Rooftop solar to top 2GW again in 2020, but big solar and big wind slowing down

Rooftop solar installations tracked record levels in the first quarter of 2020, a new Clean Energy Regulator report has confirmed, as the industry continues to assess the impacts of Covid-19 on clean energy investment.

The latest quarterly carbon markets report published by the Clean Energy Regulator outlined the continued strong uptake of rooftop solar installations, with an additional 609MW of new small-scale solar PV capacity added in the first three months of 2020.

With an additional 75,000 systems installed in the quarter, the number of households and businesses opting to get solar installed jumped by 22 per cent compared to the same period in 2019.

Installation rates have increased year-on-year since 2016, as the price of solar PV installations continues to fall, with households also opting to install larger systems. The average small-scale solar PV installation has jumped from 5.3kW in 2016, to more than 7.6kW in Q1 2020.

The Clean Energy Regulator said that it was monitoring the potential impact that Covid-19 would have on rooftop solar installations, that it anticipates will largely have an effect on the second quarter of 2020.

“If not for the potential impacts of COVID-19, total added capacity for 2020 appeared on a trajectory for 2.7 gigawatts (GW) against the record 2.2 GW in 2019,” the Clean Energy Regulator said.

“System orders have remained strong through to May. Many in the industry expected a reduction in demand for new systems owing to increasing unemployment and other factors. Some businesses do appear to have been affected but overall the size of any downturn has been muted.”

The regulator said that it anticipated that Covid-19 would impact on the level of rooftop solar system sales throughout 2020, as well as impacting on component supply chains.

“New supply of components was also expected to face constraints owing to increased importation costs, timing for shipping slots, changing exchange rates and supply chain disruptions for PV panels, wind turbines, inverters and transformers,” the regulator said.

“The extent to which these factors results in a material increase in the cost of components delivered to Australia, or issues in obtaining sufficient supply, depends on many factors including what happens world-wide with demand for such  components and the details of any long-term supply contracts.”

While the small-scale rooftop solar market continues to surge, the Clean Energy Regulator said that it expects to a continued slow down in large-scale projects in 2020. The regulator said that it expects around 2,000MW of large-scale wind and solar projects would reach financial close in 2020.

This is similar to the volume of large-scale projects that reached financial close in 2019 but remained less than half of the level achieved in 2018.

678MW of new large-scale renewable capacity came online in the first quarter, which included the 336MW Dundonnell wind farm in Victoria and the  121MW Bomen Solar farm in New South Wales.

The regulator’s update shows that the Renewable Energy Target policy remains the largest federal government driver of emissions reductions. The regulator has predicted that the large-scale renewables target would support 26 million tonnes of avoided emissions in 2020, with the small-scale target contributing a further 14 million tonnes.

The Emissions Reduction Fund is expected to deliver a further 16 million tonnes of abatement in 2020.

Federal energy minister Angus Taylor said that it was a positive sign that the Clean Energy Regulator’s report showed there had been no signs of a slowdown in the numbers of rooftop solar installations in the first three months of 2020.

“It is promising to see that the Clean Energy Regulator has not detected any slowdown in the rate of installation of rooftop solar during the first quarter of 2020. The rooftop solar sector is currently delivering increased capacity of 33 per cent year on year,” Taylor said.

The Clean Energy Regulator has confirmed that the next auction to purchase abatement under the Emissions Reduction Fund will be held over 9 and 10 September.

The regulator has faced difficulties in procuring the volumes of emissions reductions needed under the Emissions Reduction Fund to meet its 2030 targets, as it appears the cheap sources of abatement appears to be exhausted, while the regulator reckons with a reluctance to increase the price it is willing to pay for further abatement.

The voluntary market for emissions offsets is likely to be substantially impacted throughout 2020, as companies respond to economic pressures by cutting purchases, as well as a substantial decline in passenger air travel since Covid-19 restrictions came into force.

The Clean Energy Regulator has said that it may look to step in and boost demand by purchasing additional abatement, particularly in a situation where carbon permit prices were to fall below the prices it has previously paid at auction.

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