London Daily

Focus on the big picture.
Thursday, Jul 31, 2025

Why Big Solar is feeling the heat of rooftop panels in Australia

Why Big Solar is feeling the heat of rooftop panels in Australia

The large numbers of household solar panels are reducing demand for power from utility-scale renewable-energy producers.
With its sunny skies and plenty of available land, it’s not hard to see why large-scale solar projects were drawn to Australia.

Yet a rush of household installations has started to play havoc with the economics of those sprawling facilities. Combine that with the struggle shared by grids around the world as they move from round-the-clock power generation to more volatile renewable sources, and the outlook for large-scale solar in Australia looks less rosy.

About one in every four homes in the nation of almost 25 million now has solar panels and that number continues to rise, increasing power supply and lowering consumption from the grid during the middle of the day, when the sun is at its strongest. It has even forced some utility-scale solar plants to shut down during their peak production times or risk having to pay the grid to take the electricity they produce.

“Rooftop solar is an ever-growing risk for its large-scale counterpart,” said Lara Panjkov, an analyst at BloombergNEF in Sydney. “When rooftop solar operates, it reduces grid demand and suppresses wholesale electricity prices.”

BloombergNEF projects a sharp fall in income for large-scale solar in the next two to three years. The average price that plants receive in Victoria state, a market which includes the nation’s second-biggest city Melbourne, could drop as low as A$41 per megawatt-hour in 2022, from around A$140 so far this year.

The government’s subsidy regime also puts big solar developers at a disadvantage, according to Kim Nguyen, head of Australia operations at renewables investor Foresight Group. Incentives for off-grid solar can still cover 30% to 40% of their total cost, although they are being progressively scaled back. Support from the government’s large-scale generation certificates typically amounts to less than 5% of a project’s capital cost, Nguyen said.

Innogy SE, which is building the country’s biggest solar farm to date, is looking at potential solar investments “with more conservative assumptions than a year or two ago,” said Matthew Dickie, the regulations manager at the major German utility’s Australian unit.

One area where he’s looking for change is in the calculation of transmission losses. Under the current system, marginal loss factors -- a measure of how much electricity is lost over power lines -- are assessed by the market operator and have hit solar plants in remote locations particularly hard. Several industry players, including Innogy, are pushing for those losses to be calculated on an average basis across the entire network.

“Despite the room for policy improvement, Australia does have a lot of constants which make it still worthy of investigation, such as great solar and wind resource, a relatively low population density, a strong economy and robust rule of law,” Dickie said.

The growing headwinds faced by big solar have contributed to a drop off in renewables investment growth this year. Investment in new large-scale solar in Australia has trailed off this year but still totals about $7.9 billion since 2015, BloombergNEF data show. Approximately $8.3 billion was spent on rooftop solar in Australia in the period, according to BNEF estimates.

“For so many reasons, the boom in utility-scale solar has gone,” said Stephen Panizza, head of renewables at Sydney-based Federation Asset Management.

It won’t make sense to invest in large-scale solar until it becomes economical to add as much as 6 hours of battery storage, the level at which solar would be able to continue supplying the grid well into the peak evening demand period, Panizza said. That’s still a few years away and, in the meantime, there is more growth potential in wind power in Australia, he said.

Foresight’s Nguyen is not as pessimistic. She remains open to investing in big solar projects, pointing out that it still has advantages over rooftop. Large-scale facilities are more reliable -- they are maintained with much more rigor and attention than your average rooftop panel -- and more flexible, being able to switch on and off rapidly in response to price signals. It’s also more economical to add battery storage to a large solar plant than to each individual household.

There’s little doubt that Australia needs to add substantial renewable generation capacity in the years ahead as aging coal fired plants retire -- the market operator’s latest long-term plan said that more than 30 gigawatts of large-scale clean energy projects would be needed by 2040. Still, with more than 2 gigawatts of solar projects commissioned over the next three years, there are concerns in the industry that some will face significant financial stress.

Marginal loss factors, grid issues and network penalties “are already hurting utility-scale solar owners’ revenue models,” said Panjkov. “Most of these issues are likely to get worse before they get better.”
Newsletter

Related Articles

0:00
0:00
Close
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×