Will we let the sun shine in? Trends in the Australian solar industry

28 Jul 2014

This paper provides a brief overview of the size, growth and prospects for the Australian solar industry and argues that as the number of solar panels installed continues to rise, the cost of installation and maintenance will continue to fall.


The solar industry in Australia is growing rapidly, creating jobs and, as a result of the time of day that solar energy is most abundant, pushing down peak and average wholesale electricity prices. While supporters of coal and gas fired electricity often point to the ‘cost’ of renewable energy there is a growing consensus that renewable energy is putting downward pressure on electricity prices. Indeed, even the modelling commissioned by the Abbott Government’s inquiry into the Renewable Energy Target chaired by Dick Warburton found precisely that.

The solar PV industry now employs more than 13,000 people, significantly more than the number of people employed by coal fired power stations in Australia.

There are now more than 1.2 million solar PV panels installed in Australia which means that around 3.1 million people live in houses or work in organisations with solar panels on their roofs. The rapid growth of the solar PV industry has led to significant innovation in the installation of solar panels and, according to international research, the productivity of Australian solar panel installers is now significantly greater than that of workers in the US. As the number of panels installed around the world continues to grow there are likely to be significant opportunities for Australian solar PV installation firms to export their know-how and work practices.

In addition to innovation in the installation of solar panels another major change driving the industry is innovation in the way that solar panels are financed. As solar panels have significant up-front costs but deliver a steady stream of future financial benefits a major factor influencing the uptake of solar PV is the availability of financial products which allow consumers to access both low or zero up-front costs as well as a fair share of the long term benefits that flow from solar PV in terms of reduced demand from other sources of electricity and the capacity to export excess energy to other users. Australian firms have the capacity to generate significant export earnings if they succeed in developing and promoting attractive financial products which facilitate the uptake of solar PV.

The success of solar PV in creating jobs, energy and lower prices is causing significant concern for the existing energy industry. Just as the taxi industry is seeking to protect its profits and market share by demanding regulations which stifle the growth of new online car booking services the existing energy industry is seeking protection from renewable energy through regulatory means.

While falling costs and growing consumer support for solar PV will inevitably drive significant increases in market share a potential barrier to the short term growth of the solar PV industry in Australia is the ability of the existing energy industry to secure regulatory protections which impede, or increase the cost of, solar PV installation. If Australia is to benefit from the employment, price, export and environmental benefits of solar PV it will be necessary to avoid the creation of such ‘black tape’.

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