Rooftop solar still booming but big renewable projects dropping

Australians’ embrace of rooftop solar energy continues to rise, with the total capacity of new panels jumping by almost a third last financial year even as the outlook for utility-scale wind and solar farms dims.

Data tallied by Green Energy Markets, a consultancy, showed so-called small-scale solar systems added almost 3.25 gigawatts (GW) of new capacity nationally during the year to June, 31 per cent higher than for the 12 months earlier. NSW and the ACT posted increases of almost half, while Victoria’s total rose by 29 per cent.

Solar panels on rooftops are showing little sign of flagging, with COVID-19 disruptions doing little to stall the increase.Credit:Bloomberg

In June alone, new installations were a fifth higher by capacity than a year ago, building on last year’s record expansion. Tristan Edis, director of analysis at Green Markets, said this year could see 3.6-4GW added, or double the size of Victoria’s shuttered Hazelwood or NSW’s Liddell power stations.

“This year is going to be the peak but a peak that is at a very high level,” Mr Edis said. “If you’re the owner of a coal-fired power station, you’d be shaking in your boots.”

The COVID-19 pandemic may have aided the uptake of solar as more people worked from home and also could take advantage of low interest rates.

Installers have faced relatively few disruptions but interruptions to global supply chains could begin to present headwinds as commodity prices rise, including for the silicon used in the photovoltaic panels, he said.

Another issue will be the cuts to feed-in tariffs paid to households when they export surplus electricity to the grid. NSW’s independent regulator last month cut the price they will receive by a quarter to 4.6 cents per kilowatt-hour from February, while other states have also been reining in their payments.

If the rooftop sector continues to thrive, the outlook for large-scale solar and wind farms is cooling, according to the latest bi-annual national survey of investors by the Clean Energy Council.

At a reading of 6.3 out of 10 in confidence of making investments over the next three years, the rating was the lowest since 2019. NSW led at 7.2, ahead of Victoria (6.7) and Queensland (6.4).

A solar farm under construction last year outside the township of Nevertire in north-western NSW.Credit:Wolter Peeters

“Renewables have had a very slow start to the year in terms of new commitments and financial closure,” Kane Thornton, the council’s chief executive, said. “The challenges and barriers are really front of mind” for many investors.

One positive is 59 per cent of those surveyed expected to increase employment in the future, up from 54 per cent at the end of 2020, although those gains were likely to be temporary until federal policy in particular became more supportive.

Mr Thornton said, among the issues were the Morrison government’s favouring of a so-called “gas-led recovery”, attempts to expand the Australian Renewable Energy Agency to back fossil fuels, and other market interventions.

“This is the time to be opening the doors to new investment in utility-scale clean energy projects … and ensuring that sufficient new generation is in place before old fossil-fuel generators retire or are priced out of the market,” he said.

A spokeswoman for Angus Taylor, Minister for Energy and Emissions Reduction, said: “Australia is a world leader in renewable energy, with the most wind and solar per person of any country outside of Europe,” she said.

“Continued strong investment in renewables must be underpinned by new reliable, dispatchable supply like gas to keep the lights on and prices low, which is why the Australian Energy Market Operator has welcomed our investment in [the Hunter Valley’s] Kurri Kurri.”

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