Overview of the Australian Energy Council Solar Report for 2Q 2020

22 Aug 2020

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The Australian Energy Council publishes solar industry reports every quarter, and the second quarter 2020 report shows a favorable outlook in spite of the COVID-19 pandemic. There are now over 2.46 million solar power systems in Australia, with an installed capacity of more than 18.5 gigawatts. In addition, there are 2.4 GW under construction and more than 19.6 GW in announced projects.

Australia is installing solar power systems 10 times faster than the global average. In great part, this can be explained by the favorable conditions in the country:

  • Abundant sunshine in most of the Australian landmass.
  • Expensive electricity, which improves the business case for solar investments.
  • Low technology costs, combined with solar incentive programs from the government.

In many parts of Australia, solar power can now achieve a payback period of less than three years. High-quality solar panels can last for over 25 years, and manufacturers offer solid warranties. From a financial standpoint, solar power offers high returns over time at low risk.

Comparing Rooftop and Large-Scale Solar Power Systems

According to the Australian Energy Council report, solar generation in the National Electricity Market (NEM) had a peak value close to 10 gigawatts at noon during 2Q 2020. An even higher production is expected for 3Q and 4Q, as more solar power systems are installed and the summer arrives.

  • According to the AEC report, rooftop solar power systems accounted for 5,674 MW of distributed capacity – 58% of the total generation registered.
  • On the other hand, large-scale generation adds up over 3.8 GW across 54 projects.

The rooftop solar market accounts for the largest share of growth and cumulative capacity in Australia. 86,000 new rooftop installations were registered in 2Q 2020, much more than the 56,000 installations in 1Q 2020. So far, Australia has deployed over 11.4 GW of rooftop solar power systems, which represents over 61% of the total capacity (18.5 GW according to the Australian PV Institute).

Based on the data for 2Q 2020, the AEC concludes that the COVID-19 outbreak has not affected the Australian solar industry significantly. The country is adding 221 MW of rooftop solar power each month, and this is before counting large-scale projects. March 2020 was a very active month, especially in New South Wales (8500 installations) and Queensland (7500 installations).

Battery Installations for Solar Power Systems

Battery systems are a less mature technology than solar panels, but they are already being deployed in the National Electricity Market. Current growth is concentrated in South Australia, with 46.6% of new installations during the first half of 2020. This is more than the combined installations in New South Wales (16.8%), Victoria (13.8%) and Queensland (10.5%) and Western Australia (6.6%).

Australia currently has four major incentive programs that are driving the installation of batteries as a complement for solar power:

  • New South Wales Empowering Homes Program
  • Victoria Solar Homes Program
  • South Australia Home Battery Scheme
  • Queensland Government Scheme

Solar Farms: Under Construction and Publicly Announced

Australia currently has a large number of solar farms in the pipeline. They add up around 22 GW, which is more than the total capacity installed so far across all project sizes (18.5 GW). The projects under construction add up 2,415 MW according to the AEC report, distributed as follows:

  • New South Wales – 1,270 MW
  • Queensland – 635 MW
  • Victoria – 510 MW

Publicly announced solar farms that have not started construction add up 19,644 MW of capacity, which is distributed as follows:

  • New South Wales – 5,352 MW
  • Queensland – 9,741 MW
  • South Australia – 2,595 MW
  • Tasmania – 13 MW
  • Victoria – 1,943 MW

Solar power will continue to grow in Australia at a fast rate. The AEC concludes that growth could have been higher in 2020 without the COVID-19 pandemic. However, the solar industry has remained strong in spite of the global health emergency.

Financial Performance of Solar Power in Australia

The AEC also analyzed the payback period of solar power in many Australian cities. They found that a 5-kW solar installation can achieve a payback period of less than 5 years in Adelaide, Brisbane, Canberra, Sydney and Perth.

The best financial performance was found in Adelaide, with a payback period of only 3 years. Melbourne had a solar payback period slightly above 5 years, which can be explained by the lower sunshine in Victoria compared with the surrounding states.

Considering that solar panels have a service life of over 25 years, a payback period in the range of 3 to 6 years is excellent. In addition, homeowners and businesses with access to low-interest loans can deploy solar power at zero net cost, and the loan is paid with electricity savings.

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