The State of Green 2021 in Index

1. Energy sector in Australia 1.1 Grid 1.2 Renewable energy mix 1.3 Ensuring growth 2. PV Solar sector 2.1 Size 2.2 Access to the Grid 2.3 Players 3. Technology trends & pvDesign data 3.1 pvDesign 2020 Australia findings 4. Industry progress and perspectives Energy Sector in Australia The energy industry in Australia has been mainly driven by the importance of coal and naturalgas due to the strong mining industry and the abundant natural resources in the country.

Nevertheless, this tendency has started to shift towards renewable energy sources with some Regions, such as Tasmania or South Australia, already relying heavily on them.

In 2019, fossil fuels electricity generation in the country accounted to 76% of the total electricity generated, whilst renewable energy represents 24% of the total.

Energy industry in Australia

Coal Natural gas Oil products Biofuels Hydro Winds Solar Coal Natural gas Oil products Biofuels Hydro Winds Solar NORTHERN TERRITORY

QUEENSLAND WESTERN AUSTRALIA

SOUTH AUSTRALIA

NEW SOUTH WALES

VICTORIA

TASMANIA Grid

Given the size of the country and the distribution of the population in cities and regions in Australia, there is not just one national electricity market interconnected with the set of states and territories of the country. We can actually differentiate between:

The National Energy Market (NEM) , covering a distance of 5,000km, includes the territories of South 1. Australia (SA), (VIC), (NSW), Queensland (QLD) and Tasmania (TAS). These states, especially the ones with more population density (NSW, VIC and QLD) are heavily dependent on coal. On the other hand, Tasmania and South Australia are the territories with major share of renewable energies which help stabilize the NEM.

The Wholesale Energy The North West 38 small electrical systems 2. Market (WEM) within the 3. Interconnected System of 4. made up of small system Southwest Australia (NWIS) is an micro-networks that Australia Interconnect almost private system to supply rural areas and (SWIS) characterized by its supply the Pilbara mining remote inland low demographic density region. communities spread and abundance of mining across the states of operations. Western Australia and the Northern Territory. Renewable Energy Mix

Investment in renewable energy generation has increased remarkably in Australia over recent years, driven by a combination of factors including:

Government policy incentives

High electricity prices

Declining costs of renewable generation technology

This investment is contributing to a changing energy mix in Australia. Over the past decade, the share of electricity Large scale projects generation from Electricity generation renewable sources has from renewable sources increased steadily. in 2019

Additionally, renewables have passed the 50% in 2019 mark of total generation Increasing Australia’s in the National Electricity large-scale renewable Market (NEM) several energy capacity times and in March 2020, this milestone was not only achieved in the NEM but also on a national scale combining all grid in investment systems. Differentiating by technology type of renewable energies, the most developed is wind power accounting for 35.4% of total renewable energy generated. Wind power is closely followed with solar energies (32.9% of total) including large, medium, and short scale installations and by hydro power (25.7%).

Renewable generation by technology type

Wind 35.4% Hydro 25.7% Small-scale solar 22.3% Large-scale solar 9.3% Bioenergy 6.0% Medium-scale solar 1.3% In terms of most advanced regions on renewables, Tasmania is the state with the highest penetration of renewables (95.6%) driven by Hydropower. Following Tasmania, South Australia has also reached an important milestone for renewable’s penetration by accounting for 52.1% of total capacity.

On the other hand, in terms of renewable generation, New South Wales and Victoria lead the rankings with 12,160GWh and 11,428GWh respectively. In contrast with data of 2018 when total renewable generation reached 48,279 (55,093GWh in 2019), there has been an increase of 14.1% driven by the states of Queensland and Western Australia that increased their renewable generation 4,064GWh combined.

TOTAL GENERATION FOSSIL FUEL GENERATION TOTAL RENEWABLE PENETRATION OF STATE (GWh) (GWh) GENERATION (GWh) RENEWABLES

TAS 10,786 473 10,313 95.6%

SA 15,062 7,213 7,849 52.1%

VIC 47,780 36,352 11,428 23.9%

WA 19,264 15,242 4,022 20.9%

NSW 71,011 58,851 12,160 17.1%

QLD 66,068 56,747 9,321 14.1%

NATIONAL 229,971 174,879 55,093 24,0% Ensuring growth

Australia has some of the best renewable energy resources in the world, but with limited existing network capacity extending to locations with the highest potential. As such, according to the Clean Energy Council, the transmission network continues to be the single largest barrier to renewables development.

