As we all focus on buying STC’s to meet our quarterly liabilities it is interesting to see how the rooftop PV installations have performed this past year. My weekly reports always show that states like Queensland and NSW are pumping loads of unconstrained renewable energy into the NEM but how much?
Australian individuals and businesses installed a record number of rooftop solar panels last year reaching 3GW of new capacity.
Despite Covid 19 slowing economies around the world, the global solar market continues to be strong. Strong overseas demand for solar panels and inverters continues to cause supply chain constraints in Australia.
The latest data shows residential and industrial rooftop systems, which are below the commercial solar size of 100kW, grew by 300MW in December alone.
The growth in the residential and industrial sector is starting to slow with monthly volumes in 2021 not surpassing previous installation records. Last year the rooftop PV market only grew by 10%. The growth may have been higher however, installation dropped in Q3 possibly caused by supply issues or increases in the price of systems. The fourth quarter growth was also lower than the previous year.
Due to the supply chain issues, commercial scale projects have not helped with the cost of the smaller residential and industrial systems. Supply issues have pushed up the cost per kW for all projects.
The largest growth segment in the market was the 75kW to 100kW installations, these are primarily larger companies using their existing roof space to reduce their consumption and claim they are using renewable energy as part of their sustainability targets. Commercial installations grew in all sectors greater than 15kW systems.
NSW continues to grow the quickest installing 85MW in December, with Queensland next with 70MW installed followed by Victoria at 59MW, SA at 27MW, with the remainder of the states and territories adding 12MW.
With rooftop PV systems now accounting for 17GW of installed capacity, 2022 will likely see a growth in the installed capacity at a slower rate due to the impacts of COVID. Supply chain constraints and saturation of the rooftop market as fewer new houses are built, and existing houses are not being fitted with solar.
As part of the rooftop PV installations, STC’s are produced which are then used by liable entities to meet their obligations. STC obligations are linked to the number of STC’s projected to be produced in the following year. As the rooftop PV market grows the liability for obligated entities also grows. In 2022 it is expected large electricity users will be required to procure 22.4% of their consumption in the form of STCs.
The article was written by Alex Driscoll Senior Manager Markets, Trading & Advisory