Solar panels

More than 10 per cent of Australian homes now have solar panels. Photo: Justin McManus

Australian roofs now have a solar power generating capacity equivalent to half the Snowy Hydro scheme as consumers react to soaring power prices and sinking prices for photovoltaic (PV) panels.

Some 858,000 homes have solar PV panels with an installed capacity of just under 2 gigawatts, according to the latest data from the Australian Clean Energy Regulator (ACER). At the current rate of take-up, the millionth home will tap into solar power before the end of June next year, said Professor Ray Wills, chief adviser to the Sustainable Energy Association (SEA), an industry lobby group.

Significantly, the growth in demand for solar has largely weathered the slashing of generous feed-in tariff in 2011 — and subsequent dive in orders after the loss of the subsidy — to recover much of its expansion pace.

Intense international competition among suppliers, particularly from China, now means households can expect payback periods of as short as four years, with a typical 1500-kilowatt unit selling for $1500-$2000, Professor Wills said.

"By 2013-14, solar panels will be so cheap that you'll coat every surface that has exposure to sunlight," he said. "You might even throw a coat on your dog."

Residents in the sprawling outer suburbs of major cities may have a reputation for preferring hulking SUVs and expansive "McMansions", but they are also among the fastest-growing purchasers of solar PVs, said Professor Wills, speaking on the sidelines of the All-Energy conference in Melbourne.

Planting a set of panels on the roof is leading to a shift in consumer habits, resulting in average power use falling about 20 per cent compared to households without solar PV.

"People who have installed solar panels for any reason do consider their energy use more closely," he said. "The latest crop is doing so because it makes economic sense to generate electricity from a solar panel. Many are less worried about saving the planet and more worried about the bottom line."

The spread of solar panels to more than 10 per cent of Australian households presents a challenge for large-scale power generators such as EnergyAustralia (formerly known as TRUenergy).

To the surprise of many forecasters, power demand has dropped since the end of 2010. A high dollar has forced some manufacturers to scale back production or shift operations abroad but the uptake of solar PV and the spread of other renewable energy sources such as wind have added to the reduction in electricity demand from the national grid to about 2004 levels.

The energy white paper outlining the federal government's long-term plans for the sector is likely to be released at the end of the month, while other policies are under review, including the target of 20 per cent sourcing from renewable energy by 2020.

Professor Wills, who also works as an industry consultant for the advisory firm Duda & Wills, said pressure from incumbent power suppliers to limit the spread of solar and other renewable energy suppliers will only delay the industry's inevitable transformation.

"If we make the wrong decisions by defending the old market, renewables will still arrive," he said. "It will take longer and in the meantime we'll pay more for electricity than we have to."