The state of solar in 3 charts and 2 tables

The annual assessment of the Australian solar PV sector points to a near billion dollar industry in spite of plunging costs and a significant 11,700 stakeholders. But prices need to fall a lot more before disconnecting from the grid looks likely.

The Australian PV Institute has today released its 2013 annual assessment of the Australian solar sector, which provides a useful snapshot of the market in 2013 and how it has evolved over time.

As Climate Spectator has detailed previously, solar PV passed the 3 gigawatt mark for installed capacity partway through last year. In addition, the average size of solar systems has continued to grow in spite of feed-in tariffs being reduced across every state to rates close to wholesale market levels.

Australia’s cumulative installed solar PV capacity, and average size of installed systems

Graph for The state of solar in 3 charts and 2 tables

The chart below helps to illuminate how the size of systems installed in Australia has changed markedly in the last three years.

Back in 2011, more than 60 per cent of systems were concentrated in just one segment between – 1.5 to 2.5 kilowatts. But with the reduction and then removal of the STC rebate multiplier, which provided a greater rebate for capacity below 1.5 kilowatts, people have installed a greater range of system sizes.

Now we see in 2013 that more systems were installed in the 4.5 to 5.5kW size range than the previously dominant category of 1.5 to 2.5kW.

Graph for The state of solar in 3 charts and 2 tables

The solar PV sector employed 11,700 people including 400 in research and development. This is twice the scale of aluminium smelting employment and larger than a number of other industries that are often seen as important employers in the country.

Employment in the Australian solar PV supply chain – 2013

Graph for The state of solar in 3 charts and 2 tables

The industry is very clearly dominated by grid-connected, rooftop (termed ‘distributed’) solar PV installations. Off grid systems, which some time ago used to be the most important market for solar are now relatively minor. 

Value of PV business in Australia – 2013 ($millions)

Graph for The state of solar in 3 charts and 2 tables

The chart below tracks the history of solar PV component costs, illustrating that prices only started to rapidly decline in 2009. Much of the reduction is a function of declining solar module prices, and in 2013 balance of system costs became a greater proportion of system costs than the underlying solar panel or module. The report indicates that modules could even be acquired for as little as 50 cents per watt.

Historical price per watt for solar PV systems and components in Australia

Graph for The state of solar in 3 charts and 2 tables

Interestingly, with all the talk of a ‘death spiral’ where households disconnect from the grid via solar with batteries, off-grid residential systems have only just reached the same price per watt as grid-connected systems in 2009. At that time the sales of grid-connected systems depended on generous government support. Such government support is not available for the extra costs associated with battery systems to disconnect from the grid. 

Also, it’s worth noting that the lion’s share of the cost reductions in off-grid systems are a function of modules. These have now reached such a small component of overall costs that further reductions will deliver little difference to overall system prices.