Australia’s rooftop solar market has set a cracking pace so far this year, with installations at end of February up nearly 50 per cent on figures from the same time last year, driven largely by residential installs.
As we reported last week, the February uptick marked the second best month for solar PV installs in Australia since 2013 – the best month being December 2016. And while there was some suggestion this was inspired, at least partly, by a summer of record heat and extreme weather events that put the nation’s grids under serious pressure, all signs are pointing to 2017 being a huge year for rooftop solar and battery storage.
For starters, there are the power bills that, having already scaled new heights, are being forecast to continue their ascent – particularly in New South Wales, where according to a recent Morgan Stanley report retail electricity prices could rise by another 20-25 per cent in order to fully capture the wholesale price increase over the last 12 months.
According to that report, NSW baseload futures prices for 2018 have jumped another $10/MWh to $115/MWh in the last two weeks, meaning that a rooftop solar system is cheaper than the wholesale price of the coal-fired grid, let alone retail prices which are more than twice as high.
For those New South Wales households still tossing up whether or not to invest in solar, even despite the measly feed-in tariff of around 6c/kWh, this could be the clincher.
Especially considering the solar FiT may not always be so measly. A campaign being led by Solar Citizens is pushing for rooftop solar to be valued for all of its benefits – to consumers, to the grid, to network companies and to the environment.
According to the campaign, properly valued local rooftop solar is currently worth in the range of 10-18c/kWh, and recent changes to the way solar feed-in tariffs are calculated in Victoria suggest this might start to be recognised by those who set the prices in other states.
“It is an accepted part of the setting of feed-in tariffs (FiTs) in Australia that they recognise savings to retailers and pass these savings to solar owners,” said Jack Gilding, the project manager for the ‘Research review and advocacy on the fair value of distributed generation’, in this piece on RenewEconomy on Monday.
“We believe the bulk of the savings on avoided use of the transmission network should be passed on to solar owners. This would increase the FiT by around 2c/kWh nationally. However a case could be made that a small proportion of these savings could be shared with retailers and networks to provide them with a motivation to implement this arrangement.”
But even if this campaign fails, and FiTs aren’t increased, it’s unlikely that this will slow the pace of solar uptake. Rather, it is likely to give battery storage its own big boost, as the almost inevitable rise of power prices push ever more people to solar and make some of the more bullish uptakes of solar and storage more likely.
In its 2017 Battery Market Report, released to RenewEconomy in early February, Australian solar consultancy SunWiz predicted market growth would treble over the next 12 months, after a 2016 that clocked up 6750 battery installations, or 52MWh – up from 500 in 2015.
To put this in further context, SunWiz noted that that there were 130,000 rooftop solar system installations in 2016, meaning that, effectively, 5 per cent of solar installations included batteries in the past year.
Meanwhile, the falling cost of rooftop solar in Australia – which in September 2016 averaged at the same all-time low seen in December of 2015, when prices dipped just below $1.60 per watt – is making it more accessible than ever, and, as Finn Peacock explains here (and below), still well worth the investment, even with low feed-in tariffs and without battery storage.
Say your household uses 3,000kWh of electricity per quarter. If you don’t have solar, this means that you’re paying around 31c per kWh for every kWh.
3,000 kWh x 31c per kWh = A $930 quarterly bill for the non-solar owner (before fixed service charges and GST).
If you generate electricity with your solar system and don’t feed it back into the grid (because you’ve used it to power something in your home), the electricity is ‘free’, or 0c per kWh. The sun isn’t out 24 hours a day, though – so this means that you can only get your ‘free’ electricity from around 8am – 6pm.
Still, let’s make the assumption that 40% of your electricity consumption is between the hours of 8am-6pm (when the sun is up and your system is generating electricity).
40% of 3,000 kWh = 1,200 kWh of self consumed solar.
This means that you’ve only had to buy 1,800 kWh from the grid at a price of 31c per kWh.
So the solar owner has only used $556 (31c/kWh x 1,800kWh = $556) of grid electricity.
Then, we credit the 8c per kWh for the solar energy that you’ve exported. If this is a 5kW system, you’d probably have exported about 700kWh of your solar. You would be credited 8c x 700kWh = $54.
$556 (bill with solar) – $54 (credit from exports) = $502 (net quarterly bill with solar).
Your new bill is therefore going to be $502 (before fixed service charges and GST).
You are actually saving $428 per quarter ($930 – $502 = $428), or over $1,600 per year with solar.