Australia's solar industry calls for renewed support in view of RE target success

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While some two million homes in Australia have installed solar systems, demand is falling with the phasing out of government incentive programs, according to a new report by Green Energy Markets for the REC Agents Association (RAA), a national industry body representing companies that create and trade renewable energy certificates.

The report by Green Energy Markets for RAA shows Australia installed more than 1 GW of PV in 2012, making the country the seventh largest market in the world. Yet in the past 12 months the country has experienced a 22% drop in the amount of solar PV installed. The downward trend could result in the loss of more than 3,400 jobs in the next 12 months from a high of 18,500 employees, according to the report.

The decline in the solar market has also led to a substantial fall in the cost of the Small-scale Renewable Energy Scheme (SRES), a key part of the Renewable Energy Target that helps Australian families install solar.

The study finds that the level of activity in the residential solar industry may well have peaked, adding that the industry is now going through a consolidation process and faces a number of challenges.

Among the study’s key findings are:

  • The level of solar installations is falling as government support for solar has been progressively unwound. Installed PV capacity in 2013 is expected to be 800 MW, 22% less than 2012 levels;
  • The level of employment in the solar PV industry is expected to decline by 3,400 people as the level of installed capacity drops;
  • The SRES scheme seems to be working as was initially intended. The initial oversupply of renewable energy certificates is being progressively absorbed and certificate prices are moving closer to the $40 clearing house price;
  • The contribution of small-scale solar to energy supply is seen as a demand reduction and its contribution is expected to increase to 3.5% of total demand by 2016. Another way to look at this is that solar is contributing to more than a 0.4% reduction in electricity consumption each year;
  • The cost passed through to consumers for the SRES is expected to amount to only 1.3% of a customer’s bill. However once we allow for solar’s positive impact on reducing wholesale prices the increase in household electricity bills is only one third of this — only 0.3% or $1.90 increase on a typical quarterly electricity bill;
  • Solar provides competitive pressure to network investment and fossil fuel electricity generation and protects customers against future rises in gas prices and network investments.

"The Renewable Energy Target has helped almost 5 million Australians install solar, making a material contribution to meeting our energy needs," said Ric Brazzale, CEO of Green Energy Markets and president of the REC Agents Association.

"The government’s Million Solar Roofs program, in partnership with the Renewable Energy Target, has the potential to inject new energy into the solar market by helping low income earners and renters install solar", said Brazzale. "There is simply no need to change the Small-scale Renewable Energy Scheme through a review of the Renewable Energy Target."

Fiona O’Hehir, CEO of Greenbank Environmental and vice president of RAA, added: "The Renewable Energy Target works. It creates jobs, reduces emissions and doesn’t cost the federal budget a cent. The Abbott Government should reaffirm its strong support for the Small-scale Renewable Energy Scheme."

Australia had a total of 2,415 MW installed solar PV at the end of 2012. The 800 MW expected to be installed in 2013 will raise the figure to 3,215 MW. Very few large or utility scale PV systems have been installed in Australia. Solar PV systems greater than 100 kW in size are not eligible to create Small-scale Technology Certificates (STCs) under the SRES and must instead register as power stations under the Large-scale Renewable Energy Scheme.

According to the Australian Photovotaic Association (APVA), 14 MW of larger systems were installed in 2012. The 10 MW Greenough River project in Western Australia was the largest installed in 2012 followed by the Camarvon project, also in Western Australia at 510 kW.

The entire report can be read here.