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Clean Power pew-australia

Published on April 21st, 2014 | by Giles Parkinson

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Billions Invested In Solar Sector By Australian Households

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April 21st, 2014 by
 

Originally published on Renew Economy.

Australian households are almost single-handedly pushing the country towards a clean energy future, spending billions on generating their own electricity and accounting for nearly two thirds of total investment in renewables in Australia in 2013, and virtually all of it in 2014.

New global data released by the Pew Charitable Trusts, a US-based NGO, and compiled by Bloomberg New Energy Finance, shows that there was $4.4 billion of clean energy investment in Australia in 2013.

Two thirds of this, or around $2.8 billion, came from the solar sector as households, and a few businesses, installed nearly 1 gigawatt of rooftop solar PV – mostly as a hedge against soaring electricity prices.

Around $1.4 billion was invested in the wind sector, most of this on the 420MW, $1 billion Macarthur wind farm in Victoria. But as we reported on Wednesday, the large-scale renewable sector in Australia has come to a virtual standstill – because of the uncertainty over the future of the renewable energy target, with no new commitments made in the first quarter of 2014.

In 2013, only four new large-scale projects were committed, and these only because of incentives provided by the ACT government, the now defunct solar flagships program, and financing from the Clean Energy Finance Corporation, which the Abbott government is trying to dismantle.

pew-australia

The major role played by household investment in renewables in Australia is not new. As this graphic above shows, solar has accounted for two-thirds of total renewable energy investment in the country from 2007 to 2013. That household investment helped Australia record the third highest growth in renewables investment (32 per cent average annual growth) in the G20 over the last five years.

A lot of this was driven by generous state-based feed in tariffs and other federal incentives, but even though these support mechanisms have been largely wound back, Australian households are still adopting rooftop solar at a rate of more than 13,000 households a month.

Recent data showed that more than 4,000 applications are coming in a month just in the south-east Queensland region managed by Energex. In South Australia and Western Australia, the take-up rate in more than 2,500 a month, in Victoria is has been just below 2,500 a month. We have not had time to crunch the numbers for NSW, the rest of Queensland, Tasmania and the Northern Territory, but these would add several thousand more households.

This creates an interesting problem for the Australian government, which is under pressure from utilities to wind back the remaining incentives for rooftop solar, mostly because rooftop solar has taken away the profits the generators used to make in the afternoon peak. Many generators are making losses, and some have had to close or make major writedowns.

There are also numerous stories of utilities refusing to connect households or businesses wanting to install rooftop solar, or forcing them to downsize their plans. Many are required to install expensive equipment that prevents them from exporting solar energy back to the grid.

ew global capacityThis is now becoming a political issue. The Victorian Greens, preparing for a state election later this year, believe rooftop solar may be a “sleeping giant” of Australian politics. The industry believes it had an influence with its “Save Solar” campaign in the recent Senate re-run, which saw a big boost to the Greens vote.

Both Victoria and NSW are facing critical issues in 2016, when tens of thousands of households will lose their premium tariffs, and will look for other means to maximise the value of their solar output – perhaps looking at battery storage.

The Pew report notes that rooftop solar will remain an attractive option for Australian households in view of high retail electric power prices.

The market for large-scale investments is less clear, Pew notes, because of the change in policies from the Abbott Government. Right now, utilities are not writing any power purchase agreements, in the hope and expectation that the renewable energy target will be diluted, and banks say that the merchant market is too risky.

The only projects likely to get committed this year include two more solar projects from the ACT’s reverse auction scheme, and possibly some wind projects to be allocated in another upcoming auction.

Australia currently has around 3.4GW of solar – almost entirely rooftop, and most of this on households rather than commercial premises – and just over 3GW of wind energy.

This compares to global installed capacity of 735GW (not including large hydro) as at the end of last year (See graph to the right).

This other graph below also adds some global context to Australia’s investment patterns. While many other countries have seen solar dominate investment dollars in the last year, most of them (with the exception of Japan) have been predominantly large-scale or medium scale installations.