To tackle this challenge, the Australian Energy Market Operator’s (AEMO) has identified in its Integrated System Plan (ISP) , that developing Renewable Energy Zones (REZs) to leverage these strong resources will be critical to facilitating new generation and storage capacity in the NEM. As an example, in NSW the government promoted a Central West Renewable Energy Zone as a demonstrator project for coordinated development of renewable generation in Australia. The pilot, although designed for 3GW of firmed wind and solar generation, triggered a massive interest from prospective developers receiving 113 registrations of interest, totaling 27 GW and valued at $38 billion AUD.

The ISP roadmap outlines 33 different REZ areas in NSW, VIC, QLD, SA and TAS with at least 26GW of new grid scale renewables to partly replace Australia’s coal-fired generation. 0 For North Queensland 1 North Queensland Clean Energy Hub 2 Northerm Queensland 3 Barcaldine 4 Isaac 5 Fitzroy 6 Darling Downs 7 North West New South Wales 8 Northern New South Wales Tableands 9 Central New South Wales Tableands 10 Central West New South Wales 11 Southern New Sourth Wales Tableands 12 Broken Hill 13 Murray River (NSW & VIC) 14 Western Victoria 15 Moyne 16 Gippsland 17 South East South Australia 18 Riverland (SA & NSW) 19 Mid North South Australia 20 Yorke Peninsula 21 Northern South Australia 22 Leigh Creek 23 Roxby Downs 24 Eastern Eyre Peninsula 25 Western Eyre Peninsula 26 King Island 27 North East Tasmania 28 North West Tasmania 29 Tasmania Midlands 30 New 31 Tumut 32 Cooma-Monaro Renwable Energy Zone (REZ) 33 Ovens Murray PV Solar Sector Australia is a global leader in the photovoltaic solar sector, not only in large scale systems but also in medium-scale and specially in the small scale sector which accumulates +10 GW of capacity. In total, according to IRENA, the installed capacity of solar photovoltaic is 15.9GW—an increase of 40.9% since 2018 (11.3GW). Size

There were 287,504 rooftop solar installations in 2019, As for those medium scale systems between 100kw which meant the highest rate of installs since 2012 and and 5MW, 2019 was also a record year with more than the third-highest number ever reaching 2.2 GW of 162 MW of new capacity added throughout the year. installed capacity, a 35% higher than last year’s record.

Last but not least, large scale systems have experienced its biggest momentum in the last couple years increasing the cumulative installed capacity by 791% from 315MW in 2017 to 2,807 in 2019. The large-scale solar industry continued its momentum in 2019, with 27 new projects adding 1416 MW of new capacity. This almost doubled the industry’s total capacity in Australia, which is now over 2.8 GW, and its contribution to Australia’s renewable energy generation increased from 3.9% in 2018 to 9.3% in 2019. Additionally, in spite of COVID-19, in 2020 16 new projects were added with 786 MW of new capacity .

GENERATION CAPACITY PERCENTAGE OF RENEWABLE PERCENTAGE OF TOTAL Equivalent number of households TECHNOLOGY (GWh) GENERATION (GWh) GENERATION (%) powered over course of the yeaR

Small-scale Solar 12,269 22.3 5.3 2,669,440

Large-scale Solar 5,141 9.3 2.2 1,118,596

Medium-scale Solar 716 1.3 0.3 155,867

As stated in the last table, based on data of the Clean Energy Council of Australia, the total generated capacity of all photovoltaic systems equal 18.1 GWh, which is 32.9% of the total renewable generation and 7.8% of total energy generation. In 2019, there were 92 large-scale solar or hybrid projects across Australia, of which 65 are under construction or financially committed and 27 finalised during 2019. Only in 2019, large-scale solar projects accounted for the creation of 19.225 jobs for the construction of 13,269 MW solar plants for a total of 24.9 billion australian dollars.

PROJECTS THAT REACHED PROJECTS COMPLETED 2019 TOTAL FINANCIAL CLOSE (COMMISSIONED)

Number of projects 65 27 92

Capital costs 20,514 4,393 24,907 (million of AUD)

MW 11,111 2,158 13,269

Jobs created 14,959 4,266 19,225 Access to the Grid

Access to the Australian market for renewable energy in general and solar energy in particular does not differ greatly from the rest of the international markets. The most common channel through which solar parks are developed in Australia currently are private and, to a lesser extent, public such as REZ areas.

Nevertheless, as simple as the connection process seems, there are important connection congestion in the NEM which have impacted directly on the sector investment. Players

According to data from IbisWorld, there are more than 79 businesses in the sector of solar generation in Australia generating annual profits of 58,2 million dollars.

