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Earlier this year, the Clean Energy Regulator commissioned GHD, Green Energy Markets (GEM) and Jacobs Australia to
model the near-term outlook for Australia’s small and mid-scale solar PV sectors (0-30MW). 62
Modellers combined industry research with regression modelling, agent-based modelling and machine learning to obtain
projections for installation numbers, installed capacity and STC creation from 2021 to 2025. Projections were
made in a variety of subcategories including system capacity bands and by state and territory. GEM also modelled
an additional scenario in which favourable market conditions accelerate the uptake of highly distributed energy
Results from the three modellers have been averaged to produce the installed capacity estimates for the capacity
bands discussed below.
The modelling reports are available on the Clean Energy Regulator’s website. 63
Overall, installed capacity of small and mid-scale (0kW-30MW) solar PV is estimated to be 3.8GW per year on average
from 2021 to 2022, before increasing to 4.5GW per year at end of 2025. If installed, this would result in 20.3GW
of additional capacity by 2025, more than doubling Australia’s current small and mid-scale capacity to
Total installed capacity of small-scale technologies is estimated to grow by approximately 3.5GW per year in 2021 and
2022. From 2023 to 2025, yearly growth is expected to increase steadily, with 4.2GW installed in 2025. In total,
18.7GW of additional small-scale capacity is expected from 2021 to 2025 (see Figure 1.1). For comparison, 8.6GW
of additional small-scale capacity was installed from 2016 to 2020.
The small-scale sector includes both residential and commercial solar PV systems with a capacity less than 100kW.
Factors influencing near-term uptake in this sector include electricity prices, feed-in tariffs, government
incentives, capital costs, low interest rates and increasing consumer awareness.
Installed capacity of mid-scale solar PV is estimated to grow by approximately 1.6GW during the 2021-2025 period.
This can be further split into two capacity bands exhibiting different trends.
Installed capacity of systems in the 100kW-5MW band shows potential yearly growth of approximately 160MW between
2021 to 2023. This increases from 2024, reaching 210MW in 2025 (see Figure 1.2). Total installed capacity
between 2021 and 2025 is expected to reach 860MW. Growth in this capacity band is supported by ongoing cost
reductions resulting from low module prices, government incentives and voluntary emissions reduction commitments
made by corporations.
In contrast, installation of systems in the 5MW-30MW band is expected to slow by 40%, from 190MW to 110MW per year,
over the 5 years to 2025 (see Figure 1.3). The estimate for total installed capacity between 2021 and 2025 is
700MW. Declining growth in the 5MW-30MW capacity band can be attributed to falling wholesale electricity prices,
which are expected to impact the financial viability of in-front-of-the-meter power plants.
It should be noted that mid-scale results differ significantly among the modellers. This reflects the relative
immaturity of the mid-scale market and the diverse range of applications and incentives driving its near-term
growth. Behind-the-meter systems are installed to generate electricity for self-consumption, while systems
installed as power plants with limited self-use generally participate in the wholesale market. In addition,
off-grid or micro-grid power systems are often built to avoid the cost of diesel generation. Mid-scale solar
uptake moderated in 2020 owing to the COVID-19 pandemic. However, the sector has shown signs of recovery in 2021
and any longer-term effects remain to be seen.
62 Note that this modelling does not inform the setting of the Small-scale Technology
Percentage (STP). Modelling to inform the STP will be completed in early 2022.
technology percentage modelling reports.
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