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The solar shift

Changing drivers for solar PV installations

The shift to solar is happening across the board, from Small-scale residential installations, to mid-scale commercial and industrial solar on small and large businesses. In a significant year for mid-scale solar PV in Australia, a total of 433 megawatts of solar capacity was installed in 2018. This is a 44 per cent increase compared with the mid-scale solar capacity installed in 2017.

Analysis of more than 40 years of data on solar PV modules shows that each time the installed solar PV capacity doubles, the ;price of solar PV modules drops by 28 per cent.20 Based on this data, the cost of solar PV is likely to continue to decline.

The early driver for the solar PV surge was the solar credits multiplier introduced in 2009 to provide an additional financial incentive for solar PV installations under the Small-scale Renewable Energy Scheme. This financial incentive made Small-scale solar PV the dominant technology, taking over from solar water heaters, previously the technology type of choice.

Now, payback period and consumer sentiment are the main drivers for uptake. The average payback period for a 5 kilowatt system is around four years—less if state incentives are also available. Falling technology prices significantly reduce the upfront cost of systems. When combined with high electricity prices, this encourages more and more homeowners and businesses to choose solar PV to meet their energy requirements.

Figure 3: Solar PV capacity in the Renewable Energy Target, 2011 to 2018
Figure 3: Solar PV capacity in the Renewable Energy Target, 2011 to 2018
20112012201320142015201620172018
0-5 kilowatts738.51739.01369.90335.03251.29214.46229.79194.95
5-10 kilowatts 93.41249.55317.54313.61289.04326.82556.40883.55
10-15 kilowatts20.8619.8536.3235.1735.2942.6173.06133.39
15-20 kilowatts3.666.4911.5114.4916.9620.3334.6353.74
20-50 kilowatts12.5417.0437.1057.5360.7771.65105.05132.54
50-100 kilowatts3.263.8019.8244.4252.5771.94119.17137.66
100 kilowatts - 1 megawatt0.592.313.347.6310.4715.6026.4087.10
1-5 megawatts4.062.370.003.5210.3813.3416.0022.35

Small-scale solar systems increase in size

From 2011 to 2013, during the peak of the solar credits multiplier, most residential solar PV systems installed were between 1.5–5 kilowatts. Since then, residential installations have continued to increase in size. Now, most residential systems installed are from 5–10 kilowatts, mainly in the 6–7 kilowatt range. Systems of this size also have the highest uptake of concurrent battery storage installations.21

Notably, the observed trend of larger systems extends to an increasing number of 10–15 kilowatt capacity systems being installed on residential homes. Previously, systems of this size were installed mostly on small commercial premises. The trend toward larger system sizes is seen in the year-on-year growth in the average kilowatt capacity of installed solar PV systems.

We expect the commercial attractiveness of Small-scale solar PV to continue in 2019. We also expect this shift to larger residential solar PV systems of 10–15 kilowatts to continue.22

The rate of concurrent battery installations is also likely to increase due to the availability of incentives batteries enable consumers to avoid high electricity prices at times of peak demand by storing their self-generated electricity for later use.

Figure 4: Small-scale Renewable Energy Scheme capacity, 2011 to 2018
Figure 4: Small-scale Renewable Energy Scheme capacity, 2011 to 2018
20112012201320142015201620172018
0-2 kilowatts 306.35184.1445.5826.5115.3010.6310.896.91
2-5 kilowatts432.16554.87324.32308.52235.99203.83218.90188.04
5-7 kilowatts65.61225.15287.30287.69264.67299.50497.35777.48
7-10 kilowatts27.8024.4030.2425.9324.3727.3259.05106.06
10-15 kilowatts 20.8619.8536.3235.1735.2942.6173.06133.39
Average kilowatt capacity 2.423.023.954.444.995.646.407.08
In 2018 there were 9495 mid-scale solar systems installed with a total capacity of 433 megawatts.

Photo: Newcastle Art Gallery, Newcastle, NSW

Mid-scale solar systems surge

Solar PV is commercially attractive for small and large businesses and industrial facilities that consume high levels of electricity during the day. These ‘behind the meter’ solar PV systems generate electricity primarily for self-consumption, only exporting excess generation to the grid. Systems between 15 kilowatts and 5 megawatts, referred to as ‘mid-scale’ systems,23 are typically installed where there is a good match between demand for electricity and PV generation profiles. This leads to short payback periods for the system and allows businesses to enjoy electricity cost savings over a longer period.

The number of mid-scale solar PV systems has increased over time. In 2018 there were 9495 mid-scale solar systems installed with a total capacity of 433 megawatts. This is a 34 per cent increase in the number of mid-scale solar PV systems installed, and a 44 per cent increase in the capacity of these systems, compared with 2017.

We have noticed participants who would have typically entered at the top end of the Small-scale Renewable Energy Scheme are now going directly into the Large-scale Renewable Energy Target, with installations between 100 kilowatts and 5 megawatts. This is likely due to the reduced cost of systems, payback periods being within leasing tenures, and larger systems providing a better match to the consumption needs of the business.

The rise in mid-scale solar PV systems has paved the way for innovative ventures across diverse businesses, industries and institutions such as enabling landowners to use their properties to host mid-scale solar farms, and educational institutions to install solar across campuses.


  1. Bloomberg New Energy Finance, Solar’s 28% Experience Curve Is Steeper Than Expected, 22 February 2017.
  2. Battery storage systems are not incentivised under the Small-scale Renewable Energy Scheme. Some consumers may choose to install a battery system at the same time as installing a solar PV system.
  3. Previously we classified systems under 10 kilowatts as residential systems within the Small-scale Renewable Energy Scheme. Current data, however, shows that 80 per cent of systems between 10 and 15 kilowatts are located on residential properties. Based on current data, we have amended our definition of commercial within the Small-scale Renewable Energy Scheme to refer to systems between 15 and 100 kilowatts.
  4. Previously we classified systems between 10 kilowatts and 1 megawatt as ‘commercial and industrial’ systems and systems over 1 megawatt as utility-scale power stations. To align with recent trends in the industry, we now classify solar PV systems between 15 kilowatts and 5 megawatts as mid-scale solar PV systems.

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