What will the commercial solar landscape look like post 2020? What are the main drivers in Australia to motivate organisations’ uptake of solar energy? Danin Kahn, CEO of Todae Solar spoke at All Energy last week to address these questions, to a room full of industry players eager to hear his predictions for the coming decade.
With Scott Morrison confirming his intent to scrap the small scale solar rebate, Angus Taylor’s affinity for coal and government backing “fair dinkum reliable generation because that’s what this country needs”, policy doesn’t look set to support solar, at least at federal level. A Labor victory could indicate positive support for renewables but as they have not made a specific commitment to solar subsidies, the likely outcome is still very unclear.
Product efficiencies are continually improving, and although we are unlikely to see huge jumps in cell efficiency, we can expect a gradual but steady improvement. As global solar production continues to grow, economies of scale will drive down costs.
Industry experience will be a key factor in EPC cost since it becomes easier to identify the most efficient and cost effective way to operate. Market competition will also undoubtedly make an impact; Todae Solar is seeing better deals on sourcing products than we were five years ago, at least in part due to more market players driving down pricing.
Wholesale power prices are of course a huge driver in the business case for commercial solar. The higher the cost of electricity, the quicker the payback period for solar.
Many factors play into this, including the closure of coal-fired power stations, the uptake of electric vehicles, the addition of large scale renewables and so much more. Future prices are therefore difficult to predict but we can be fairly certain they will remain high for the foreseeable future.
Corporate sentiment plays a significant part in the motivation to install solar. SME interest has been rising steadily year-on-year since 2011 as indicated by the rise in 10-100kW projects (shown in yellow in the graph above).
In terms of large companies, the RE100 list is now at 152 and growing, as moving to 100% renewable generation becomes ever more in vogue with large corporates, appealing to a customer base increasingly aware of environmental concerns.
Our own data tells much the same story about government and public bodies. We have seen consistent growth in MWs installed acquired through tenders, indicating that state organisations are increasingly looking at reducing their energy costs and reducing their carbon emissions.
Todae Solar is also seeing multi-site MW projects on the rise; Charles Sturt University, Aldi, St. Vincent’s and Stockland are some of our customers who have now installed MW rooftop systems across multiple locations.
Low Case versus High Case
Based on these primary drivers we can estimate the likely best and worst case scenarios, factoring in their predictability. We’re not holding out much hope for a positive policy outcome, but the market has already to some extent accounted for this through years of policy uncertainty. There is a small but significant chance policy could deliver a positive outcome for renewables, but since we don’t know what that is likely to entail, it is better to estimate conservatively.
EPC costs can be confidently projected to be lower. To what extent is yet to be determined but we are likely to see efficiencies improve and increased competition resulting in module and inverter cost depreciations.
Tariffs could go either way. Power prices are unlikely to drop dramatically but as the government has committed to controlling them, they are also unlikely to increase substantially.
Finally corporate sentiment will almost certainly be a positive driver in the commercial solar landscape post-2020. With electricity prices remaining high and organisations increasingly looking to curb their emissions, even a conservative estimate will no doubt see corporates increasing their awareness and uptake of solar energy.
Danin ended the presentation making a bold prediction for Australia’s commercial solar future – 90% corporate take-up by 2030. Predictions about solar by all manner of industry experts have often proved to be fundamentally inaccurate, so only time will determine its validity. However, Danin’s vision has driven the company from an online sustainability business in 2003 to become Australia’s #1 commercial solar installer for the past three years running, so hopefully the future is bright for commercial solar.
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