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

	2011	2012	2013	2014	2015	2016	2017	2018
0-5 kilowatts	738.51	739.01	369.90	335.03	251.29	214.46	229.79	194.95
5-10 kilowatts	93.41	249.55	317.54	313.61	289.04	326.82	556.40	883.55
10-15 kilowatts	20.86	19.85	36.32	35.17	35.29	42.61	73.06	133.39
15-20 kilowatts	3.66	6.49	11.51	14.49	16.96	20.33	34.63	53.74
20-50 kilowatts	12.54	17.04	37.10	57.53	60.77	71.65	105.05	132.54
50-100 kilowatts	3.26	3.80	19.82	44.42	52.57	71.94	119.17	137.66
100 kilowatts - 1 megawatt	0.59	2.31	3.34	7.63	10.47	15.60	26.40	87.10
1-5 megawatts	4.06	2.37	0.00	3.52	10.38	13.34	16.00	22.35

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

	2011	2012	2013	2014	2015	2016	2017	2018
0-2 kilowatts	306.35	184.14	45.58	26.51	15.30	10.63	10.89	6.91
2-5 kilowatts	432.16	554.87	324.32	308.52	235.99	203.83	218.90	188.04
5-7 kilowatts	65.61	225.15	287.30	287.69	264.67	299.50	497.35	777.48
7-10 kilowatts	27.80	24.40	30.24	25.93	24.37	27.32	59.05	106.06
10-15 kilowatts	20.86	19.85	36.32	35.17	35.29	42.61	73.06	133.39
Average kilowatt capacity	2.42	3.02	3.95	4.44	4.99	5.64	6.40	7.08

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.

A WordFrom Industry

Solar provides opportunity to repurpose farmproperties

In late 2016, Yates Electrical Services launched its first Large-scale solar farm in Renmark, South Australia. The 187.2 kilowatt site is part of the company’s Redmud Green Energy project, which aims to create a distributed network of Large-scale solar PV generating sites throughout South Australia. The goal is to reactivate redundant land parcels, boost the economic growth of regional areas, improve the reliability and sustainability of the network, and support South Australia’s pioneering efforts towards operating as a renewables-dominated market. As of the beginning of 2019, Redmud Green Energy has delivered 46 Large-scale solar projects throughout regional South Australia.

By creating solar farm solutions of up to 1 megawatt, Redmud Green Energy has provided an incentive for business owners, landowners and growers to diversify their business practices assisting their operations through access to cheaper, cleaner energy solutions, as well as providing supplementary income streams and vastly reducing reliance on the unpredictable, and often volatile, primary production markets. The Redmud Green Energy project built on the strengths of Yates Electrical Services’ history of solar installations, involving more than 1200 local residential solar installations in the Riverland region since 2011.

The company is now looking at integrating storage solutions to these solar farms, so the systems can react to Australian Energy Market Operator signals to store generated energy during low-demand periods and export energy during peak periods, regardless of whether the site is currently generating. This energy arbitrage system will further support the energy grid, alleviating pressure on current infrastructure by providing dispatchable generation when it is most required.

The Redmud Green Energy project involves some 20 sites in various stages of development, with another 50 put forward for site viability studies.

The Large-scale generation certificates generated by the solar farm installations have made up a significant amount of revenue, providing additional security to business owners, landowners and growers, as well as a substantial business case for investment in South Australia’s renewable energy industry.

Photo: Renmark, SA. Yates Electrical Services

This content was provided by Yates Electrical Services.

Spotlight on…solar powered education

A growing number of educational institutions across the country are installing solar PV, with the size of these systems also increasing. There was a 16 per cent increase in installations and a 32 per cent increase in installed capacity in 2018 compared with 2017.

Similar to businesses, educational institutions use most of their electricity between 9 am and 5 pm. Lower electricity costs for schools, vocational educational facilities and universities provides a strong economic case for installing solar PV. Many of these educational institutions also use these systems to educate their students on renewable energy generation and sustainability.

Figure 5: Installations and capacity on schools and universities greater than 15 kilowatts, 2014 to 2018

New South Wales, Victoria and Queensland have the most installations on educational buildings.

Educational institutions participate in both the Small-scale Renewable Energy Scheme and Large-scale Renewable Energy Target.

In past years, educational institutions participating in the Large-scale Renewable Energy Target were predominantly large universities. The University of Melbourne and University of Queensland were the first to install solar PV across multiple buildings on their campuses.

This year saw a shift towards smaller schools participating in the Large-scale Renewable Energy Target. There was a 100 per cent increase in the number of schools accredited under the Large-scale Renewable Energy Target and a 71 per cent increase in installed capacity compared with 2017.

The number of schools installing systems between 15 and 100 kilowatts in the Small-scale Renewable Energy Scheme appears to be slowing as schools seek out these larger-sized systems.

Photo: Amaroo School, Canberra, ACT

Bloomberg New Energy Finance, Solar’s 28% Experience Curve Is Steeper Than Expected, 22 February 2017.
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.
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.
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.