Australia's bullish solar charge

During the last two decades in solar I can recall being so excited about where the solar industry has got to, that I could barely sleep. And it happened again recently.

Recent events in two key solar markets have got me all worked up again and wondering, are we finally 'there'?

In 2010, with a 60 cent gross feed-in tariff available, New South Wales managed to stimulate around 375MW of solar installations in around 10 months which at the time, was unparalleled.  It was estimated that on ‘Solar Tuesday', when the NSW scheme was abruptly halted, around 75MW of applications were received in a single night.

Yet in Queensland with the swish of a pen, Premier Campbell Newman set a new record this year with an estimated 350MW of new applications in the final 13 days of the Sunshine State's 44 cent net FIT scheme.

Broadly speaking, it means that despite the fact that in NSW your annual revenue was around five times higher (from the gross 60 cent scheme), Queensland still managed to get 27 times more applications when measured on a volume/ time basis.

Of course, PV prices have fallen and competition is intense but balancing that out we have a lower STC price and two times less multiplier; so NET prices to consumers are not dissimilar.

The other fascinating thing that is happening is that despite the fact that New South Wales has (virtually) no export tariff at all, demand is slowly but surely coming back – although it's a long way from the heady days of 30MW/month. In June this year the market registered almost 17MW after hovering around 7-8MW per month since the scheme ended.

So despite the fact that the economic proposition for exports in New South Wales is the worst in Australia, it seems consumers are starting to rationalise the purchase of solar PV in their head, once again.

There-in lies the reason I was tossing and turning; the underlying demand from two key markets is providing us with un-mistakable signals about ‘socket parity'. And we haven't even got started on commercial PV.

There is no doubt that solar consumers are as fickle as any other and can be tempted to act in droves – or not – by an array of market signals. A case in point is the TV news coverage on the final evening of Queensland's scheme, which sent a number of solar company call centres into overload. A bit of mass market prompting from a ‘credible' source such as the evening news and suddenly the light bulb went on for a bunch of consumers.

Equally, I am hearing stories that when the multiplier dropped from three to two on June 30 that for many solar companies the phones just stopped ringing.  Whilst wanting to save $750 odd dollars off a 1.5kW system is a logical reaction, over the system's life I would argue that this is largely an emotional market reaction driven by marketing rather than an astute financial reaction; a slightly larger system at lower dollars per watt, a better deal on export tariffs or installing some energy efficient appliances is likely to provide a better 10-year proposition. But we are emotional creatures.

As tremendously exciting as this is, we remain in a precarious position. A proportion of all the demand in our states is now lag from previous schemes, so measuring real, new demand is increasingly difficult. The RET is under threat, the multiplier that was responsible for June's surge is now gone and foreign exchange rates are subject to significant swings*.

And perhaps most importantly, there is a very strong possibility that by the end of 2012, Australia's installed capacity of solar PV may exceed 2GW – around 4 per cent of Australia's stationary generation capacity. On a clear, sunny day that's quickly becoming a material chunk of lost coal-fired revenue that a lot of people don't and won't forgo without a fight.

The rug could quite easily be pulled from under us.

Despite this I must admit that after many years of building solar industry forecast's based on sound facts then multiplying it up, testing it against logic and multiplying it up again, it is clear that it's time to become far more bullish.

We have a massive transition to make if we are to avoid a mess in the energy sector, assuming solar PV's growth rates continue unabated.  Programs such as Horizon Energy's needs based, incentivised FIT are important to monitor. This is one methodology that could provide a clear guide for the deployment of PV where its merits are most valuable, and valued.

Our industry has a momentum and a competitive force that is building like snowball now and there are more signs than ever that it will grow stronger not weaker.

*This article has been updated to account for the recent surge in the strong Australian dollar (an earlier version said the dollar was 10 per cent below levels from 6-months ago, this is not the case).

Nigel Morris is the Director of Solar Business Services.

This article was originally published by SolarBusinessServices. Republished with permission.