The companies holding the largest market share in the Solar Electricity Generation in Australia industry include AGL Energy Limited, FRV Services Australia Pty Ltd, Wirsol Energy Pty Limited, Neoen Australia Pty Ltd, Edify Energy Pty Ltd, Enel Green Power Australia Pty Ltd, and Genex Power Limited. Neoen Australia Pty AGL Energy Limited is Edify Energy Pty Ltd FRV Services Australia Ltd is the local one of the country's owns multiple power Pty Ltd is a global subsidiary of Neoen, a oldest companies that generation and developer of French multinational vertically integrates storage assets across renewable energy corporation across the energy Australia. The infrastructure. FRV specialising in supply chain, company operates in operates in the renewable energy including electricity the industry through industry through the projects. Neoen generation and five solar farms, all of Clare, Moree and operates five solar retailing. Some of which have been Royalla solar farms. farms in Australia, AGL’s operations in developed over the with a sixth currently the industry include past five years. in development. the Nyngan and Broken Hill solar farms with capacities of 102 MW and 53 MW respectively. Wirsol Energy Pty Ltd Enel Green Power Genex Power Limited is a global renewable Australia Pty Ltd is the is the developer of energy group, local subsidiary of a several renewable specialising in the global developer of energy projects in investment and renewable energy Queensland and New development of infrastructure. Enel South Wales. Some of utility-scale solar. In Green Power operates their most important Australia, the in the industry projects include their company has several through the Bungala 50 MW Kidston solar solar projects already solar project, which is farm or the 50 MW operational such as the largest solar Jemalong solar the Wemen Solar farm project in Australia project. in VIC (110MW) or the leading to a total Clermont project generation capacity of (89MW). 275 MW. Technology trends & pvDesign data Over the past five years, ongoing research and development has created new solar technologies and made significant improvements in the production, efficiency and cost of solar panels. One driver of investment in large-scale solar generation infrastructure has been the significant decline in the price of solar panels over the past decade. The cost of solar panels in Australia has fallen from over $135 per MWh in 2014-15 to less than $45 per MWh in 2020.

On another note, important technology trends must be highlighted such as the increasing use of bifacial modules , new materials for improved efficiencies, larger solar modules or the use of batteries or synchronous condensers for grid stabilization. pvDesign 2020 Australia Findings

According to pvDesign’s data gathered from more than 200 companies1 with more than 1,500GW simulated in almost 5,000 different projects worldwide in 2020, we can gather the following data.

1 Of the total companies studied, 29 had simulations in Australia Larger site sizes Electrical configuration Average site sizes in Australia in 2020 Interestingly, in contrast to worldwide were 96.4MW, +50% larger than the data, in Australia DC Bus systems average worldwide according to were used in 27.5% of designs (in pvDesign’s data (64MW). comparison to 5.2% globally). String Box configurations were used in 63% of the designs which is 16% more than global data.

String Box

DC Bus System Central inverters over String Inverters

92.7% of designs preferred central inverters, a value much higher than global data (62% of designs). This might be related to the size of the sites. As we just discussed, utility-scale projects in Australia created with pvDesign are larger than average, making central inverters a wiser choice in terms of supply and deployment as they are cheaper than string inverters and fewer of them are required per site.

Central inverter String inverter Tracker Structures are a priority

91% of the designers chose to select tracker structures over fixed in Australia. In comparison to global data, this is 40% higher than the average. This strong difference might be due to the geographical position of Australia. PV industry professionals find that the higher investment on trackers versus fixed structures is worth it considering the energy yield increase.

Uptake of bifacial modules

36% of total simulations opted for bifacial modules over monofacials. Industry progress and perspectives Despite the high investments in the sector that have led to a 45% annualised growth in the past 5 years, recent changes to government policies as well as bottlenecks when connecting new sources to the NEM electricity grid have lowered growth expectations on investment in the near term. Additionally, the outbreak of the COVID-19 pandemic in early 2020 is expected to have a direct negative impact on wholesale electricity prices, driving an estimated 25% decline in industry revenue in the current year.

Nevertheless, over the longer term, the transition towards renewable energy generation is expected to continue, as ageing coal-powered stations are retiring and the process of decarbonisation continues as so do the rise of maintenance costs. State Rise of solar in Integrated System Avalanche of governments other States and Plan (ISP) outlining application for the stepped in by Territories such as the optimal Renewable Energy committing to 0 WA. development Zones (REZ). net emissions by pathway for 2050 to cover the transmission lack of incentives development. by the Commonwealth.

Consolidation of Key global Increased Boom of the using stabilization economic motor awareness on battery sector. methods for the that will drive energy transition grid: batteries and international and raised synchronous investment after concern over a condensers. the global more sustainable pandemic energy Covid-19. production. Connect with us

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