Whether you agree with Winston Churchill or not, there is no denying the wisdom of examining history so that we may repeat our failures as little, and our successes as much, as possible. Sarah Morton from Green Energy Markets looks back at the Australian solar photovoltaic industry’s achievements since developing the PV Roadmap.

In 2004, despite Australia’s vast solar resources, promising start-up companies and leading research, we had only 46 megawatts (MW) of installed photovoltaic (PV) capacity and our historical lead in the PV industry was progressively being overtaken by other countries. The industry was concerned with these developments and identified a need for a roadmap – to demonstrate the potential for and benefits of PV in Australia and how these could be met.

Consultation on the PV Roadmap identified targets for market expansion. The ‘Sunrise 2010’ cumulative target of 350 MW caused considerable consternation at the time as many outside the industry (and some within) thought this was too aggressive. If you’d asked many people just two years ago, they would probably still have agreed, as at the end of 2008, Australia’s total installed PV capacity was sitting on just 104 MW. The telling fact is that 80 MW was installed in 2009 alone – allowing Australia to just sneak back into the top ten countries globally installing PV in that year.

So despite years of stop-start industry support, it is now clear the industry is going to deliver installed capacity well over the 350 MW target. With an expected

240 MW of PV to be installed this year – an outstanding growth of three times that of 2009 – Australia should have around

420 MW installed by end 2010, 21 per cent higher than the PV Roadmap target.

This has occurred despite a constantly changing playing field, including changing rebates, the sudden ending of support programs, and different levels of support from state to state. The PV industry has responded strongly to incentive programs and has delivered faster than expected, while meeting expectations of cost reductions – similar to the successful response of other renewable energy and energy efficiency technologies to the Mandatory Renewable Energy Target and the NSW Greenhouse Gas Abatement Scheme.

The PV industry has exceeded the Roadmap target due to a combination of international and local factors. By 2009 significant cost reductions in international PV modules were flowing through to the Australian market. These were due to a range of factors including global expansion in module production and improved economies of scale; new technologies and reduced manufacturing costs and changes in currency exchange rate – followed later by reduced global demand due to market collapses as a result of the Global Financial Crisis – and reduced policy support in some countries. These translated into a 25 per cent decline in the cost per watt of grid-connected systems between 2008 and 2009. Cost reductions coincided with ramped-up support in the form of the $8,000 rebates for grid-connected systems first introduced under the Howard Government, and together these drove a major expansion of the Australian industry, with many new businesses seeing opportunities and entering the market with different business models and small, low-cost systems.

More recently the solar credits multiplier – where PV systems can receive five times the number of Renewable Energy Certificates (RECs) up to a capacity of 1.5 kilowatts (kW) – has provided an important stimulus to the market. PV is now dominating REC creation and we expect that for 2010.

PV will produce around 20 million RECs, which is more than 50 per cent of REC creation.

As for the future, analysts project continuing international cost reductions as global demand and installations continue to rise. How much of this flows through to the local market depends on whether the strength of our currency can be maintained.

As far as policy support goes, the Small-scale Renewable Energy Scheme (SRES) is set to replace the Renewable Energy Target as the federal support mechanism for PV from 2011. At face-value, a fixed certificate price under the scheme of $40 (paid by liable parties) combined with one of the more generous state feed-in tariffs provides a very healthy outlook when considering that grid parity is expected to be reached well before 2020.

However, there are a number of possible roadblocks to continued industry growth over the short to medium term. Support via feed-in tariffs may not be available to new PV installations after the next few years. In addition, there are a number of mechanisms by which support provided by the SRES may be curtailed. The regulator has powers to reduce the REC multiplier and/or limit the amount of certificates produced by an installation and the Minister has powers to reduce the $40 fixed price of certificates if it appears that certificates (PV and solar water heaters) created in 2015 will exceed 6 million – a figure that would represent a contraction of the solar energy industry compared with just 2009.

With an estimated 4,000 people employed in the industry in 2008 – prior to the growth period – this industry is a growing force and it remains important not to withdraw support for the industry too quickly.

Sarah Morton is an energy and greenhouse consultant, specialising in energy efficiency, renewable power generation and solar energy. Ms Morton has worked on numerous advisory projects for government, the private and public sectors. Prior to her role at Green Energy Markets, she worked for Carbon Market Economics and the Clean Energy Council/Business Council for Sustainable Energy (BCSE) as an energy and greenhouse analyst on policy, advocacy, research and industry development.