Australia still has only one completed, utility-scale ground mounted solar farm, the 10MW installation at Greenough River near Geraldton in Western Australia, although the Nyngan and Broken Hill projects being built under the solar flagships scheme, and the three projects to be constructed in the ACT, will soon add to that.

pew global

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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • spec9

    Australians adopted roof-top solar at such a high rate that the utilities ended up with some ‘stranded assets’ because they built big huge plants that were expected to be needed for peak demand but the solar PV cut off the peak. We need to do that here in the USA too. Especially in the south & southwest where PV output closely tracks the heavy demand for electricity needed for air conditioning.

    • Calamity_Jean

      Somebody should tell the Australian utilities that adding wind would allow them to shut down old dirty polluting coal-burning plants and make their peaker plants more profitable as they would be needed to cover lulls in the wind. Solar power will move the daily peak from late afternoon to the sunset to bedtime hours.

      • LookingForward

        The problem with that is that the Australian government is pro-coal, they tried to ruin renewable (which they succeded in, when it comes to utility scale) and now they are ruining gas too.
        So it’s up to the people to build renewable and ruin coal them selves.
        Which will happen in the next few years, unle they make it illegal to have rooftopsolar (I see the desparate coal government doing that)

        • Calamity_Jean

          “So it’s up to the people to build renewable and ruin coal themselves.” I hope the Australian people succeed. Soon and completely.

        • jeffhre

          This seems to be heading toward the exact opposite of what the government has intended to do. The citizens are hedging against rapid price increases with more solar than ever, while governments promises and attempts to protect the status quo have convinced the industry to stay with coal.

          This leaves the industry with few renewable resources and little appetite to develop them. While citizens are taking the lead in renewable generation and hence setting the values for the industries existing (and increasingly stranded) assets with little industry input. Interesting situation! Well Aussies, does that sound like it’s true so far?

          • Bob_Wallace

            You should take that question over to Giles’ site -

            http://reneweconomy.com.au/

            The lead article right now is about massive grid exiting by 2018.

  • No way

    Anyone know the percentage of electricity that roof top solar is producing in Australia? And what the increase has been compared to last year and if there are any projections for next year.

    What I’m really asking is if this is making any noticable difference in the electricity generation mix.

    • Ronald Brakels

      Over 2%. It may be close to 3% by the end of the year but that might be a little optimistic. The state of South Australia gets about five and a quarter percent of its electricity from rooftop solar. Solar is definitely affecting the generation mix, as is Australia’s reduction in electricity use resulting from improved efficiency and from, “Pickle me grandmother! Look at the size of this electricity bill! It’s a beauty!” While currently only producing a very small amount of total electricity use, solar devastates the profitability of other generators by producing its electricity during periods of peak demand and so greatly lowering electricity prices.

      • jeffhre

        Yes, the effects are much easier to see at a state by state level.

  • vensonata

    at the rate of 1 house per 4 minutes in the u.s. installing rooftop solar it will take 770 years to completely service the 100 million houses in the country. The rate needs to increase by a factor of 100 . Amazingly that would do it in 7.4 years. So one house every 2.4 seconds is the rate needed…. actually it is possible.

  • Matt

    13,000 households a month that is about 3/min (24/7). Makes the USA number of 1 every 4 mins looks very sad. Double when you look at population (2012), USA 313.9m verse Australia 22.7m.
    So we have about 12 times the people and installing 1/12 the systems. I guess that is just gross (12×12).

    • jeffhre

      Perhaps, though I believe that in the US we are tracking these very small scale systems quite poorly. With results coming later if ever.

  • JamesWimberley

    What’s up with the lack of commercial solar? The self-consumption incentive is as strong as for households, and the daily pattern of use (workday not evening) matches solar better. The UK, with a much friendlier solar policy, shows a similar pattern – installation is dominated by residential and utility. Does Australia lack highly visible pioneering commercial investors, like WalMart, Casino and IKEA?

    • driveby

      Seems so, cant remember reading anything about Big W, Bunning, Woolworths, Super IRA or any other of the large chains about going solar… one always sees the small systems on res houses, but nothing on the big flat roof complexes.

      • Bob_Wallace

        Might be interesting to contact some of them. Ask them why they aren’t installing solar like Walmart and IKEA in order to increase profits.

