Australia’s commercial rooftop solar market had its best ever year of growth in 2024, new data has revealed, but beneath the silver lining is a cloud over the health of the residential sector, which analysts say may be falling victim to its own success.
But first, the good news: The latest 2025 Annual SunWiz PV Market Report reveals that businesses turned to solar in record numbers, particularly in the 15-30 kilowatt (kW) and 1-5 megawatt (MW) segments, as they sought to reduce operating costs and hedge against rising electricity prices.
“Commercial solar had its best year yet, as more businesses recognised the long-term financial benefits of solar energy,” says SunWiz managing director Warwick Johnston.
“The increasing adoption of larger systems highlights the growing confidence in solar as a mainstream investment for businesses.”
Johnston says the big showing from the commercial side of the ledger can also be traced back to big corporations like Woolworths, Bunnings and Coles continuing to meet their ESG commitments by greening up their power supplies.
“We’re [also] seeing distribution centers with the move to online shopping and store delivery … getting a lot of solar on them, and we’re seeing a lot of new-build commercial properties going up with solar already attached,” Johnston told One Step Off The Grid this week.
But while the commercial solar market boomed, residential solar growth slowed, marking one of its weakest years in recent history.
“The residential solar market, which has long been the backbone of Australia’s solar growth, experienced a 1.6% decline in installations in 2024,” the report says.
SunWiz puts the contraction down to a combination of market saturation, declining feed-in tariffs, and higher financing costs – perhaps with a touch of the battery rebate factor (more on that later).
The SunWiz 2024 report shows the sub-10kW residential sector in particular saw a decline, as many households delayed investments due to economic uncertainty and less attractive returns.
Johnston says this is a sign that Australia’s world-leading rooftop solar industry is becoming a “victim of its own success” – the success being huge uptake that has driven down wholesale power prices.
The problem here is that falling wholesale power prices have in turn wiped out the value of feed-in tariffs, which can then translate to longer payback periods on solar investment and a range of complex new tariffs to navigate.
Many could also be holding off investing in solar until they can afford a battery, too, to maximise solar self-consumption as feed-in tariffs become negligible.
This brings us to another factor Johnston points to, the aforementioned battery rebate effect, where households hold off investing in rooftop solar until they can access a battery rebate and afford to invest in both PV and storage.
This is likely to have played a part in the flattening out in installations seen in New South Wales last year – illustrated in the chart below – where a battery rebate was announced in May but not launched until November, much to the frustration of the industry.
Johnston says the next wave of residential rooftop solar expansion lies in self-consumption and energy storage, as battery adoption accelerates – but how this plays out will also depend on whether battery prices continue to fall, and how state and federal governments handle the addition of any new rebate schemes.
“The decline in residential solar volumes presents both a challenge and an opportunity for the solar industry,” Johnston says.
“While traditional small-scale residential sales have declined, small-commercial solar and battery storage represent the future growth drivers. Solar retailers who adapt their business models to these emerging trends will be best positioned for success in 2025 and beyond.”
All of that said, the fact still remains that half of the 40.7 gigawatts of cumulative solar capacity installed in total across Australia comes from panels installed by households – a mind-blowing achievement.
Residential solar may face further contraction, Johnston says, but potential changes in policy following the federal election could boost consumer confidence and spark a new period of growth – particularly if a battery rebate is added to the national subsidy schemes, the SRES.
Emerging trend: Solar replacements spark new wave of residential demand
As Australia’s solar market matures, an increasing share of PV installations are replacing existing solar systems, the SunWiz report notes.
CER data shows around 20% of residential installations in 2024 were at the site of an existing PV system, as consumer replace older systems.
Johnston says the trend is underpinned by the fact that many older solar systems are far too small for the needs of an electrified home, prompting an upgrade to larger, more efficient and battery-ready solutions.
The rapid advancements in solar module efficiency also mean that replacing an older 3kW or 5kW system with a larger, more powerful system delivers much more bang for buck.
For the solar industry, it’s a significant evolution in the market and a major growth opportunity for the taking.
“Installers should focus on reaching out to existing customers whose warranties are expiring or whose inverters are failing, offering them a seamless upgrade path,” Johnston says.
“Installers and retailers who proactively target system upgrades, battery storage add-ons, and performance-based replacements will be best positioned to capitalise on this new wave of solar demand.”
Sophie is editor of One Step Off The Grid and deputy editor of its sister site, Renew Economy. Sophie has been writing about clean energy for more than a decade.
