Up to 50% rooftop segment decline likely

Australian solar installers are likely facing a severe short-term market downturn on the back of the Covid-19 pandemic. While installation rates have remained robust in the first six months of 2020, Cornwall Insight consultant Ben Cerini says an initial decline in the small-scale market segment of up to 50% over the next 12 months is expected.

“The forecast is based on our assessment of where consumer sentiment is,” Cerini told pv magazine Australia. “Given where the economy is going at the moment that is probably a reasonable assessment.”

Cerini notes that while Clean Energy Regulator (CER) rooftop array registration data to date suggests that the installation rate has remained strong over the first quarter of 2020, that a significant downturn is to be expected.

“The CER figures suggest there hadn’t been a significant decline in registrations, but given consumer sentiment there may have been some people who were already committed to doing solar that might not push through [with an installation] over the rest of the year.”

The Cornwall analysis echoes the findings of a survey conducted by pv magazine Australia and Green Energy Markets at the onset of the Covid-19 lockdowns, with industry participants reporting that customer enquiries had fallen between 25-50%. The survey was conducted over the first week of April 2020.

Beyond householders, who may have lost their job or faced reduced working hours, small businesses that were considering installing solar will also likely be doing it tough and put PV plans on the backburner, suggests Cerini.

“I can’t imagine in the commercial and SME space there will be a lot of businesses putting capital expenditure into solar,” says the Cornwall consultant. “There is significant amount of pressure on small businesses in particular – and their recovery will be longer than the ability of people to get back into employment.”

If there is an upside to the downturn, it is that the market segment went into the Covid-19 downturn in robust health. Installation rates early this year were approaching 30,000 a month and are set to fall to around 14,000 over the next 12 months – according to the Cornwall forecast.

“The number of installations over that period is going to take a significant hit from where the industry has been,” says Cerini. “But it won’t be negative 50% over the next two years. As the economy recovers, we expect rooftop PV installation will also recover and more people will install solar again, up to the point of around 20-30,000 installations per month.”

There have been indications that residential electricity consumption has increased over lockdown periods. While solar’s ability to insulate some consumers from the resulting bill shock, the fundamental reality of the economic downturn is set to bite the segment.