Australians could soon start to benefit from cheaper solar panels as a dive in raw material costs and a “boom” in global output delivers annual solar electricity price falls of 10% for the rest of the decade, according to a report by Climate Energy Finance.
The Solar Pivot report by analysts Tim Buckley and Xuyang Dong said prices of polysilicon used to make the wafers in panels have fallen by two-thirds in 2023, sending panel prices down to US18c (A26.7c) a watt as of last month.
Global installations of solar hit a record 268 gigawatts last year and could reach 1,000GW by 2030. “This would have profound implications for electricity and energy markets globally,” the report said.
“CEF foresees the world could hit 1,000GW per annum of solar installs by 2030. This would have profound implications for electricity and energy markets globally.”
Panel maker JinkoSolar last month announced plans for a US$7.9bn wafer-to-module solar factory in the Chinese province of Shanxi that alone will churn out as much as 56GW solar capacity a year. That scale is 19 times the biggest US plant – now being built - and compares with Australia’s total solar capacity of 30GW as 2022.
“The energy sector for decades has failed to invest in technology,” Buckley said. “Now the Chinese are spending unbelievable amounts of money.”
The US, the European Union and India are among economies also ramping up investments in solar energy. The motivation is partly to decarbonise their energy systems and reduce dependence on Russia but also to counter China’s growing domination of renewable technologies, particularly solar.
The Inflation Reduction Act, passed by the US Biden administration and which set aside $US369bn to bolster energy security and manufacturing, will drive a five-fold increase in yearly panel output to 40GW by 2024 and double solar installs to 40-50GW a year to 2030.
By contrast, China is on track to have 12 solar manufacturing enterprises with annual module production capacity of 30GW each. It also will install 120-140GW of solar in 2023, doubling that to 260GW by 2030, the report said.
Buckley said catching up with China if energy security was the goal was “a serious problem”.
“They’re actually building market dominance with every year that goes by at the speed they’re moving,” he said, noting China’s share of global polysilicon output was already 75% in 2021 and will reach 90% by the end of this year.
With all that expanded production capacity, “it’s an easy guess to say module prices will drop 30 or 40% by the end of this year versus where they were at 12-18 months ago,” Buckley said.
Renate Egan, head of the Australian Centre for Advanced Photovoltaics based at the University of New South Wales, said the report was “comprehensive and optimistic”, underscoring solar’s falling cost compared with energy sources, including coal.
Egan said the findings were consistent with work being done by the Australian PV Institute for the federal government.
Other nations couldn’t replicate what China had done over two decades “in a few years”, but there were parts of the supply chain Australia could have competitive advantages, she said.
These include minerals processing such as converting sand to metallurgical-grade silica. Similarly glass, aluminium and polymer components in modules could offer opportunities for Australia to focus on, Egan said.
“There’s huge room for improvement in deployment and connection costs” for modules, she added.
Finn Peacock, founder of SolarQuotes, said China’s factory gate solar panels were 15% cheaper this year. Given the slightly weaker Australian dollar, “it seems reasonable that solar panel installers should soon see around a 10% decline in panel prices compared to the end of last year”, he said.
Wholesale prices for “a good mid-range panel” are about $0.50/watt, excluding GST, from Australian warehouses. Countering much of the decline, though, will be another 13% reduction in the solar rebate from next January.
At present, a 10kW rooftop system costs each household about $11,000. That price includes the rebate, now worth about $4,400, which will fall to $3,840 next year.
Online solar inquiries have spiked in the wake of the latest news of higher electricity prices with interest over the king’s birthday weekend up 30% from a year earlier, Peacock said.
