In part two of an interview with Tristan Edis, Q.Cells Australia Managing Director Oliver Hartley discusses:
Tristan Edis: What do you think are the prospects for commercial sector solar? People have been talking about this for a little while now, but costs have only recently reached a critical attractive threshold for commercial customers. Is this something that you think could be the next boom or what needs to happen for commercial solar to take off?
Oliver Hartley: I hope it’s actually not going to be just a boom-bust again. I hope we’re going to have this commercial sector develop into a very stable sector because it is probably the area where solar at this stage makes a lot of sense.
Some of the commercial customers, particularly the SMEs, do have relatively high electricity costs and obviously their usage matches quite nicely with a solar generation profile. So, I see a very stable market developing there.
A lot of the risk or uncertainty that comes with that market at the moment is still around the debate over the Renewable Energy Target and whether the threshold for getting STCs is brought down from a hundred kilowatts to 10 kilowatts and the potential value and risks associated with LGCs which you don’t get upfront.
Secondly, obtaining a grid connection is still something in Australia that is very difficult and it varies from area to area. A company might have worked out a process for one area and then go into a new area and they are faced with the same problems. So, this is another hurdle which adds costs. Uncertainty always adds costs. And we were talking earlier about reducing costs in the medium to long run and this is certainly an area where we can still improve quite a bit here in Australia.
TE: Do you have any feel for what you think might be the potential size of the commercial sector in Australia relative to residential?
OH: We believe the commercial sector can certainly get on a level that’s almost on par with the residential sector.
TE: You’re thinking that it might be something that would slowly evolve over many years?
OH: Correct. Unless we all of a sudden get a feed-in tariff or something like that, which leads to a big boom again – which is unlikely.
This is going to be a step-by-step process. There will be customers where it makes sense now. There will be a range of customers where it will make sense in half a year’s time, or maybe in a year’s time.
The more we can reduce these additional costs like the grid connection costs, and also the customer acquisition costs, the greater the potential for commercial solar. It takes time to help commercial customers make the purchasing decision, because at the moment they are still hesitant. Nobody has done it in their facility. They’re not yet aware of what risks and benefits are involved. All this drags out the decision making process. All this adds to costs. You have to have more visits, you have to have more phone calls, you have to do more presentations and it all adds up.
The more we get into the commercial space, the easier it becomes and the bigger the group of accessible customers there will be. But this will take time.
TE: You mentioned the need to reduce grid connection costs. Is this an area where there might be almost a process of co-learning between the PV industry and grid operators?
TE: Okay, so what’s the way that we can improve and streamline this process?
OH: The solar industry, but also the industry bodies need to work with the grid operators because I think in general they are not opposed to solar as such. It’s just that they have a responsibility for ensuring the network is working reliably and they take their responsibility seriously.
So we have to listen to their concerns and work with them to get their input on where, from their point of view, solar makes more sense.
TE: And do you think the sort of issues that they’re putting up presumably these are things that have been encountered in the past in say Germany and they’ve got different inverters that you might be able to employ to manage some of those issues?
OH: Absolutely. There is technology that can be deployed, particularly when you then go to the larger ground mounted solar stations, where you have a completely different, more mature technology… technology where, for example, the inverters can help stabilise the grid.
However, I don’t want to play down the challenges. We have probably one of the longest grids – if not the longest grid - in the world. We have a thinly populated country here with some very remote areas even on the grid, or rather on the fringe of the grid. So this cannot be compared to the infrastructure in Europe where we clearly have an over-engineered grid with a lot of people living in a relatively small geographic space with a very stable grid, whilst here in Australia the grid is much more stretched.
So, I don’t want to say just look at Europe and transfer the learnings from Europe over to Australia and it will resolve all problems. It’s more about working hand-in-hand with the local grid operators to find solutions for our local challenges.
Part one can be found here.