“Achieving more than 3 gigawatts of new projects reaching FID [final investment decision] in the 2022 calendar year cannot be ruled out,” he said.
The CER said 561 megawatts of small-scale solar PV capacity (68,250 systems) was installed in the first quarter – 28 per cent lower than the same period last year – but the sector was still on track to deliver 2.3 gigawatts this year, down from the record 3.2 gigawatts in 2021.
This follows five years of consecutive growth from 2016 to 2021 where the annual added solar PV capacity was about 35 per cent a year.
The CER said it had always been anticipated the uptake of rooftop solar would wane in Australia, which has the highest penetration of solar in the world.
The Carbon Market Report said the COVID-19 pandemic, during which international borders were closed and many Australians were confined to their homes, had brought forward household investment in rooftop solar and delayed the inevitable decline.
The opening of borders allowing overseas travel as well as lower feed-in tariffs for households from energy retailers were other reasons for the slowing of solar uptake.
“It is likely some households that may otherwise have waited to install systems, brought forward their investment in rooftop solar as discretionary spending in other areas was reduced during 2020 and 2021,” the CER said.
“This was followed by a steep decline in the number of installations in early 2022, as consumers switched spending to recreation activities from late 2021.”
The payback period for the average 8 kilowatt solar PV system is about three to four years, according to the CER, so there is a chance installations could pick up again, especially if higher power prices remain for the next few years.
Clean Energy Council chief executive Kane Thornton said he was not surprised the record rooftop solar PV numbers had tapered off, partly due to COVID-19 impacts on supply chains.
However, Mr Thornton said with energy prices spiking, solar companies had reported significant growth in inquiries recently.
“Rooftop solar remains one of the best investments to relieve cost of living pressures from rising electricity costs, and we expect strong future growth in household batteries, so consumers can make best use of the energy they produce,” he said.
Farmers are paid for growing trees under the Coalition’s $2 billion Emissions Reduction Fund.
The Carbon Market Report also showed there were 282,778 Australian Carbon Credit Units, or ACCUs, surrendered in the first quarter, up 62 per cent from last year.
Despite market concerns about the former Morrison government changing the rules to allow current holders of fixed delivery contracts to break their contracts – which pushed the price of ACCUs to more than $50 – the CER said it did not believe the market would become flooded with carbon credits.
“The long term average price of all Commonwealth fixed delivery contracts is $11.70 and the reported spot price appears to have currently settled for the time being above $30 which is a premium above double the average contract price,” the CER said.
“However, it would appear to be commercially risky for project proponents to forgo the certainty of the Commonwealth contract price – and pay the exit fee – in the hope of selling all the volume in the reported spot market at the recent prices.”
The 14th auction of the Emissions Reduction Fund was held in April, with 7.6 million ACCUs contracted for an average price of $17.35.
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