Written by Kyle Pennell, PowerScout
Australia is the world’s eighth-largest producer of solar power, with an installed capacity of over 4,000 megawatts. And at the household level, Australia has the highest solar penetration rate on earth － fully 15 percent of all Australian households are equipped with solar panels (and some estimates place the number as high as 20 percent). In the U.S., by contrast, less than one percent of all households have solar panels. And in Belgium, which boasts the world’s second-highest rate of household solar penetration, just 7.45 percent of all homes have solar panels.
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Source: Energy Supply Association of Australia
In some areas of the country, installation rates are much higher. In South Australia and Queensland, 25 and 24 percent of all households have solar panels, respectively. Some of the suburbs around Adelaide and Brisbane have reported residential solar installation rates of over 50 percent.
Source: Energy Supply Association of Australia
Several factors have conspired to make Australia a global leader in installed rooftop solar.
Like most other developed countries, Australia has adopted some modest renewable energy targets to help move the country toward a sustainable future and mitigate the negative impacts of climate change.
Some of the suburbs around Adelaide and Brisbane have reported residential solar installation rates of over 50 percent.
As is true for most of the world, electricity generation remains the largest greenhouse gas emissions source in Australia, and energy production for the residential and commercial sector accounts for about 28 percent of all the country’s emissions. Transforming the nation’s electricity production patterns, therefore, could dramatically reduce greenhouse gas emissions and help curb climate change.
That’s why Australia now aims to produce 50 percent of its energy from renewable resources, including solar, by 2030. To achieve that target, the country will have to develop at least 14 additional gigawatts of utility-scale renewable energy over the next 12 years. (It should be easy to achieve; China developed an additional 20 gigawatts of wind power in 2014 alone.)
In addition to climate-related anxieties, more general environmental concerns about air and water quality have also motivated greater investment in solar energy.
Toward this end, Australia also began offering generous feed-in tariffs in late 2009. Like the net metering arrangements offered by American electric utilities, the feed-in tariffs offered by states and territories across Australia enabled homeowners to receive payment for excess renewable energy their solar systems produced.
Source: Australian PV Institute (lots more graphs at the link)
Another financial incentive that encouraged solar installations was the solar credit multiplier scheme. When Australian households install solar panels, they receive a small-scale technology certificate (STC). The STCs are rated according to the size of the installed system capacity － the larger the system, the larger the value of the STC, which can then be sold to the local energy utility.
In addition to climate-related anxieties, more general environmental concerns about air and water quality have also motivated greater investment in solar energy.
Under the multiplier system, the first 1.5 kilowatts of grid-linked solar capacity and the first 20 kilowatts of off-grid solar capacity were eligible for an STC valued at five times the standard rate from the summer of 2009 through through the summer of 2011. After that, the credit multiplier declined, with gradually lower credit multipliers offered until 2013, when the scheme was phased out entirely.
In addition to government policies and incentives, Australian housing patterns are also uniquely suited to the adoption of rooftop solar. Home ownership in Australia stands at around 70 percent; among homeowners, 88 percent live in detached single-family houses. And at 245 square meters, the average new Australian home is also bigger than an average new home anywhere else in the world. The large number of stand-alone homes translates to a lot of rooftop real estate for solar panels, and the large rate of home ownership makes it possible for millions of Australians to reap the many financial benefits that installing a solar system can bring.
Sunlight in Australia is also abundant. The country’s direct solar irradiance －a measure of how much much sunlight falls on a given point － is higher than that of any other continent. And according to one analysis from the Commonwealth Scientific and Industrial Research Organisation, Australia receives so much sun that an area of about 2,500 square kilometers (or 0.03 percent of the Australian landmass) could provide enough energy to meet the entire country’s electricity needs.
Economic forces have also played a large part in prompting Australia to go solar. Australia is one of the world’s leading coal consumers. Coal constitutes about 70 percent of all electricity generated in Australia, and natural gas constitutes an additional 20 percent. In the U.K. and U.S., on the other hand, only about 70 percent of electricity is generated from fossil fuels; in nearby New Zealand, that figure is less than 33 percent.
Sunlight in Australia is also abundant.
But even though Australia has a high rate of consumption and plentiful coal and natural gas reserves, it also has a high rate of coal exports. An incoherent set of energy and climate policies, characterized by a too-rapid rollback of coal power without a proportionate increase in either natural gas or utility-scale renewable energy installations, has led to rapidly rising energy prices. Between 2003 and 2013, residential prices for electricity increased 72 percent and the residential price of gas increased 54 percent. Electricity prices for businesses over the same period rose 60 percent.
Source: Reserve Bank of Australia
Today, South Australians pay over $0.45 cents per kilowatt-hour, one of the highest electricity rates in the world. Victoria residents pay about $0.35 per kilowatt-hour. The EU average, by contrast, hovers around $0.30 cents per kilowatt-hour, and the U.S. average is just under $0.15 per kilowatt-hour.
Source: Parliament of Australia
By installing solar panels, though, homeowners can essentially lock down the price they pay for electricity over a period of at least 25 years (the average panel warranty period). And since the average system pays for itself after about five years, the economics of solar continue to favor homeowners.
This confluence of factors － government subsidies and incentives, concerns about climate change, and high energy prices － has led to a large and successful residential solar industry. (Some have found it a bit too successful. Back in 2013, Queensland’s largest coal-burning electric utility, Stanwell Corp., charged that the high penetration of rooftop solar was the reason why the company had failed to turn a profit that year.)
But solar installations show no sign of slowing down. While the price of electricity is expected to drop across most of the country over the next two years, the long-term outlook remains relatively uncertain. Additionally, Australia is no longer on course to meet either the modest greenhouse gas emissions reductions target agreed to under the Paris climate accord or the more aggressive emissions reduction recommendation of the nation’s Climate Change Authority. And despite its high global ranking for rooftop solar installations, just 3 percent of Australia’s total electricity comes from solar power.
In other words, there’s a lot of room (and a growing necessity) for solar to expand, especially at the utility scale. The country had a total of just 300 megawatts of utility-scale solar capacity in 2015, when California alone had over 7,000 megawatts. But Australia is now rapidly scaling up its solar power plants, with over 17,500 megawatts of utility-scale projects in the development pipeline.
… despite its high global ranking for rooftop solar installations, just 3 percent of Australia’s total electricity comes from solar power.
Like rooftop solar systems, utility-scale projects benefit substantially from generous government subsidies, including a A$250 million loan program from the Clean Energy Finance Corporation, a government-owned development bank, and a A$100 million fund from the Australian Renewable Energy Agency.
As both public and private investment in solar continues to increase, it’s only a matter of time before Australia’s total solar capacity rivals even that of the U.S., China, and the world’s other top solar producers.
