Australia's Solar Industry mourns the loss of Queensland

Across the nation, many solar businesses are feeling the pinch. Not for the first time, business models are being readjusted. The end of feed-in tariff supported installations in Queensland means that the Australian solar industry has been wound back by 25%-33% overnight. Once the SA feed-in tariff is wound back, Australia will enter a new phase - one of overall stability but flat profitability. Businesses that succeed in this new market will be those that optimise their sales and marketing expenditure through targeted marketing and commercial sales.

Previously solar businesses had to face overnight halts to installations as feed-in tariffs closed, then figure out how to cover overheads as the cost of systems plummeted. But the latest release of installation data from the Clean Energy Regulator (CER) reveals the impact of the closure of the Queensland 44c/kWh feed-in tariff. The graph above shows the monthly installation tally according to CER data releases in recent successive months, with the most recent releases shown in darker colour. When interpreting the graph, its important to correctly interpret the apparent turn down in the most recent two months since any data release, as systems can take 12 months from installation to appear in the dataset. For example, June's installation figures appeared to be 7MW when June's data was released, which jumped to 57MW when July's data was tallied, and then to 73MW when August's data was tallied.

However, the most recent data set is different. It shows the second-last data point to be a 45% reduction on the third-last data point. This implies a distinct plunge in installations occurred in July. Even though the actual plunge is likely to be less than a 45% reduction, such plunges previously only occurred when nationally-simultaneous incentive wind-backs (i.e. multiplier reductions) occurred - in which case installation volumes truly fell by 67%. The reason for this recent downturn is the loss of the Queensland market, (which represented 50% of the market nation-wide, and 67% of the market in June). The graph below shows the national data broken out by state. Note that the axes are independent for each state, but the thickness of the line (also showing capacity installed) is consistent across each state. We can see that there was a massive turndown in June in Queensland , but there has also been a consistent slide in Tasmania since June. In spite of the downturn in Queensland, the data in WA, Victoria, SA, NSW, and the ACT shows remarkable month-on-month consistency.

The lower sheet shows information from the most recent CER data release. It identifies the overall market stability over the first half of the year; the exception being the Queensland market. Interestingly it is SA that has gained market share in the second half of 2013, which is the likely result of the closure of its feed-in tariff. However, SA hasn't responded to its feed-in tariff closure to the extent that it responded to a previous wind-back in September 2011, and certainly it is not enough to offset the loss of the Queensland market. Meanwhile NSW is regaining some market share - NSW being the state that best figured out how to sell solar without a Feed-in Tariff

Once South Australia's feed-in tariff is wound back, the solar industry will face a new phase of the solar industry evolution, that of general market stability but flat profitability for the average business. The best strategy to employ during this new phase is to focus business expenditure towards optimal return on investment in sales acquisition, both in residential and commercial sales. Recently, three major Australian PV retailers have approached SunWiz to perform analysis on how their market share is evolving on a regional/postcode basis. This has highlighted areas they are doing well and opportunities to replicate this success in other growth regions, and identified opportunities that they are missing out on - growth areas where their market share is slipping or non-existent. These businesses can now target their marketing towards regions where they are most likely to successfully convert sales, thus maximising their ROI on their customer acquisition costs. Similarly, using PVsell to rapidly identify whether commercial leads are worth pursuing has allowed their sales staff to concentrate on commercial opportunities that are most likely to bear fruit. This educational outcome from PVsell use can mean the difference between a commercial sales operation that is highly profitable and one that drains resources.

Even without incorporating your solar business' market share analysis, SunWiz's Solar Hot Spots interactive opportunity identifier can be used to find opportunities for growth. The image below provides a generic example by identifying where the most volume and greatest growth occurred in Q2 of 2012 - the quarterly installation figures for each postcode is shown below. Unsurprisingly this was in Queensland, with record Quarters occuring in Cairns, Mackay, and two suburbs near Townsville, plus very strong figures for Toowoomba and two suburbs south of Brisbane. Other noteworthy Q2 statistics are included in the section below.

And yes we will see you at All Energy. Indeed, we will be giving PVsell demonstrations and training at 10:30am and 3:00pm each day Melbourne Convention & Exhibition Centre Hospitality Suite 2.204.

Market Synopsis

PV Market

74 MW of PV was registered in August, a slight fall from July's figures.
Registration grew markedly in SA, but still not to the extent of two years ago when their FiT was first wound back
7.5% of systems in SA were in the 10-30kW range in August
For the first time since we started tracking SolarChoice retail pricing, system prices have risen across the board (every system size)

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STC Market

STC prices fell back a little last week.
The Clearing House could move a small amount this quarter (<1M)
Four weeks out from the End-of-Quarter surrender period, many Liable Entities are still well short of their requirements. ClearView can help identify who in the Clearing House will benefit
The weekly and monthly STC creation tally are displayed on our website - check in regularly.

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Solar Hot Spots

Alice Springs was one of the top hot spots in Q2 2013; 25% of its total capacity being installed in that period.
in NSW, Smithfield (outer Sydney) had a record quarter
In SA, Hilton had a record quarter, an average system size of 8.5kW and has only 1% penetration
in Tas, Forest had a blinder, almost doubling its installed capacity and with an average system size of 11kW
Things were more stable in Victoria's hot spots, but Happy Valley added 50% to its installed capacity.
WA was much quieter, but Malaga still managed an average system size of 26kW and has consistent installation levels

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PVsell News

Our PVsell training webinar is available online. Here's what we've added recently:

Four new commercial load profiles that you can use to appropriately size your system to minimise export and maximise profitability
An online help system

We're also in the process of adding more support features.

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SunWiz Activities

In the last months, SunWiz has:

Performed opportunity assessment on a number of potential Solar Power sites for a local council
Performed a solar pre-feasibility study for a museum
Assisted an inverter manufacture in assessing opportunities to enter the Australian market
Delivered custom PVsell training
Researched every major electricity retailers price structure in 2013 across the nation
Assisted with 4x grid connections in the 35-80kW range (one of which came through in hours)
Met with visiting international Solar CEOs
Been so grateful for my health, even while confronted by death in the family and other emotionally challenging times

To learn more about what we can do for your solar business, visit www.sunwiz.com.au

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