Despite the challenges of 2020, the solar market has continued to grow and has posted record high installation figures for the year. Across Australia just under 3GW of solar capacity was added from homeowners and small businesses (projects under 100kW in capacity) installing solar panels to tackle their rising energy costs, up 43% from 2.1GW in 2019 (Sunwiz Annual Report).
Three drivers of recent growth in the Australian rooftop solar industry
The number of solar installations in Australia has passed 2.5 million in 2020. Solar power has become a mass market product and is driven by a strong financial and environmental return. The exceptional growth in 2020 has been bolstered by the below 3 drivers.
- Greater time to focus on home improvements
As the working population shifted to less hours and flexible working situations, many Australians took the opportunity to tackle home improvements. Evidence of this can be seen as Australia’s largest retailer of home improvement products and building supplies announced a 14% increase revenue during 2020 to $15b in their latest annual report. Data from the Commonwealth Bank (Australia’s largest retail bank) showed that consumer spending on household furnishings and equipment was up 53% in April 2020 year on year. The rooftop solar industry realised similar growth with consumers finding time to progress solar projects that had previously been too time-consuming.
- Flexible working means larger home energy bills
The rise in flexible workers energy bills presented another key driver for the uptake of residential solar systems. Research from Roy Morgan showed that over 4.3 million people (or almost a third of working Australians) were working from home by mid-2020. Working from home often means greater daytime electrical usage with greater use of Air Conditioning to keep workspaces warm and other lights and kitchen appliances. For houses that were left empty during the day under usual working circumstances, this meant a significant increase in electrical usage. Solar is one of the most cost-effective ways of tackling home energy prices.
- Solar prices continue to fall to record lows
The cost to install solar has continued to fall through-out the year with residential solar prices dropping 13.2% in 2020 following a decade long trend as tracked by the Solar Choice Price Index. This is despite the number of certificates in Australia’s federal solar rebate declining each year, effectively applying around a 5% increase in the net price paid by customers. At current prices a most homeowners can expect an appropriately sized solar system to pay for itself in 2 to 4 years. Small businesses with most of their electrical usage during the day can typically expect a system to cover its cost in less than 3 years and in some cases less than 12 months. The trend of falling prices has forecast by Dr Martin Green to continue (Smart Energy Conf 2020), with his estimates that underlying solar panel costs may reach US$0.10 per watt in the next 2-3 years.
With zero daily community transmitted COVID-19 cases across most Australian states, a vaccination roadmap starting to be formed and economic activity rapidly returning to normal in the early parts of 2021, it appears the Australian rooftop solar industry is in a healthy position going forward.