Recently I was reading about the demise of Unleash Solar (a big solar retailer in 2010) and the difficulties of Redset (an Australia photovoltaic agent). This got me thinking about the changing face of the Australian solar power industry.
Back when our business started looking into selling solar power, it was a niche market and it was too difficult for novice retailers like ourselves to work out the good from the bad. Solar hot water was the exception because it had been around since the 1950s and had well established brands, products, warranty claim history and processes. Plus, we already had five years of experience with solar hot water.
2000
The Photovoltaic Rebate Program (PVRP) began in 2000. Then it became known as The Solar Homes and Communities Plan. The PVRP provided a rebate of up to $8,000 to households who installed a 1kW system. It was open to households earning an annual taxable income of less than $100,000.
In those days, photovoltaic (PV) systems were really expensive (who could image a 1kW system costing more than $8,000 now!). This plan was credited with the installation of 130,000 PV systems and a significant increase in the numbers of installers and retailers, particularly in the last year the plan operated. So there was a fair, but not huge, uptake and a load of new companies started selling PV.
There were also other programs to assist off grid properties, schools and not for profits. This was the start of solar power going from niche to mainstream awareness.
2004
The Solar Cities Commonwealth Government program started in 2004 with an objective of assisting whole communities in different locations across Australia to rethink the way they use and produce energy. There were 7 cities targeted, including Perth. The Perth program concluded in 2012 and the mid term review cited the Solar Cities program a success.
2009
Government Green Loans (interest free loans) and free Home Sustainability Energy Assessments commenced 1 July 2009. These schemes also helped improve awareness of and uptake of solar power. The Government discontinued the Green Loans on 22 March 2010 despite concluding the program was a moderate success. A modified Green Start program was proposed but never got off the ground, due to implementation risks.
2010
In 2010, the Solar Home and Communities Plan was replaced by the Solar Credit Scheme. For a 1.5kW PV system you received five times as many small-scale technology certificates (STCs) as you should, based on its environmental efficiency. There was, and still is, no comparison of the relative efficiency of the photovoltaic systems to determine the number of STCs offered (as is done with solar hot water).
At the same time the State Governments were offering big feed in tariffs for anyone selling solar power back to the grid. Both of these factors caused a huge demand for PV systems. The problem was, it was hard for the consumer and even the retailer to tell a quality system and an inferior system apart. There was minimal brand awareness and so nearly every one bought on price.
2011
In 2011, the government assistance fell sharply as the demand for solar power massively exceeded government forecasts and the assistance was costing Federal and State Governments a fortune. State governments axed or heavily cut their feed in tariffs and the Federal Government cut the solar credit multiplier to 3 a year early.
This was somewhat offset by reductions in solar panel prices, which was a result of falling costs and a huge ramp up in Chinese solar panel production fuelled by Government assistance. This was further boosted by a strong Aussie dollar. Domestically, rumblings of another home insulation debacle and stories of dodgy installers, unscrupulous retailers and worthless warranties started to emerge. At the same time, rising energy prices became a hot topic.
2012
Since 2011 a large number of Australian PV retailers have gone bankrupt or made their money and shut up shop before they could get caught up with warranties. Just enter ‘solar’ in the business name search section of the ASIC insolvency notices from July 2012 and you’ll see what I mean. Despite this, a lot of quality players still remain and are thriving.
From 2011 and into 2012, a huge over supply of Chinese solar panels caused a price war resulting in massive unsustainable losses for global solar panel companies. This caused a third of Chinese solar panel manufacturers to leave the industry, many of whom were bankrupt.
2013
In Australia, the solar credit multiplier was effectively eliminated from 1 January 2013, 6 months early. Consumers still get STCs on 1 to 5kW photovoltaic systems. It was hard to say what that would do to Australian demand for solar power. In reality, the answer is not much.
So What’s the Australian Market Like Now?
- Locally, the demand for solar power remains high because rising energy costs are still a major concern for individuals and businesses.
- This, as well as continuing low PV prices (but with talk of solar panel prices increasing 2- 5% over the coming year), have meant that demand is now toward a 4kW system as a way of eliminating drawing on the grid in daylight hours.
- Home owners with such PV systems are increasingly changing to a Time Of Use electricity tariff and modifying the times of day they consume energy to maximise the benefits of their PV system.
- People looking to install solar power are now looking more towards a quality system system rather than a cheap system. There are still plenty of cheap systems out of there but cheap is now viewed with more scepticism. Consumers now have a level of brand awareness and are looking into the warranties in more detail in their purchase process.
- There are now sustainable levels of government assistance with a realistic number of STC generated, normal (pre 2010) STC pricing and low incentives for selling electricity back to the grid.
- The quality players in the photovoltaic market are thriving.
- Increasingly solar power is being implemented with businesses because of its reasonable return of investment in the face of increased power bills.
So whilst solar power is still not a mature market, hopefully it has gotten through its difficult teenage years and we can now look forward to a market without cowboy operators and where safety is paramount. I’m sure there will always be demand for the cheap photovoltaic systems but hopefully the market will start to demand quality PV systems. Maybe the day will come when the Clean Energy Regulator will test the efficiency of solar panels and inverters over time to determine the STCs to rightly tip the scales to quality systems. But I’m not optimistic.
