Down Under in flux

The Australian PV market is set to contract in 2013. From around 1 GW of new PV capacity in 2012, Australia looks set to add 750 to 800 MW this year, according to Sydney-based market analysts SunWiz. The market is not uniform across the country. In two of Australia’s six states installations have been carrying on in 2013 under state government feed-in tariff schemes, which are winding up. “We’ve still got further to fall,” remarks Warwick Johnston, the Managing Director of SunWiz, “This year’s figures are buoyed by the Queensland FIT installations and the South Australian program, so it’s not like the fall is over just yet.” Installations covered by the Queensland FIT scheme had to be finalized by July 2013 and installations under the South Australian program have to be completed by January 2014. This does not, however, mean that installations in Australia will dry up completely once the final FITs recede.
At the same time as the FIT schemes, which have seen Australia add around 2 GW of PV capacity in recent years, draw to a close, a market based purely on PV as the lowest cost electricity provider is becoming more established.
With high and increasing electricity prices, retail grid parity has well and truly arrived for residential and commercial consumers. “An underlying market that is very stable and essentially subsidy-free is emerging,” says Johnston. “The problem is that there’s not a great deal of profitability in the industry due to the great reduction of system prices and very intense competition.” This latter dynamic is perhaps what could be attributed to the generally subdued mood at the 5th All-Energy Australia conference and trade show held last month in Melbourne. Attendance numbers were flat and exhibitor numbers significantly down at the show in 2013, which is the largest renewable energy event in Australia. Around 5,000 visitors attended the trade show over October 9 and 10, similar to the 4,700 attendees in 2012, with 155 exhibitors presenting their wares, down from 270 last year. PV suppliers, integrators, and service providers comprised the vast majority of exhibitors.

Commercial roofs

Commercial rooftop installations were one of the hot button topics amongst All-Energy attendees and exhibitors.
The trend towards a growing commercial rooftop market segment has been expected for some time and module suppliers and commercial installers alike were both keen to show off the commercial installations they had recently realized.
“The business case for installations on properties with high daytime power consumption is compelling,” says Solarmatrix’s Georg Dreher, “It’s just a no brainer.” Around Australia electricity prices have been on the up, as fuel costs for generators increase and also as increasing peak electricity demand has required utilities to carry out major transmission infrastructure upgrades (see pv magazine 05/2013). The engineering and wholesale firm Solarmatrix is based in the state of Western Australia, and the firm’s marketing and project manager Dreher says that electricity prices in the state have shot up by around 60% in four years. “There’s a strong awareness of this among commercial-scale consumers,” says Dreher. Solarmatrix shares premises in the West Australian capital of Perth with an energy efficiency firm, which passes on leads to Solarmatrix when it becomes clear that PV is the best choice for the commercial consumer. Independent supermarkets, meat processing facilities, small or mid-sized manufacturers and wineries are ideal potential customers for commercial rooftop PV installers, the firm reports. Installation sizes on those commercial premises vary, according to the available roof space and user requirements, but can be in the hundreds of megawatts.
Module supplier Upsolar was also keen to talk commercial installations at the All-Energy show. The week before the trade show opened its doors Upsolar took part in a ceremony to flick the switch on a 100 kW rooftop installation at Hilton Manufacturing, in the southeastern state of Victoria. The installation had a unique genesis. Hilton Manufacturing is a metal working firm based in the Victorian capital of Melbourne, and it constructs, among other things, what are known colloquially as “roo bars.” Roo bars are commonly fitted to vehicles used in the Australian outback, to protect cars and trucks from being damaged if they hit a kangaroo or other wildlife.
Looking to diversify its product offering, Hilton Manufacturing worked with multinational ABB to design a PV tracking system for its rooftop. The result was a 100 kW installation on the manufacturer’s roof, utilizing Upsolar’s “smart” modules. Hilton also constructed a viewing platform for the installation and only days before All-Energy, 45 people, including federal politician Mark Dreyfus and members of the press, attended a ceremony to flick the switch on the PV array. Hilton Manufacturing is now happy to show off the finished product from the viewing platform by appointment. Upsolar provided 340 of its 290 W modules for the installation and ABB supplied the 100 kW inverter.

DC optimizers

The scale of these installations and this fast evolving commercial rooftop market is contributing to the growth of value added technology such as tracking arrays. This is even more so for products such as PV monitoring software, power optimizers and microinverters. Manufacturers and suppliers of these services and products all had a strong presence at the All-Energy show.
Upsolar presented its “smart” module offering over the two days, which incorporates Tigo DC optimizing technology. Upsolar’s Country Manager, Australia, Maree Viotto says that the bigger the project, the more cost effective the smart module solution becomes. “While Australian consumers are sensitive about system and component cost,” says Viotto, “they are almost more sensitive about return on investment.” Viotto concludes: “The smart module solution, to know whether an installation is working well and to know that the modules are performing, doesn’t add a lot more to the cost.”

Microinverters

Chinese manufacturer APS had a large booth and the company reports that it has sold 70 – 80% of its production into the Australian market since 2011. “Our strategy was to be the geographic leader in the microinverter segment in China and Australia,” says CEO Zhi-Min Ling. The firm has sold around 40 MW of product in Australia. Zhi-Min Ling says he too is looking towards the commercial rooftop market as a good opportunity for microinverters. APS released a portfolio of larger capacity microinverters into the Australian market at All-Energy.
APS claims that microinverter technology is well suited to both residential and commercial rooftop market segments, because of the performance advantages it can deliver and, especially for commercial applications, for safety reasons. Zhi-
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Min Ling says that Australian installers and consumers were particularly open to microinverters, while other more established PV markets may not be. “Australian consumers are open to new technology and new things, but it did take time,” he says. “Microinverters also give integrators and installers differentiated portfolio and that’s what helps them to stand out.” SunWiz’s Johnston agrees that the microinverters do present a point of differentiation, however he says it’s not yet clear whether there is still value in using microinverters in an Australian context. “Certainly one of the pull factors that’s unique here in Australia is the recent changes to the Australian Standards, which can drive people towards microinverters as being a simpler installation – relations here require DC wiring.”

