The city of Melbourne welcomed almost 6,000 Australian solar, storage, and renewables professionals from around the country for two days this week, to the eighth All Energy Australia. pv magazine joined them and has distilled five of the major talking points and trends from the trade show floor.
Growth past 1 GWa in 2017
With three months left to run in 2016, the new PV installs for the year have not yet been locked in, but it certainly appears that 2017 will be a year of major solar growth. All Energy itself increased visitor numbers by around 10% on 2015 numbers, to 5,800, this year. 140 exhibitors filled the show floor, with wholesalers and distributors prominent.
The Australian residential rooftop market, likely to reach over 700 MW in 2016, may be in for a slight uptick next year, and the C&I segment is expected to show steady growth. But it's the utility scale market that will be a big mover in Australia in 2017.
Spurred on by the ARENA Large Scale Solar subsidy program, a good proportion of the 480 MW of projects successful under the program are likely to be installed next year. This represents stellar YoY growth for the segment, with PV power plant developers in Australia having suffered through a number of lean years in recent times, hamstrung by an uncertain policy landscape.
Given this outlook for all three market segments, the Australian market will very likely exceed 1 GW in new PV capacity in 2017, the first time the market has done so since 2012.
While scaling from double-digit MW installs in the utility scale segment to close to 500 MW will indeed represent a challenge for EPCs and construction companies, some project developers pv magazine spoke with at All Energy were confident that such an ambitious installation timeframe could be met. First Solar's Ewan Norton-Smith said given the "relatively small ARENA bridge" to market, represented by the 480 MW program, it is remarkable its effectiveness in delivering a robust project pipeline. Norton-Smith noted that 2017 would represent "a full 180 turnaround from 2013," with the ARENA program combining with a range of state-based initiatives to energize the power plant market.
The alacrity with which the developers are moving forward with their utility scale PV projects is attributable to their desire to maximize the number of Large Scale Generation (LGC) certificates, which are the key component to the market-based Renewable Energy Target (RET) mechanism, generated once the plants are commissioned. LGCs will only be created under the RET until 2020 and currently are trading at record high prices of around AU$90/MWh ($69/MWh) of generation.
Additional to the 480 MW under the ARENA program, a number PV power plant projects that did not receive funding are also moving forward. Coupled with an emerging behind-the-meter small utility scale segment, with projects between 500kW and 2 MW the most common, these too will add to the pipeline for ground-mounted systems in 2017 and beyond. With module prices falling fast and increasing professionalism and expertise in the sector, large scale solar is approaching competitiveness with big wind in Australia, pointing to a bright future for the big PV Down Under out to 2020 at least.
Storage providers converge on the market
A quick wander around the All Energy show floor revealed the growing importance of battery storage in the Australian market. SolarEdge co-founder Lior Handelsman said that 2016 was, "the year of storage," even given that was more in terms of interest and hype, rather than installations on the ground. The number of grid-connected batteries being installed in Australia in 2016 may only be a fraction of what a leading market like Germany is achieving, 2017 is expected to see as many as 10,000 systems residential storage systems installed – with average battery system capacities around 6kWh to 8kWh.
Given this anticipated growth, international storage providers are flooding into the Australian market. While LG Chem lithium-ion systems are the clear Australian market leader, Enphase, Tesla, Redback Technologies, ABB, TrinaSmart and BYD are just some of the companies looking to gain a foothold. "It was fantastic to see many more storage products showcased across the exhibition floor," said All-Energy Australia Exhibition Director Robby Clark.
Germany's Sonnen exhibited at All Energy for the first time this year and it reports already having shipped some 450 battery systems since first introducing its product last year. Solarwatt was another first time exhibitor, with the company hoping to begin shipments in January 2017. Zygmunt Nejman has taken on the role of Managing Director of Solarwatt Australia, moving across from ABB, and he said that the product's quick response time in meeting household electricity loads facilitates higher solar self-consumption rates when compared with rival products. Solarwatt also exhibited its German-made dual-glass modules at the show, with plans to sell the panels on the back of demand for its battery product.
