factors considered.
The market forecast drills deeply into each of these potential influences and presents a variety of probable outcomes. The solar opportunity varies markedly by location with crucial sub-sector and geographic analysis a key component of the report. Behind the forecasts, a series of logical tests are conducted; economic scenario modelling using a complex set of combinations and permutations of system size, location, component costs, margin requirements and more.
Ultimately, the message from their forecast is pretty simple.
The medium term rise of is inevitable but crippling one of the fastest growing industry segments in the country need not be.
Based on the combined knowledge of Australia’s leading solar industry analysts, this 90 page report includes 58 different graphs and tables describing the latest market segment statistics combined with insightful commentary. Also included in the forecast is an analysis of the top PV businesses of 2013, and identification of the top postcodes for solar power in recent times. The Australian PV Market Forecast 2013-2018 can be ordered from http://www.sunwiz.com.au/index.php/solar-market-intelligence/market-forecast.html for $4000 ex GST.