Solar photovoltaic became Australia's largest source of renewable energy in 2014, with a cumulative installed capacity of 4 GW, overtaking wind power, which totaled 3.8 GW, according to research and consulting firm GlobalData.
The company's report* states that renewables have become an integral part of the energy policy in Australia and, as a result, the government has introduced new policy instruments and efforts to attract investment in research and development and new projects.
For example, in 2012, the government introduced a carbon pricing mechanism, to support a move to a low-carbon economy. The mechanism provided incentives for the reduction of emissions with a fixed annual price for three years. Although the mechanism was scrapped in July 2014 to support economic growth, tax liabilities for the applicable years have to be met in full.
Siddhartha Raina, GlobalData's Senior Analyst covering Power, says that growth in Australia's solar PV market has been a recent development, and is largely due to policy support from the government, which has often included financial incentives.
However, some regulations, such as National Greenhouse and Energy Reporting Regulations 2008 and the Australian National Registry of Emissions Units Regulations 2011, are currently undergoing amendments, and the Clean Energy Regulator has recently announced that it will hold the second Emissions Reduction Fund auction for carbon abatement contracts.
Raina comments: "The government recently announced the revised Renewable Energy Target (RET) to support emission-intensive industries and slightly reduced the RET from 41 Terawatt hours (TWh) to 33 TWh. Despite this, new renewable energy capacity of 6 GW still needs to be installed by 2020."
GlobalData's report also states that while solar and wind power will remain key contributors to Australia's renewable energy mix, bioenergy is set to become increasingly important.
Raina continues: "While feed-in tariffs and renewable energy target schemes, along with other subsidies and support initiatives, have had a major impact on the solar PV and wind industries, the impact of such programs on biopower and small hydro has been minimal.
"Despite this, strong government backing is expected to promote stable growth in the bioenergy sector. Bioenergy capacity amounted to 573.9 Megawatts in 2014 and is expected to more than treble to 1.8 GW by the end of 2025," the analyst concludes.