Australia has been installing record numbers of solar photovoltaic systems in 2017, and new capacity is expected to go above one gigawatt before the end of the year. Seven other countries will exceed this mark in 2017: China, USA, India, Japan, Germany, France and South Korea. It is important to note that the solar industry is now growing by itself, as subsidies and other incentive programs have been gradually phased out throughout the world.
The economics for solar power get better year by year because of two complementary trends: System costs are rapidly decreasing, and large solar power projects are being installed for less than 1 US dollar per watt in many parts of the world. On the other hand, electricity prices are increasing in many countries, and the case of Australia is notorious – electricity prices have doubled for some clients in less than a decade. In most of the country, network and retail costs represent the largest fraction of the power bill, sometimes more than 50%. South Australia is the exception, where rising natural gas prices are the main cause of electricity price increases.
Any breakthrough that makes battery technology more affordable could lead to even faster growth in the solar power industry. Consider that solar power can now beat fossil fuels in price, but not in availability – production is zero at night and very low under overcast skies. With affordable batteries, energy generated from the sun can be available 24/7, as long you have a production surplus during the day that is high enough to charge batteries.
According to GTM Research, the list of countries installing more than one gigawatt of solar power annually will increase to 13 in the year 2018. The eight countries in the current list are expected to continue installing solar power systems at a fast rate, and there are five newcomers: Mexico, Brazil, Spain and Egypt. Demand for solar power in Europe slowed down in Europe since 2011, but the industry is booming again, but this time without depending on incentives!
The case of Mexico is interesting because it demonstrates how favorable policies can boost the renewable energy market. Mexico is undergoing a significant energy reform, simplifying participation for private investment. In addition, the country is establishing annual renewable energy targets and creating a market for clean energy credits. Mexico recently completed its third renewable power auction, focusing on renewable energy and natural gas, where solar power will represent over 50% of contracted capacity. The average bid price is US$ 20.57 per megawatt-hour, which is very low, but also consider that investors will accumulate clean energy credits that can be sold for extra income.
Australia does not have any upcoming incentive programs for solar power, but rising energy prices are driving its growth in the residential and commercial sectors. The National Energy Guarantee published by the Turnbull government establishes targets in both emissions reduction and firm capacity – conventional solar only counts towards the first target, but systems that combine solar power and batteries count towards both.