Germany may set most of the records for the amount of solar PV installed – 27GW and growing quickly – but it seems that Australia can claim a record of its own – it’s really big in small solar.
According to data drawn to our attention by Warwick Johnston of Sunwiz Consulting, Australia installed more small-scale solar than Germany in calendar 2011 – 795MW of rooftop systems of 10kW or less (the average size in Australia ranges from 1.5kW to 2.2kW) compared to 759MW in Germany.
The flip side to that story is that commercial- and industrial-scale solar in Australia is virtually non-existent, whereas it forms the largest part of the market in Germany. Commercial scale – 30kW to 100kW – is just starting to get traction in Australia.
But in Germany, according to the network authorities, more than 2,000MW of 10kW to 50W systems were installed last year, 1,505MW of 50kW to 250kW systems, and more than 800MW of 250kW to 1MW systems. There were also 2,313MW of 1MW and above systems installed in 2011 in Germany. Australia has a grand total of 5MW of systems of that size.
Even though Germany is trying to put a cap on PV growth after installing 7GW of PV in 2011, the latest data shows that it installed 1.8GW in the March quarter alone – three times the rate of the same period last year. And an interesting footnote. Just last Thursday, the amount of solar capacity in Germany broke through 20GW for the first time, with peak capacity engaged at 20,097MW just after noon. Throughout the day, it produced about 167 GWh of electricity. A day later, it got to 22,240MW.
Debate over solar multiplier
The Federal government is downplaying suggestions that it will axe the solar multiplier on July 1, rather than just winding it back to 2 times from 3 times as planned, but the debate about whether this is a good idea or a bad idea rages in the industry. One company, CoZero, an aggregator that buys and sells small scale technology certificates (STCs), says the market is flooded with STCs, and the industry is mature enough to cope without it. Other disagree. “In the context of the entire market, the projected oversupply is not especially large,” another aggregator, Green Energy Trading said in a blog last week. “Any early reduction in the multiplier would have been an overreaction based on the STC price rather than supply demand dynamics of the market.”
Even the existence of a boom is disputed – apart from Queensland, which now accounts for nearly half the national market and is apparently growing at 1,000 installations a day. That, though, is more to do with the fact that it is the only state to keep its feed-in-tariff intact – a net tariff of 44c/kWh. All eyes are on the Newman government to see what it does with that. Solar markets in other states are only now readjusting to having tariffs removed, although there has been a boost in activity ahead of July 1. For the government, ensuring the growth in solar PV and the fall in prices that it can deliver to consumers is one of the few good news stories of its Clean Energy Future, if only it knew how to sell it.
The other aspect of CoZero’s complaint is the cost of the STCs and how that is passed through to consumers. That, though, is easily remedied, at least in part. It simply requires the state pricing bodies to recognise the price at which the STC’s are exchanged and adjust them accordingly. So far, only the ACT price regulator has taken such action, ruling that the local utilities can only pass on $31.50 per STC, rather than $40 granted elsewhere. Based on the estimated 45 million STCs to be accounted for in 2012, that lack of attention to detail is handing a windfall of around $450 million to the energy retailers at the expense of customers. Perhaps we should expect to hear an energy economist lamenting about regressive taxes anytime soon.
The price of PV is still falling sharply
The results of Suntech, Trina and Sunergy were notable for their splash of red ink, but that was expected. What did catch the attention was that even though margins are basically non existent – less than 1 per cent in most cases – they are not waiting for others to fall and for prices to rise, but rather pushing hard for costs to fall even further. That is good for the industry.
Suntech, which is slightly more expensive than many of its rivals, achieved a 10 per cent fall in the cost of its modules to $1.04/watt in the March quarter. It expects this to fall to 90-95c/W in the June quarter, and to 75c/W or below by the end of the year. That is nearly 30 per cent in a single year, after a 45 per cent cut in module costs in 2011.
Analysts expect Trina, which achieved a 42 per cent cost reduction in its cost of its modules in 2011, should achieve a further 39 per cent reduction in 2012 and another 20 per cent in 2013, by which time it would have fallen to 61c/W from $1.83/W at the end of 2010. Sunergy predicted a 21 per cent fall in cell to module conversion costs in 2012 alone.
Arise, “the self-consumer”
Another key theme that arose in many of the quarterly briefings was the emergence of the “self consumer”. Suntech COO Andrew Beebe said this would be the driver behind the growth in European and the America, where the markets were transitioning from schemes based on feed-in-tariffs toward “self consumption markets.” In Australia, we know this term as “pro-sumer”. The big issue was the regulatory framework that allow these to emerge in great numbers. It was an issue higlighted in VCEC’s recommendations on distributed generation, and the difficulties “self-consumers” had in getting connections to the grid. In California, they have just announced a doubling of the number of PV installations that can qualify for net metering, a decision that effectively lifts the cap on residential solar PV in that state to 5GW from 2.4GW. Even there, the local utilities were arguing against it.
Australia on the radar
The other interesting aspect was how Australia fitted in to the various company’s business models. With Sunergy (the first graph), it already accounts for 18 per cent of its market share, but as Europe plateaus, and China, India and Japan grow quickly the share contracts. Not that the market itself will contract, Sunergy says the commercial sector is looking particularly strong in Australia.
Trina sees Australia as one of its growth markets, and expects it to contribute around 3.5 per cent of revenue in calendar 2012, nearly half the size of the contracting Spanish and Italian markets. But the Chinese market is expected to more than double and will account for 17 per cent of its revenue, still behind the US, notwithstanding the threat of duties. Australia forms part of the growth narrative centred on the Middle East, Asia and the Americas.
Suntech said it expected the Australian, Israeli, and Thai markets to drive demand in 2012, although its biggest growth would likely occur in Japan and China, which have both introduced feed in tariffs – and in Germany and Italy, where solar prices fallen below retail parity and the “self consumption” market is about to take off.
Big Solar arrives in Canberra
Community group 100% Renewables is taking its Big Solar campaign to Canberra, were it has meetings with Opposition leader Tony Abbott, leading front benchers Joe Hockey and Malcolm Turnbull, and 50 MPs and advisors. Curiously, most of the MPs are from the Opposition ranks and the advisors from the government ranks. The Big Solar campaign is presenting the results of a poll which shows that 94 per cent of people support building large scale solar power plants in Australia and 95 per cent support the government’s new $10 billion Clean Energy Finance Corporation. The poll was conducted over two months and took the views of 12,000 people.
“What we found is that people are crying out for leadership and vision,” national campaign coordinator Lindsay Soutar said in a statement. “Today we are going to Canberra to show Tony Abbott these results and ask why he is not backing the new Clean Energy Finance Corporation in parliament this week.” Volunteers from the campaign will meet with the MPs and advisors, and ask them what they are doing to build big solar in their electorate.
Solar ambition from around the world ….
Research firm Climate Strategy said the Latin American market will become significant, with more than 2,100MW being added a year from 2015, compared to 75MW this year. Meanwhile, Qatar said it wanted solar to account for 10 per cent of electricity production by 2018, while Morocco plans to speed up the tender process for a 500MW solar plant so that the 160MW first stage begins construction in 2012. It aims to have 2000MW of solar installed by 2018.