Australia continues to be one of the most active markets globally for residential solar but a new report says the rooftop solar potential of the nation’s commercial and industrial (C&I) buildings remains largely untapped with the sector facing “substantial” barriers.
An estimated 22 GW of rooftop solar capacity has been installed atop Australian households but the Institute for Energy Economics and Financial Analysis (IEEFA) said only 5.6 GW of capacity has been rolled out across the country’s C&I sector. This includes capacity installed at sites such as factories, warehouses, retail stores, schools and hospitals.
In its Unlocking the clean energy potential of Australian business rooftops report, the IEEFA said that the “significant market potential and benefits” of C&I solar, annual installations have flatlined in recent years after an initial growth spurt in the market in the mid-2010s.
“At about 600 MW per year, annual installations in the C&I solar market over the past few years have substantially lagged behind the roughly 2,500 MW per year the residential sector has recorded in the same period,” the report reads.
The IEEFA report shows the technical rooftop potential for solar across the Australia’s C&I areas could be close to 40 GW, and once agricultural areas are included, this could exceed 80 GW by 2050. The independent think tank however warns that some forecasts indicate the figure could fall well short of that potential with CSIRO suggesting slow growth to just 17 GW by mid-century.
The report identifies four distinct barriers to C&I rooftop solar and storage uptake including distorted business-level investment frameworks, with solar and storage projects in businesses are often too big to qualify for residential incentives and too small to qualify for utility-scale incentives.
The report also highlights “complex and inconsistent” network tariff structures, “fragmented, slow and unpredictable” grid connection process, and an “uneven playing field for network services.”
Johanna Bowyer, lead analyst of Australian electricity at IEEFA and report co-author, said these barriers are preventing the C&I solar sector from reaching its full potential at speed and left unaddressed “will continue to constrain investment, slow down uptake and leave the full potential of C&I solar and storage unrealised.”
The report recommends a set of solutions to help overcome these hurdles, including improved incentive schemes, reviewed and standardised network tariffs, and a streamlined grid connection process. It also calls for a review of the economic regulation of distribution networks to examine the potential for non-network solutions such as distributed energy resources to compete with traditional poles and wires investment.
“These recommendations offer a set of solutions to enable the C&I sector to be scaled up at pace, helping serve demand as coal exits, and supporting Australia in attaining its emissions reduction goals while reducing energy costs for businesses,” Bowyer said.
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