Solar Boom 2.0

Solar Boom 2.0
If you’ve ever been in business, you’ve likely heard the axiom ‘80% of sales come from 20% of your clients’. Known as the 80/20 rule, the Pareto Principle, or the Principle of Factor Sparsity, states that for a given series of events, 80% of the outcome is generally generated by 20% of the causes. It’s one of those strange mathematical equations which inexplicably finds its way into many facets of life, throughout business and nature.

Microsoft noted in their software development that by fixing the top 20% of reported bugs, 80% of the related errors and crashes in a given system were essentially eliminated. The company also discovered that - in a general sense - the hardest 20% of the code required to for a piece of software took 80% of the allocated time to write, while the easier 80% of the coding took only 20% of the time.

A similar pattern can be seen in economics, where the richest 20% of people on the planet own approximately 80% of global wealth. In the US in 2018, approximately 80% of the county’s Federal Income Taxes were paid by 20% of the population. Even in dieting, it’s commonly known that 80% of weight-loss comes from what you eat, and only 20% from exercise – a fact I conveniently ignore every time I’m ordering a pizza.

In fact, in almost every facet of business you can find some correlation to this rule - from the output and efficiency of your staff, to the effectiveness of your sales - it lingers as an unseen force in the background, tending not to stray from that ratio too far. Yet one area it can’t be found is the Australian solar construction industry, where the top 20% of companies have only a 30% market share.
With such a vast array of competition in the Australian Energy Market - particularly when you take into consideration the affordability of solar, ease-of-access for any business with enough vision and drive to participate in the ever-expanding market, and the demand for renewable energy solutions both on a residential and commercial scale - the robustness of the solar installation industry simply doesn’t accommodate the oligopoly style arrangement from which the retail energy sector suffers. This is likely due to the 2012 solar boom, where the plentiful work enabled businesses entering the solar installation market to work together constructively for communal growth – yet even with the massive uptake of installations and ample work available, the industry is not without its casualties, as 2018 saw Australia’s largest PV installer True Value Solar exit the market, accompanied by Flex.

Even so, the Solar Boom 2.0 is upon us, and it’s an industry that shows no signs of wavering through the fog of climate change denial and the political quagmire oozing out of Canberra. A few of us prematurely pondered that policy changes - such as the introduction of the terribly written first iteration of the NEG – might do enough damage to put the brakes on the whole machine, yet even in the face of adversity, the industry continued pushing new boundaries, so much so that according to the Solar Industry Year in Review report released this week by SunWiz, 2018 convincingly smashed previous records for Australian PV installations.
"With 55MW of new solar installed in December alone, and November experiencing a record capacity of 177MW, its difficult to see the industry slowing down any time soon."
Incredibly, of the 25 largest solar farms currently in operation nationwide, 14 of them were commissioned in 2018, inclusive of the now-largest solar installation in Australia; the 189MW installation located at Colleambally, and over 2 million residential PV systems.

An interesting change which the market experienced in 2018 was the almost unanimous growth nationally. Historically, national growth of the solar sector has been supported predominantly by the growth of one or two individual states; in 2018 however, the majority of states experienced highly successful expansion, with 4 of the states registering higher than 60% increase for the industry, inclusive of the ACT which hit 111% growth for the year.

South Australia - the Australian Energy Market’s poster-child for renewable energy uptake, saw the state reaching a mammoth 43.4% of energy generation for 2018 coming from renewable energy sources, being Australia’s second largest installer of sub-100kW installations, contributing 400,000 new residential and small business solar systems to the network.
So where does our emerging, Paringa based business factor into this? Australia-wide, Yates Electrical Services ranked as the 7th largest producer of Large Generation Certificates for systems greater than 100kW, and 12th for systems greater than 10kW. The South Australian battery rebate also recently kicked off and the expectation is that delivery of storage solutions in South Australia for 2019 will be approximately three times more than the Tesla battery.

With over 10GW of PV installed in Australia in 2018, 2019 is definitely shaping up to be one interesting year.

About the Author

Patrick is the Marketing and Communications Manager at Yates Electrical Services. When he's not designing stuff and writing stories, he performs as an acoustic soloist and spends time with his beautiful little family.

Patrick also likes long walks on the beach, sewing, and photoshopping himself to look like an Avenger. He really wishes he was an Avenger.