What is your background, current position and for how long have you already been active in PV?
I’m the managing director of SunWiz
, a consultancy providing strategic intelligence services to the Australian solar industry. I’ve been active in the Australian solar industry for seven years now, gaining experience from beginnings as an engineering consultant at a boutique solar company, through experience in professional consulting in sustainable energy, and managing installations at a regional PV retailer before starting my own business. I hold a masters in renewable energy and bachelors degrees in engineering and science. I also contribute to the success of the solar industry through my involvement in our local solar industry organisations.
| "2013’s installation volume will be in the order of 750MW"
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What are your expectations for the market development in Australia in 2013? How many MegaWatts do you expect to be installed? And how many MW do you envision for 2014 and 2015?
2013 will be a year of contraction for Australian PV. Having installed over 1GW in 2012, I forecast that 2013’s installation volume will be in the order of 750MW, with later years having similar volumes. Only under our most optimistic set of assumptions do we see continued growth over the coming five year period.
Can you estimate the market shares for respectively power plants, commercial and residential application? Is this likely to change in the coming years?
The residential market has historically been the primary PV market in Australia, accounting for 90-95% of installation volumes. The impacts of high penetration are starting to be felt by the energy networks and in turn by the solar market. Thus, underlying this overall market stability will be a shift towards commercial rooftop PV installations, but at least 50% of installed volume will continue to be residential, (down from 95% in recent years). There aren’t many opportunities for utility-scale solar farms in Australia, as they are financially unviable at this stage except in remote locations. Grid parity for commercial rooftop PV will soon be reached, which will create a big opportunity, particularly in the second half of this decade.
Which incentives are still available and for whom?
Every system under 100kW is eligible for small-scale renewable energy certificates which provide an upfront discount equivalent to A$0.73/W. Systems over 100kW are eligible for large-scale renewable energy certificates, based upon their annual generation. The structure of the Australian energy market means that power generation is net metered on a half-hourly basis, with exports attracting only A$0.06-$0.08/kWh; in one state (South Australia) an additional $0.16/kWh is provided by the government, but this will cease to new applicants in September 2013. In some small jurisdictions there is a voluntary feed-in tariff of equivalent value to the price of import power. In spite of these challenges, the Australian PV industry survives and is attracting international attention as testbed for conditions that are the likely future for many other nations.
Which segment will show the biggest growth potential (geographically and by type of customer)? And what will be the most important drivers for further market growth?
Geographically the opportunities are quite evenly distributed around the nation. The biggest growth potential over the next three years is from rooftop commercial PV (30-200kW), but from a low base (only 50 MW in 2012). Further market growth will require technical solutions to network penetration issues, and improved success in selling commercial PV systems. Australia’s generally low levels of experience servicing commercial customers presents an opportunity for international companies to enter this sector of the market.
| "Currently paybacks are in the range of 4-7 years"
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Do private households still need an incentive to make a solar investment financially attractive? How do the cost of solar compare to the cost of electricity from the grid? What is the resulting payback time for a PV system?
Current incentive levels are sufficient to support a steady ‘underlying’ market. The cost of solar electricity is about 16c/kWh in most residential installations, compared to an electricity price that ranges from 20-35c/kWh depending on the regions. Because feed-in tariffs are low and energy exports are accounted on a half-hourly basis, currently paybacks are in the range of 4-7 years depending on the ability of the system owner to consumer the power at the moment of generation.
What is your vision on the 'business model of the future' for solar energy in Australia? Will it be lease, PPA's or private ownership? How can the millions of potential customers be reached, that are still without a PV system?
Expanding the market for solar PV will require financial innovation. Until now most installations have been private ownership, but businesses are more inclined to invest their capital into their own business. Leases offer the greatest tax advantages and have the lowest barriers; by contrast PPAs have market and regulatory barriers that are difficult to overcome. Financial innovation could also unlock new sectors of the residential market, but small systems remain quite affordable.
Who are taking the lead in solar energy development in Australia? And what is the role of the energy utilities?
Australia’s PV industry is highly competitive, with the top 5 PV retailers having only 15% market share. The largest PV retailers install nationwide, though many regional installers feature in the top ranks. The major three energy utilities all retail PV systems, though their deployment levels could be far greater if they wanted to. True Value Solar (owned by Germany’s M+W) currently leads deployment from Origin Energy.
What do you currently consider to be the major trends and trending topics for PV in Australia? And which topic is
heavily underestimated by the solar industry?
The key trend in Australia is towards commercial PV deployment, which is finally starting to materialize after two years of effort. Network connection is the major issue faced both in the residential and commercial sectors, as highly conservative network operators push back against PV installations due to (largely unfounded) concerns about power quality and network reliability. The local solar industry underestimates the power of the incumbent operators (many of which are indirectly owned by state governments), but for the time being consumer appetite remains strong.
| "It will dawn upon governments that solar is the most cost-effective energy source"
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What is your vision on the potential for energy storage in Australia?
Energy storage is where commercial PV was two years ago – a great idea but financially unviable for the time being. Ultimately storage will be required to facilitate increased PV penetration into the electricity distribution network. The network operators may drive uptake of storage, whether intentionally (where it can provide superior value to network augmentation when combined with solar) or accidentally (by increasing standing charges)
In your opinion, which PV development will surprise us in the coming years?
At some point in the coming years, it will dawn upon governments that solar is the most cost-effective energy source, one that underwrites Australia’s competitiveness. When governments again return to embrace solar power, there will be an unprecedented rollout.
Look into your crystal bowl: how will the Australian market for PV look like in 2020?
By 2020, every suitable house will have a PV system, and many businesses are covering their warehouse roofs as solar PV becomes the most cost effective way to meet Australia’s Renewable Energy Target
Warwick Johnston will be one of the expert speakers of the 'Global Demand Conference VII', hosted on the 18th of June in Munich. For more information on the conference, please go to: http://www.globaldemandconference.com/
