Renew Economy predicts that Australia will experience its biggest boom in solar construction in 2017 as PV costs continue to drop. The rapid growth will be enhanced by international market factors and local policy incentives taking hold.
Australia is bound to experience the biggest boom ever in large-scale solar construction over the next year, the clean energy website Renew Economy predicts. According to author Giles Parkinson, there are several factors that point to a major increase of Australian solar investment in 2017.
Internationally, these include the continuing fall of manufacturing costs. He argues that an expected surplus of manufacturing capacity will force manufacturers to reduce margins driving prices down further. Locally, it’s a great environment for solar investment as prices for large-scale renewable energy certificates are high and the Australian Renewable Energy Agency’s solar tender has had its positive effects .
Increase in solar capacity means reduction of margins
As the biggest PV manufacturers complete their investments, the market will be facing even more over-supply in the next year. Bloomberg has stated that capacity will increase by 18 % this year. Therefore, companies will have to reduce their margins as they protect market share. Global PV installations this year may reach about 67GW, up 27 % from last year, according to Bloomberg New Energy Finance. In 2017, it’s expected to increase by 25 %, and in 2018 it will rise another 23 %.
But for Parkinson the fall in manufacturing costs – estimated to be around 10 to 15 % a year – and the cut in margins in the international market, will be good for the Australian sector. Analysts expect the tender of the Australian Renewable Energy Agency to be a catalyst for more than $1 billion in investment in the next 12 months. Apparently, the tender process has already elicited significant price reductions. Parkinson reckons that should trigger around 400MW of large-scale solar developments alone.
„One of the ironies of the ARENA initiative is that it will give the industry a massive shove forward, but it has meant that in the past year, projects have been on hold as they jockey for funding, and others await the result. But costs have come down, even without much construction activity“, he states.
He also quotes Jack Curtis, the local head of First Solar, who expects the ARENA tender to be a “watershed” moment for large-scale solar in Australia: “I think it could be the biggest tipping point in the industry we’ve seen,” Curtis told RenewEconomy. He says the tender has brought about multiple projects and multiple participants – banks, equity investors, manufacturers and installers.
Large-scale solar not affected by cuts
Parkinson, furthermore, states that “large-scale solar is not affected by proposed budget cuts from the Coalition that may yet be supported by labor. That is likely to impact any future rounds, such as for large-scale solar thermal and storage, which would also be a major disappointment.”