A number of homegrown battery suppliers were also present at All Energy, and ultra-capacitance lead acid supplier Ecoult presented a series of reference projects demonstrating its C&I an utility scale products' versatility and resilience. Local vanadium redox flow developer RedFlow also attracted strong interest to its relatively small booth.
Fierce module price competition
As it is the world over at present, low and rapidly falling module prices have become a feature of the Australian PV market, and it was a common topic of conversation amongst attendees. Sub-$0.40/W prices were cited by many as being on offer from tier-one Chinese manufacturers.
Exactly how the low module prices will impact the Australian end market is yet to become explicitly clear, however, it could make the business case for larger C&I installations and merchant utility scale compelling. Some installers and other market participants expressed quality concerns, given the pressure on manufacturers in the current environment, and there are fears that Australia will become a dumping ground for low-quality product. The Clean Energy Council, which is the show's strategic partner, is developing an enhanced certification process that it hopes will help to address this.
New market entrants
With the Australian PV market surging towards considerable growth, some international market participants made their entrance in 2016. Germany's BayWa r.e. launched its Australian subsidiary this year, after completing the acquisition of West Australian wholesaler and offgrid and C&I project developer Solarmatrix last month. Baywa r.e.'s Frank Jessel said that it will be important that wholesaler and distributors ensure they contractually protected against holding large module inventories given falling module prices. Jessel noted that battery products now account for around 10% of Baywa r.e.'s revenues at present and that he expects that will flow through to the Australian market in 2017.
China's Huawei was another prominent new arrival to All Energy this year, and the company has set ambitious goals for the next three years. Huawei will supply its Fusion smart PV power plant solution, which is enabled through its string inverters, to Australia in 2017. Huawei says its goal is to increase its footprint of less than 10 MW of supply in 2016, to become the market leader in the utility scale space in Australia within two-to-three years. Huawei also displayed residential and C&I inverters at All Energy, although products details are being held back by the company until the official launches occur next year.
Large Australian construction companies are becoming involved in PV power plant installation, which should bring new levels of professionalism and scale to the sector. UGL Limited, Downer Group, and RCR are all expected to get involved in the market segment in 2017, which will enhance construction project capabilities in the market.
A little over one week ago, the state of South Australia was plunged into darkness when a massive storm ravaged power infrastructure. Interstate interconnectors were brought down, and wind turbines curtailed in the face of high winds and lightning strikes. A fall in grid frequency caused operators to shut down electricity supply around the state.
Immediately the political debate accompanying the massive power outage became politicized with members of the conservative federal government squarely blaming high levels of renewable energy in the state for the grid instability. The Australian Electricity Market Operator is still finalizing investigations into the outage. The South Australian Premier, from the center-left Labor Party, took a swipe at conservatives for politicizing the crisis today, however, implications for wind development in the country could be very serious.
The Australian Federal Government will convene a meeting of state Energy Ministers in Melbourne tomorrow, and it is expected to push towards the development of a national framework for renewable development. Friends of the Earth is planning a protest to welcome Energy Ministers from around the country, as they attend the meeting.
While this is worrying for Australia's chances to meet its national renewables target, it could play into the hands of large scale solar. Utilities are thought to be happier with solar's production profile when compared with wind, and there is far less public opposition to big solar. With some 5 GW of renewable projects required to be developed by 2020, solar PV could be in the hot seat to capture a significant amount of that capacity.
"There's no better time to be developing large scale solar [in Australia]," said Green Energy Market Ric Brazzale, referring to both this market development and also to the high large-scale certificate prices. While his team's analysis points to project capacity falling short of the what is required under the RET, Brazzale said some wind developers would likely turn to PV.
Green Energy Markets tracks Australian solar deployment across all market segments and the figures show a residential in slow declines, after highs earlier this decade. This decline has been partly compensated by an expanding C&I segment, which is growing by around six to seven percent each year. But it's the large scale sector that is going to deliver real end-market growth as PV projects bloom under the Australian sun.
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