Rooftop solar PV to be energy game-changer in Australia

POSTED May 30, 2012

The Australian Energy Market Operator has produced a landmark report that for the first time recognises rooftop solar PV as a significant source of energy in the National Electricity Market, and includes forecasts that could have a profound impact on the way electricity is consumed and produced – and talked about – in this country.

In a report entitled Rooftop PV Information Paper, AEMO says that up to 18,000MW of solar PV could be installed on Australian rooftops by 2031 – under its high growth scenario – when it could potentially account for around 10 per cent of the electricity produced in the country. Even its mediums scenario predicts 12,000MW of rooftop PV.

The forecast by AEMO is the first formal recognition by an Australian energy authority of the potential of rooftop solar in Australia – something that had remained the province of the solar industry itself, a handful of consultants, the Greens, advocacy groups, and web sites such as this.

The report is in marked contrast to the Draft Energy White Paper produced for and released by Federal Energy Minister Martin Ferguson last December, which predicted that solar – in all forms, including utility scale solar PV and solar thermal – would account for less than 3 per cent of Australia’s electricity capacity by 2030, or 2,000MW in all forms.

AEMO has not produced its own percentage estimates, but its top end forecast suggest that rooftop PV could generate 28,000 gigawatt hours (GWh) of electricity in 2031. That is potentially around 10 per cent of the forecast for the entire eastern Australia grid by that year. In 2011, solar PV accounted for just 0.6 per cent of 196,440GWh produced. (It should be noted that the AEMO forecast is for the National Electricity Market only, so it excludes WA, the Northern Territory, and separate grid areas such as Mt Isa).

And while the Draft Energy White Paper suggested (to the amazement of many) that installations from rooftop PV would effectively cease after the renewable energy target ends in 2030, AEMO says the economics would be so compelling that by 2020 consumers could be getting a 3-4 year payback on solar PV and a 1-2 year payback by 2025. Based on its numbers, if the market does slow down around 2030 it would only because it had become saturated!

The significance of the AEMO report is several-fold. From a technical point of view, it means that rooftop PV will now be included in its demand forecasts, and in its statement of opportunities – the energy bible that is used as a guide to what opportunities exist for developers who are thinking of building new gas or other generation assets. AEMO will update its demand forecasts by the end of June, and then issue a separate Statement of Opportunities.

Another significant aspect is the potential changes this makes to generation assets. A deployment of the scale being contemplated by AEMO suggests a “merit order” impact on existing generators of some significance. In Germany, where 25GW of solar PV accounts for just 3-4 per cent of the annul electricity production (although more than a third of production on some recent sunny days), the merit order impact is already having an effect to the point where the profits of established generators are being erased and major utilities such as RWE and E.ON are refusing to build new gas-fired generation.

The third impact is on the way energy is consumed at the household level. AEMO’s high forecasts suggest nearly half the households in the country with an available rooftop could be taking up solar PV, and a lot more thinking about it.

This has two implications – it means that households have an option to hedge against what appears to be an inevitable increase in