Australia has long been regarded as one of the pioneers of the global solar photovoltaic industry, courtesy of its excellent research at institutions such as UNSW and elsewhere. Now, thanks to its excellent solar resource, rising electricity costs and the falling cost of solar PV, it is now emerging as the leading market for rooftop solar as well.

It wasn’t that long ago that visitors from Europe expressed their astonishment about the lack of solar panels on Australia’s rooftops. But, as one industry leader noted the other day, the growth of PV in Australia has jumped 6,900 per cent between the Beijing Olympics and the London Olympics – enough to earn it a gold medal in deployment.

As consulting group SunWiz noted last month, Australia installed more small-scale rooftop PV (systems less than 10kW) on households in 2011 than Germany, with 795MW vs 759MW. It now has an estimated 1.7 gigawatts of solar PV installed on rooftops, and is expected to get to 2,000MW by the end of the year. The Australian Energy Markets Operator recently said there could be 12,000MW to 18,000MW of rooftop solar PV in the country by 2030. Sunwiz and Solar Business Services say 18,000MW is conceivable by 2022.

The federal government’s principal forecasting body last week said its landmark assessment of 40 different technologies indicated that by 2030, solar PV would be the cheapest of all available technologies. If you take out landfill and some optimistic views about the cost of capital for nuclear, it could offer the cheapest within a decade. That estimate, however, was on utility-scale solar. Off grid and on household and commercial rooftops, solar PV is already offering a cheaper alternative.

PV manufacturers and international installers now believe that Australia is on the cusp of becoming the leading market in the world – not necessarily the largest over time, because it will surely be overtaken by the likes of China, Japan and US in terms of absolute numbers in rooftop installations – but because it is the first where the market surges even without feed in tariffs, which have been removed from just about every state and territory in the country.

Yingli – in announcing it was setting up its first operations in Australia – recently stated that the country could become the first “mass market” for rooftop solar in the world. Danny Kennedy, the head of US solar leasing firm Sungevity, which is looking to replicate its solar leasing business in Australia, says the country could be the most advanced market in the world.

Why?

“Because of high electricity rates,” Kennedy told RenewEconomy at the Clean Energy Week conference. “You have got prices going up due to the mismanagement of the grid and higher distribution costs, you’ve got such a high level of adoption – nearly four million Australians are living in a home with solar hot water or a PV system – and that means they don’t listen to the bulls*** that it is not working, not ready or unreliable.”

Sungevity says it expects to be delivering cost savings of at least 15 per cent to householders when it is able to get its leasing model up and running – with the cost of leasing and reduced costs of electricity from the grid undercutting the cost of business as usual. The emphasis on reliability falls on the leasing firms because they will own the systems, guarantee their maintenance and in some cases guarantee a minimum output. Sungevity is one of a number of firms that are looking to produce a solar leasing model – much will depend on their ability to secure financial backing, but the big retailers such as Origin and AGL Energy are already using their own balance sheet to offer systems for as low as $199.

That, of course, has the potential to recast the political debate about the cost of solar – which has been accused of adding between 1 and 3 per cent to bills in the past because of the costs of state-based feed in tariffs and other support schemes. It now seems clear that the feed-in-tariffs in Australia, cumbersome as they were, succeeded in reducing the balance of system costs of solar PV quite dramatically, a situation that the Japanese government is trying to replicate by introducing what will be the most generous feed in tariffs. Not that Kennedy is expecting a quick recognition of these changing dynamics from Australian politicians. “They don’t lead, they tend to follow,” he noted.

And why is solar able to achieve these cost savings, when the cost of a utility-scale solar plant is still significantly higher than the cost of coal and gas in Australia? Kennedy says it is a simple matter of efficiency, and highlights these two illustrations below to push his point.

“PV is not really competing with fossil fuels, it is competing with the steam turbine business, a device invented in Britain in the 1880s. The bottom line is that boiling water for electricity is not efficient. Solar energy was trapped in plants through photosynthesis, the plant dies, lays underground for 200 million years, is dug up (as coal), to boil the water to drive the steam turbine to ship it to the market through a transmissions system that is also very inefficient, where it is converted by a transformer – whereas our machine sits at point of use and takes 15% of the solar energy directly into the house.”

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