Market saturation and increasing grid integration challenges are expected to cause a faster than anticipated fall in new distributed solar photovoltaic (PV) installations in Australia, limiting growth in the country's overall renewable additions, according to Paris-based energy watchdog the IEA.
It revised down its forecast of renewable capacity for Australia over 2023-27 by 12pc from last year, as distributed solar PV additions are expected to consistently shrink over the period, the IEA said in its Renewables 2023 report on 11 January. Annual increases in distributed solar PV, mostly rooftop systems, are forecast to fall from an estimated 2.9GW in 2023 to 2.5GW in 2024, 2GW in 2025 and 2026 and 1.9GW in 2027.
A combination of market saturation, new rules for supplying energy to the grid and falling compensation will affect demand, the IEA said. Distributed solar PV has been the biggest source of additions since 2020 and is expected to remain so until 2026, being surpassed by utility-scale solar PV and onshore wind from 2027 onwards, according to its latest forecasts.
Distributed solar PV is still expected to contribute the most cumulatively, with 13GW of new capacity to be installed over 2023-28 to a total of 32.5GW, according to the IEA's main case scenario. Utility-scale solar PV is next with 10.6GW, bringing capacity to 23.3GW, while onshore wind capacity is forecast to rise by 10.1GW to 22.1GW. Australia overall is expected to add over 35GW of new renewable capacity over 2023-28, including nearly 1.5GW dedicated to hydrogen production that drove a sharp downwards revision for Asia-Pacific.
The IEA has also revised down growth for South Korea, as the country shifted part of its energy plans from renewables to nuclear energy. Upward revisions for Japan and India balanced out the agency's combined forecasts for Asia-Pacific, which remained mostly unchanged from last year.
Australia, Japan and South Korea should prioritise streamlining lengthy permitting processes, overcoming grid bottlenecks and enhancing system flexibility to speed up renewable additions, the IEA said. A lack of new federal incentives and rising investment costs have delayed Australia's development of new utility-scale projects, it said, although it noted the federal government's efforts with the expansion of its Capacity Investment Scheme to underwrite 32GW of new solar, wind and battery storage capacity.
Curtailment has been on the rise since 2017 because of grid constraints, the IEA said, which has affected utility-scale solar and wind operators.
Australia is targeting to reach 82pc of its electricity from renewable sources by 2030, up sharply from around 31pc in 2022. The IEA forecasts the share will reach 49pc in 2028.
