London Daily

Focus on the big picture.
Thursday, Oct 02, 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
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×