Solar energy has become increasingly popular in Australia, with approximately 30% of Australians adopting solar panels for power.
This growth has been driven by a combination of environmental concerns, government rebates, feed-in tariffs, high and increasing electricity prices, cheaper panel and inverter pricing, and straightforward installations. In addition, Australia has a sunny climate and high electricity prices, which make solar an attractive option for homeowners.
The country's feed-in tariff system also allows homeowners to earn additional income from the excess solar energy they produce. Overall, the adoption of solar energy has been driven by a combination of economic and environmental factors.
Why have so many Australians adopted solar?
By 2022 30% of Australian homes have adopted solar power by installing solar panels. A two-fold growth from 2012 (15%). This means over 3 million homes do have solar now.
This starkly contrasts with other developed countries, such as the U.S., where approximately 4% of residents have solar panels. But why exactly have so many Australians adopted solar?
Many factors have led us to become world leaders in solar on residential roofs. They are:
Over the past decade, Australia has seen a record number of bushfires, droughts, and flooding. This increase in natural disasters and the overall increase in temperatures have led to a loss of habitat and threats to our Koala population, the bleaching of the Great Barrier Reef, and an unprecedented loss of native animals, primarily through fires and floods.
The former Federal Liberal Government, for a decade, has denied a problem existed and did not go into action. Then, finally, the Australian population decided to act and solar in their own home and business was one of the easiest ways to fight climate change.
The upfront government rebate
One of the primary reasons for the increase in Australians adopting solar comes in the form of solar rebates that incentivise the purchasing and installation of a solar PV system.
The Australian solar rebate scheme run by the Federal Government has seen many changes over the years but overall did contribute at least 25% towards purchasing a solar system and, in earlier years, as much as 66% in rebates.
On top of the Federal rebate, some States like Victoria provide additional financial support, making solar a must-have for any financially savvy homeowner in these States.
The Feed-in tariff (FiT)
Other than rebates, feed-in tariffs have allowed Australians to gain additional income from solar power, encouraging adoption. During the early days, feed-in tariffs paid between 60 to 40 cents per kWh but have gradually been scaled back to 5 to 10 per kWh.
Feed-in tariffs are left to the State Government to regulate in states such as NSW and Victoria. Therefore suppliers must provide a minimum tariff of 5.2 cents per kWh in 2022.
It is expected that with the increase of wholesale electricity prices and the growth of EV charging during the day, the value of midday electricity will increase again, and consequently, so will FiT payments.
Relatively high and increasing electricity prices
Electricity prices have increased significantly over the past decade. Moreover, they seem to rise to new levels each year. This has promoted the adoption of solar by many Australians.
For example, the wholesale electricity price, which makes up approximately 30 – 40% of a final kWh price, has increased by almost 140% compared to the past few years. The Australian government suggests that household electricity bills have increased by 72% since June 2013.
Whilst owners may still rely on the electricity grid for any additional kWhs that their system cannot produce, it is through solar systems that homeowners are fighting back to reduce the sting of their sharply rising electricity bills.
Cheaper panel and inverter pricing
The International Renewable Energy Agency found in its 2019 report that “Since 2010, the cost of energy has dropped by 82% for photovoltaic solar, by 47% for concentrated solar energy (CSP), by 39% for onshore wind and by 29% for wind offshore.”
Chinese production costs of solar panels, partly due to the enormous volumes manufactured, are much cheaper than the price of solar panel production in Korea, Europe, or Australia. This price reduction also applies to racking and inverters.
Solar installation is complicated, with many panels weighing more than 22kg nowadays. However, there has been a willing workforce to embrace solar installation, and this competition has kept installation prices reasonable.
Also, luckily Australian roofs are relatively flat or low-angle and often single-story. Compared to Europe, where many roofs are steep to assist the snow sliding down predominantly double or three-storeys, an installation in Australia is more straightforward.
Many roofs are tile or metal sheeting, allowing economy of scale when ordering racking, brackets, and clamps. This, again, helps keep installation costs at a reasonable level.
The powerful rays of the Australian sun
A 6.6 kW solar system in Brisbane will produce 25% more electricity than a 6.6 kW solar system in Hobart. The reason is the sun intensity (solar irradiance) and sunlight hours in Brisbane compared to Hobart.
But when compared to some other solar adoptive countries such as Germany, many Australian renewable energy systems will produce 100% more renewable electricity, over a more extended period of the day, than the same size PV system in Germany.
An Australian system has favourable Return on Investment (ROI) numbers of 3 to 5 years compared to almost any other place globally.
Therefore these seven factors have come together to reduce pricing and increase solar popularity over the past decade, resulting in homeowners flocking to solar and increasing the average individual residential PV system size from 1.5 kW in 2008 to over 7 kW in 2022.