        After all, aren’t they paying 2x, 3x as much for electricity as US chains?
        Might get someone at one chain thinking and if one installs solar then other will probably take notice.

        Flap your wings, butterfly….

        • Newsflash

          Ask Ronald he live there?

        • jeffhre

          Wow, they still have Woolworths! My spellchecker is telling me Woolworths is not a word,LOL.

    • Ronald Brakels

      There are a few reasons why there is a lack of commerical solar. The biggest reasons probably are:

      1. Big business pays considerably less for grid electricity than households.

      2. Australian businesses want a 9% return on investments – No Global Financial Crisis recession here. If something doesn’t pay for itself in 7 years it probably won’t get built.

      3. Electricity distributers don’t make it easy to connect large scale rooftop systems.

      4. Installing solar on household roofs costs an average of less than $2 a watt, but for some reason larger installations always seem to cost a lot more per watt which is the opposite of how its supposed to work. Our one and only operating utility scale solar farm was quite embarrassing as locals were installing point of use solar on their roofs much cheaper per watt than the solar farm. Installers have little experience with large installations and costs need to come down.

      5. Big electricity users can pay electricity rates based on spot prices which means they can free ride on daytime electricity price decreases resulting from household rooftop solar.

      That said, large businesses do install rooftop solar. For example a Melbourne business with significant electricity consumption 24/7 has invested in a 200 kilowatt system in the cloudiest place in mainland Australia:

      http://reneweconomy.com.au/2014/victorian-food-wholesaler-taps-solar-cut-costs-risk-28186

      Commercial solar is here and expanding, it just took a while to get started.

      • Ronald Brakels

        And I probably should have mentioned that all the incentives for solar, which have now mostly been removed, in effect really only applied only to households, so business here never got into a habit of installing solar like households did.

        • Ronald Brakels

          And a little fairy just chimed in with a good point, which was pretty astounding, I have to admit. Many businesses rent their premises which adds in extra complication and moves the question to why doesn’t Westfield Management or whoever owns the bulding not install solar on the roof or the renting business make a deal with the building owner?

          • Calamity_Jean

            Many businesses rent their premises which adds in extra complication….

            I suspect the “hassle factor” is a major inhibitor of commercial-space rooftop solar.

          • Ronald Brakels

            Well, a building like a shopping centre might either let tenants take care of their own electrical needs or they will buy it in bulk and then make a deal with tenants and generally making a profit on that. So while a large shopping centre will pay less for electricity than smaller businesses, assuming they can install at household solar prices and using a 9% discount rate, they should still have a strong incentive to install solar even if they are paying 15 cents a kilowatt-hour instead of the more usual 30 cents. I suspect the reasons we aren’t seeing a lot more large business solar installations are a combination of dinosaurism conbined with bizarrely high flatroof installation costs, with a considerable amount of connection problems and and unnecessary costs and the threat of loosing preferential grid electricity rates from electricity distributers, with just of free riderism thown in on behalf of those aware enought to realise things are a changing. And we can’t discount tribal politics. Business owners do tend to favour budgie smuggling more than the average Australian and so may be more likely to share the Budgie Smuggler in Cheif’s opinions on anything that isn’t black and sooty.

          • jeffhre

            “Might” is a very critical point. With the impediments you have listed, they would really, really have to want to go green to take the risk of upsetting the established apple cart (do Australians say upsetting the apple cart?) What percentage of facility mangers have that characteristic?

          • Bob_Wallace

            Shouldn’t be a hassle. Just need to get some bids and sign a contract.
            You should be able to get a monitoring and maintenance contract to deal with everything once the system is turned on.

          • jeffhre

            Until the process becomes systematized and widespread, if the US installations provide any clues, it will be a huge hassle for most facility managers. And until they see their competitors installing them, it will be a hassle they do not want to face.

      • Newsflash

        What bull is this, wal-mart own their store, Kmart, Big W, Bunning, Woolworths rent. Now why would they invest in PV on an rented store?

  • Will E

    Solar Power and Wind Power Generation is a MONEY MAKING FORMAT.
    millions of dollars invested, billions of dollars profit.
    endless supply of Solar Dollars.
    for everybody

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