Key things to watch in the Solar, BESS and EV space

Introduction

With 2024 now underway, the solar and sustainable energy sector in Australia is poised for some exciting developments and trends.

In this article, the Enhar team would like to share some industry specific insights about the current state of electrification in the commercial solar, electric vehicle (EV), solar farm and battery storage sectors.

While there are plenty of exciting opportunities for those that take a proactive approach, there are some important challenges to be aware of when developing and building projects. 

Here are the key takeaways for electrification including commercial solar, EVs and broader electrification: 

• Continued growth is expected in the rooftop solar space for the public and private companies to increase business stability, reduce energy costs and add solar as an asset to the balance sheet. 
• Reduced uptake of rooftop solar for councils and universities as they have already hit their electrification targets though additional solar projects are expected to support EV’s and the ‘going off of gas.
• Prices are expected to remain stable as distribution tariffs were recently increased on their 5-year schedule, and no coal-power plants are set to close until 2028.
• Increased uptake of EV’s, especially in fleets and the acceleration in the rollout of public charging infrastructure.

Here are the key takeaways we see for utility scale solar and BESS in 2024: 

• Increased role of battery storage within solar portfolios.
• Increased uptake of multi-day storage and smoothing (greater grid resilience).
• Increasing constraints on land for large scale battery projects.
• Grid capacity constraints are increasing due to a massive volume of applications that are competing for grid capacity. 
• The Australian Government is improving the solar farm and battery storage landscape - Capacity Investment Scheme - $10 billion of new investment and 6 GW of clean dispatchable capacity by 2030.
• Transmission upgrade planning is being challenged by stakeholder concerns - communities are resisting. Wherever transmission upgrade options are green-lighted will be strong targets for development.
• Consumers will ultimately pay for transmission upgrades through network charges.

Commercial Solar

The state of commercial energy

Australia has seen impressive growth in uptake of solar PV systems in recent years with 32.3% of homes having installed a solar PV system and many councils, universities and public buildings have hit their electrification targets, reducing their reliance on the grid and the associated costs. 

Companies during this time have seen the least uptake in solar, while energy prices have increased significantly more than all other markets.

Distribution costs have recently increased at their 5-year interval, however with so many factors at play; inflation, global events (war) in resource rich areas, additional renewables, new energy retailers with competitive prices – the energy market is facing uncertain times. 

Moving forward, there is a delicate balance in play that needs to be managed to ensure grid and price stability. Key constraints we are facing:

• Demand can not increase disproportionate to generation. 
• Generation can not be added at a rate that destabilises the grid. 

As we navigate this transition, individuals and companies that have secured energy generation and storage technologies will have some safety buffer in the years to come.  

Where we are heading

Due to the increasing population, number of EV’s on the road and the gas-ban for new home builds, AEMO expects continued growth in energy consumption. While 2021 and 2022 show reduced consumption due to the covid-19 pandemic, it is expected that affected sectors will see a return to normal levels.

Energy generation is also forecast to grow, however we are seeing a shift in the market participants of solar from homes and government buildings to public and private companies.

• For homeowners, this is due to a decrease in the value of financial incentives (Small-scale Technology Certificates) and reduced capital due to the cost-of-living crisis.
• For councils, universities and public buildings, the reduction in uptake is due to many buildings already having solar PV systems installed, meaning there is less available roof space.

Councils, universities and the like will be increasing their uptake of EV’s and focusing on adding new generation to support the electrification of heating, water heating and cooking appliances. 

With this change comes a major focus in focus to public and private companies, which have an opportunity to reduce their emissions and reliance on the grid, add a solar asset to their balance sheet and buffer themselves from potential instability in supply and prices. 

Public companies such as Bunnings have started getting ahead of ESG curve, aiming to source 100% of its electricity from sustainable sources by 2025. 

Bunnings also generates 30% of their energy for 125 of their 381 stores from solar, meaning there is lots of roof space left to electrify. 

Growth in solar uptake of private companies is also expected to ramp up as they still have ample free roof space for solar PV installations.

Quality and experienced installers can’t keep up with current demand and as more companies begin electrifying their buildings, it is expected that the price of design and installation services will increase. 

Governments, councils and strata apartment buildings have shifted their focus to the next key areas of electrification; transport and heating.

Enhar has seen a huge shift of focus to EV infrastructure which is needed to support the transition to an all-electric fleet. 

And with electrification of heating, hot water and cooking there will be a strong trend in locations with proactive government policies, such as ACT and Vic.