Portfolio differentiation

Perhaps benefiting from the desire to offer differentiated products, Swiss inverter manufacturer SolarMax reports that it is doing good business Down Under. At the All-Energy trade show the company was celebrating having been present in the Australian market for one year. Daniel Freudiger, SolarMax’s General Manager International, says that while SolarMax was not present in the Australian market during the feed-in tariff-driven boom in previous years, the present market in Australia is sustainable.
“Being a later market entrant means that things weren’t always easy for us,” said Freudiger, “because nobody was simply waiting for us.” Despite this, SolarMax has picked up supply deals in Australia and is too looking towards the emerging commercial rooftop market to continue to provide new opportunities. “Even though incentives are gone it is still a good market and with small commercial set to take off, it’s perfect for us,” Freudiger says. SolarMax will expand its Australian team later this year and through 2014.
The ease of doing business in Australia and achieving product certification was noted by foreign suppliers, including SolarMax, at All-Energy. With the county’s population situated around the major cities along the country’s coastline, establishing distribution networks is not as challenging as the country’s vast geography may appear to present. SolarMax said that managing a supply chain from Switzerland was challenging, however not prohibitively so.

Change of government

The Australian political landscape is throwing up new challenges for the development of renewable energy, including PV. In September a new conservative government, led by Prime Minister Tony Abbottt, was elected. One of the key policy platforms that the Abbott government was and remains committed to is doingaway with the price of carbon introduced by the previous government. The conservatives have also been repeatedly winding up renewable energy financing bodies, such as the Clean Energy Finance Corporation (CEFC).
Representatives of the CEFC held sessions at the All-Energy show, to demonstrate how the body had supported innovations and deployment within renewable energy, on a revenue positive basis for government. However it is unlikely now that CEFC will be spared, which would mean removing a possible key body in providing bridge finance for utility-scale PV applications.

Policy changes

The change of government could have an impact on the commercial rooftop sector. “If the carbon tax is repealed then the value of commercial solar in particular declines,” says SunWiz’s Warwick Johnston. “The second issue is the renewable energy target review.” Australia currently has a national renewable energy target of 20% renewables by 2020. This target, while initially passed with bilateral support, is now set to be reviewed by the incoming conservative regime. Johnston says a downward revision would undermine the economics of both commercial and utility-scale solar in Australia.
“There’s also the case of the one million solar roofs policy,” says Johnston, referring to the incoming government’s commitment to reaching this goal. “We’ve already reached one million, the government is claiming to commit to an additional one million over ten years, and targeting that towards low income households and maybe including solar hot water.” Johnston adds it’s unclear whether that would be a benefit or a detriment to the solar industry.

Utility hurdles

Notwithstanding changes to government, developing utility-scale projects is still not without its challenges. Solar-Log’s Australian representatives report that the long time line for securing approvals for installations larger than 30 kW are proving a break on the market. Christian Fahrig, Solar-Log’s Senior Technical Engineer in Australia, says that utility conditions, such as zero grid export for installations larger than 30 kW in the state of Western Australia for example, and costly and slow permitting processes are big challenges for commercial rooftop installers to overcome. This is particularly problematic for the specialist for solar monitoring systems Solar-Log, because the company’s product, often a last addition to a PV system, is most effective for larger, commercial installations.
Commercial rooftop project developer Solarmatrix confirms Solar-Log’s experiences. The local utility, Western Power, requires installers to complete a registration and approval process that can take around 14 weeks, at the best of times, which greatly adds to the cost of installation of a larger system.
Infinite Energy, also operating in Western Australia, agrees that the process can be long, but counters that while the processes can be time consuming, they are not prohibitive. Managing Director Aidan Jenkins says that for installations up to 30 kW the process is the same as that for a residential array. However above that, “the requirements from Western Power are creating somewhat of a dead point in the market.” Jenkins says that the additional costs resultingfrom the conditions placed on installers by the utility are especially problematic for installations between 30 and 150 kW. Upwards of 150 kW, the additional costs leave an installation that still makes financial sense.
In Western Australia alone, Infinite Energy has completed three installations larger than 100 kW and two larger than 150 kW. A “40 x 30” installation, with modules of 40 kW in capacity but inverters worth 30 kW, is proving somewhat of a sweet spot for commercial installations under the current regime. Commercial electricity consumers in the state pay around AU$0.35 – 0.40/kWh (US$0.33 – 0.38/kWh) for electricity, making these installations very attractive. Infinite Energy is currently offering a five-year lease for commercial installations that is revenue positive during this period and after which the commercial property owner retains ownership of the array. Even so, explains Jenkins, “there isn’t the natural sense that commercial PV is the answer to the electricity cost problems experienced by businesses.” In many ways the Australian photovoltaics market is leading the way towards a sustainable, economic market. This is giving solar PV suppliers confidence to move into the market. However the pendulum of public policy continues to cause uncertainty, clouding the way for a PV-led electricity system under the Australian sun.