Solar energy's surge is only just getting started in Australia as utilities join the rush to a source of power that is now far cheaper than new coal plants, a report by the Climate Council finds.
The report also comes as the world's biggest supplier of batteries, Warren Buffett-backed China's BYD, marks out Australia as its second market to target consumers anxious to shield themselves from rising electricity prices.
Solar photovoltaic prices have fallen almost 60 per cent in five years and can now supply electricity as low as $78 per megawatt-hour for large-scale plants. That's close to half the cheapest levelised cost of ultra-super critical coal-fired power, the council report said, citing Bloomberg New Energy Finance data.
The cost of solar power is now below the retail prices of all Australian capital cities, with the exception of Canberra, the report says. The average small-scale solar system has a capacity of 5.4 kilowatts.
But while households have led Australia's take-up of solar PV so far, the next push will come from large-scale systems. There are more than 20 projects likely to reach financial close this year alone. (See chart below of 12 of them).
"It's really starting to take off," Andrew Stock, an energy industry veteran and author of the report, said. The current projects have more than 1 gigawatts of capacity, with a total of 3.7 gigawatts in the development pipeline.
"Solar is really going gangbusters globally," Mr Stock said, noting that new PV installations jumped almost 40 per cent to 73 GW in 2016 from the previous year. "These large solar plants can now produce electricity well, well under the costs of conventional [fossil fuel] thermal plants."
Solar can provide power when demand peaks, which is why EnergyAustralia, AGL and Origin are jumping into the market for utility-scale plants, he said.
While household panels have largely been pointed to face northwards in Australia to maximise midday generation, new large-scale plants are being built to track the sun's trajectory.
"Single-axis tracking will hold up better through to sunset," Mr Stock said.
During the recent record-breaking heatwave in NSW, large-scale solar supplied 132 MW of electricity at the 6pm (AEDT) peak of demand on February 10. Rooftop PV supplied an estimated 291 MW, the Australian Energy Market Operator said in a report released on Wednesday.
At that time, Tomago Aluminium, the largest electricity user in the state, was operating at a reduced load of about 580 MW, as the state struggled to avoid blackouts.
While Australia has world-class solar resources, other nations are so far achieving much lower prices for new solar projects. (See chart below.)
The Climate Council report blames a relative lack of experience in such projects but also higher financing and construction costs.
Whether 2017 can top last year in terms of worldwide solar installations remains unclear, with the Global Solar Council last month saying it expected a tough year before a recovery next year.
Big installers in China and the US were among those likely to curb construction this year.
Bloomberg New Energy Finance, though, predicts global PV will rise to 78.4 GW of new capacity this year and 88.3 GW next year, according to Jenny Chase, the group's head of solar analysis.
India will be among the nations expected to take up some of the market slack, with installations likely to more than double this year from 2016 to 9.4 GW, Ms Chase told Fairfax Media.
BYD, which supplies about 12 per cent of global batteries though its electric car and utility storage businesses, is among the storage companies hoping to grab market share in Australia.
Buffett, the US billionaire investor, holds 10 per cent of the firm.
The company on Wednesday unveiled its range of batteries for households up to larger commercial users, with the smallest size with 2.5 kw-hour capacity likely to start from "under $3000", Julia Chen, a company spokeswoman told Fairfax Media.
BYD is hoping to target households that have lost generous feed-in tariffs that paid as much as 60¢ per KW-hour exported to the grid. Many will now be earning a tenth of that sum or less, and instead will be facing steeply higher electricity bills for any electricity they buy from utilities.
Australia is the second market after Germany that BYD has targeted. Demand for storage is expected to rise to 20,000 to 30,000 units this year, and BYD is aiming to grab 20 per cent of the market, Ms Chen said.
BYD estimates the market opportunity is about 200,000 households already with PV to add batteries as prices continue to fall. That number will swell as more homes add panels.
Technology gains are likely to see energy density levels for lithium batteries continue to fall for another two or three years. After that, cost gains are likely to be driven increasingly by scale savings and other improved manufacturing processes, Ms Chen said.