Key Takeaways

Electrification is a challenging process that involves balancing increased demand with increased generation to stabilise costs and the grid.

Councils, governments and universities have added a significant amount of solar PV systems to their buildings and are running out of available space to add additional systems. They have shifted focus to EV’s, adding infrastructure to support all electric fleets.

Public and private companies have begun to shift to renewable energy sources and have begun adding solar PV systems to their buildings. This is expected to continue as solar PV systems enable them to be more energy independent, reduce their emissions.

This is increasing demand for quality commercial scale solar PV experts with proven track records. Costs for commercial grade engineers and installations are expected to increase as more businesses join the electrification race. 

Solar Farms and Utility Scale Batteries

The state of utility scale 

Australia has unparalleled solar resources with the highest solar radiation of any continent. In 2023 the Australian Government set an ambitious target of 82% renewable energy 2030, and various state governments have complimentary ambitious targets.

Coupled with the Capacity Investment Scheme - $10 billion of new investment and 6 GW of clean dispatchable capacity by 2030, investment in Australian Solar Farms and Battery Energy Storage schemes (BESS) have attracted significant interest and investment from local and international players.

As of February 2022, 80 large scale solar projects added 5.8GW of energy capacity to the Australian grid in prime locations, and more investors are lining up to enter the market.

While this is great for Australian power cost reductions, developers are facing tougher paths in the land acquisition and project approvals process.

Suitable land is becoming more scarce with each project that is approved and grid capacity constraints are starting to be reached with the massive volume of applications.

Competition is becoming fierce on both fronts, however there is still substantial room for growth if you know where to look for suitable sites and where the market is heading.

Large scale battery storage has become a hot development market with projects at increasing scales being proposed across the country.

Where we are heading

Enhar has seen a trend of increasing difficulty in the acquisition of suitable land for solar farm and battery projects, and in the number of applications achieving development approval reducing.

Due to the increased competition, strategic expertise is becoming more important to successfully secure new land.

‍Solar and BESS development experts have been through the process before and know the ins and outs. They also have proprietary insights that enable them to get pre-empt where new land and grid opportunities will open up.

For example; transmission upgrade planning is being challenged by stakeholder concerns -  communities are resisting upgrades. This means that locations where transmission upgrade options are actually approved become strong targets for new development.

Enhar also expects to see battery storage play an increased role within solar farm portfolios as well as increased uptake in 2024 and beyond. 

Battery storage is needed to improve grid frequency stability, which is a key issue that stakeholders and regulators in the energy sector are well aware of as we navigate the electrification process.

There are a few key battery storage types to be aware of:

• 4 hour storage to ‘unduck the duck’ (reduce the immediate peak energy generation required to meet demand)
• Multi-day-storage and smoothing across longer time-frames to enable high penetration renewables to be dispatchable.   
• Long duration storage co-located with wind and/or solar generation will become the turnkey solution to deliver low cost dispatchable renewable power at a mass scale

Enhar has seen increased interest and expects continued momentum in battery-only projects. 

Key Takeaways

The Australian Utility Scale Solar sector has received significant interest from investors globally.

As a result more players are competing for the same resources; suitable land and grid capacity, and the game is becoming more difficult.

‍Solar industry experts are aware of this and by keeping their finger on the pulse of the market, they have a significant advantage in both knowing where to look when acquiring new land and how to navigate the development approvals process.

Battery-only projects will start to play a larger part in investors' portfolios as a focus on improving the energy distribution over time and grid stability becomes a main factor.

For expert assistance in securing land, permits and grid connection for BESS and solar farm projects, contact Enhar.

Conclusion

The energy market has many stakeholders and is extremely complex. With so many macro variables and opposing forces at play that require balancing, it is arguably impossible to predict the all the short-term nuances of the transition to renewables with any certainty.

What is certain is that we are headed to a more electric world as humanity weans off fossil fuels. And the roadmap is relatively clear and having a hand in the industry, it's possible to see the shifts in client types and requests, their motivations as well as keeping up to date with relevant changes in policy and general challenges, which are emerging as the market grows and competition for decreasing easy-access to resources increases.

This report completed for the Australian Government does a great job out outlining the landscape and though written in 2011, it has variables models and projections up to 2050.

If you're interested in an on-the-pulse update for a project that you're currently working on, Enhar are here and can assist you with your solar, battery or EV project at any stage.

For commercial solar, BESS and EV projects contact Trevor Ackland: trevor@enhar.com.au

For solar farm and battery projects contact Demian Natakhan: demian@enhar.com.au

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