While Silex shut its Homebush factory citing increased competition from cheaper Chinese manufacturers, the Australian Energy Market Operator included, for the first time, an analysis of existing and forecast solar PV installations in its annual report.
The report said that producing an estimated 1200GWh or 0.6% of annual energy, solar PV was already at an “observable” level in the national electricity market. Already, the solar PV installation has grown, from a level “too small to make a material impact” on the electricity market, to 1450MW at the end of February 2012.
This, the grid operator said was largely “driven by improved payback of rooftop PV systems, due to incentives such as state government feed-in tariffs, falling system prices, and rising retail electricity tariffs.”
The impact of solar PV and indeed its share in the electricity mix is set to grow, according to forecasts by the AEMO, which analysed the growth under three scenarios of slow, moderate, and rapid growth – all three determined by varying electricity prices and government subsidies.
The report forecast solar PV to add as much as 12,000 MW to 18,000 MW to Australia’s electricity generation capacity by 2031 under the moderate and rapid growth scenario.
Analysts say that such growth predictions, if realised, would result in upwards of $30 billion in investments by households, an investment that AEMO says will generate returns in one and half to three years by 2032.
However, the report notes that the uptake in the short term up to 2017 is expected to be relatively restrained due to the feed-in tariffs being withdrawn by states and potential reduction in demand due to installations having been brought forward to beat the rebate cut-off dates.
“From 2018 to 2025, economic payback is expected to improve strongly, with innovative financing reducing the problem of up-front payment, and commercial buildings joining the trend.
“The moderate uptake scenario sees this accelerate, averaging 620 MW per year, while the rapid uptake scenario forecasts new installations to average 1130 MW per year,” the report states.
But it is the period after 2025, when the economic payback is set to improve with uptake likely to exceed 50% of the expected saturation level under the moderate scenario and 80% under rapid scenario.
But despite such upbeat forecasts for solar PV, lack of policy clarity by the federal government and states withdrawing feed-in tariffs, the sector is set for tough times in the near term.
Already, competition for market share, cost pressures due to improvements in technology and excess capacity have led to businesses closing down.
Last week two Australian companies shut shop due to competition from Chinese manufacturers. Silex System disbanded its NSW factory, where it produced solar cells and modules.
Perhaps less known is Origin closing production at its jointly owned Transform Solar venture in Idaho, where it had made a $134 million investment.
While the Origin venture is likely to do lab-level work to test the technology, like many it is awaiting for the tide to turn in the solar industry.
This article first appeared in ILN's sister publication EnergyNewsBulletin.net.
