Solar Energy in Australia: A 2023 Market Analysis

Solar Energy in Australia: A 2023 Market Analysis

Last updated on October 10, 2023

The sun is shining bright down under, and solar energy in Australia is booming. According to recent reports, Australia’s solar energy capacity grew by more than  50% last year, and it shows  no signs of slowing down.

By the end of 2023, some estimates project that solar energy could contribute to  almost 22% of Australia’s total energy production.

Why is solar power on an exponential rise  in Australia? Well, for starters, Australia receives ample sunshine.


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    Parts of Australia average over 9 hours of sunlight per day, providing plenty of opportunities to soak up the sun’s rays.

    Australia also suffers from  high energy costs, especially in remote areas, and solar power can help lower bills.

    The Australian government also offers incentives like rebates, grants, and tax exemptions for residential and commercial solar installations to encourage more people to adopt solar solutions.

    This winning mix of abundant sunshine, high energy costs, and government support, put solar energy in Australia on the right track towards  a bright future.

    If you’ve been thinking about adding solar panels to your home or business, 2023 may be an ideal time to take this step and to start benefiting .

    The sun is shining brightly on Australia’s solar energy sector, so take advantage of this opportunity while great  deals and rebates are being offered.

    The Growth of Solar Energy in Australia

    The solar industry in Australia has seen enormous growth over the past few years. According to the Clean Energy Council Solar Report, the number of solar panel installations has increased by over 50% since 2018.

    By the end of 2023, Australia is poised to become a leader in solar energy. The capacity of solar installations across the country is projected to reach over 25 gigawatts, enough to power over 5 million homes.

    The surge in solar is driven by multiple  factors.

    First, the cost of solar panels and the cost of installation has dropped significantly over the past years. Panels that once cost $10,000 now cost a fraction of that. Government rebates and incentives have also made solar costs and expenses more affordable.

    Secondly, environmental concerns are motivating many Australians to go green.

    Solar energy is produced by harnessing the power of the sun,and therefore is responsible for  zero emissions and is a sustainable source of renewable energy.

    Finally, solar energy provides energy security and independence.

    Solar panels on your roof ensure a private  power source and decrease the complete reliance  on the main grid. This gives homeowners more control over their energy usage and bills.

    The future is bright for solar power in Australia.

    Advancements in battery technology, solar efficiency, and energy management systems will continue to make solar energy an attractive option for homes and businesses alike.

    This year  and beyond, solar energy will stand out  as a dominant source of clean, renewable power across Australia.

    Top Solar States and Cities in 2023

    Australia has seen massive growth in solar energy adoption over the past decade, particularly  in certain areas. According to the SunWiz Solar Index Report, the top 3 solar states in 2023 will be:


    Queensland will likely remain the leader in solar adoption, with over 1 million solar systems installed. Major cities like Brisbane and Cairns will continue to see strong solar growth due to high electricity prices and plenty of sunshine.

    New South Wales

    New South Wales comes in second for solar adoption and is on track to pass 1 million solar installations in 2023. Cities such as Sydney, Newcastle, and Wollongong are solar hotspots, with coastal areas especially keen to tap into the abundant sunlight.


    Victoria rounds out the top three solar states. Major population centers Melbourne and Geelong are driving forces behind the solar boom. New solar-friendly policies and rising power costs have homeowners and businesses shifting to  solar at record rates.

    What’s Driving the Solar Boom in Australia?

    The solar energy market in Australia has seen tremendous growth in recent years, fueled by several factors: 

    1. Rising Electricity Prices

    Electricity prices in Australia have increased substantially, by more than 60% in the last decade according to the Australian Energy Regulator.

    As power bills keep increasing, the savings expected from solar power become more appealing. The average Aussie household can save $540 on average per year by switching to solar, according to Energy Matters.

    2. Government Incentives

    The Australian government offers incentives for residential and commercial solar installations under the Small-scale Renewable Energy Scheme (SRES).

    Rebates and subsidies help reduce the upfront cost of a solar system by up to 50%.

    The Renewable Energy Target also requires electricity retailers to source a portion of their energy from solar and renewables, creating further demand for solar installations.

    3. Growing Environmental Awareness

    More Australians are concerned about climate change and are keen  to reduce their environmental footprint.

    By generating their own clean energy with solar panels, people can cut their CO2 emissions and contribute towards creating a more sustainable future.

    A 2019 survey by the Australia Institute found that 81% of Australians are concerned about climate change, indicating strong support for renewable energy initiatives like solar power.

    4. Affordable Solar Technology

    The cost of solar panels and systems has decreased by more than 70% in the last decade, according to the International Renewable Energy Agency.

    It has  now become very affordable for the average homeowner to install solar panels. The upfront costs can be recouped from energy bill savings within 3 to 7 years.

    The combination of rising electricity prices, generous government incentives, growing environmental awareness, and more affordable solar technology has created ideal conditions for the solar boom in Australia.

    Given that the demand for solar energy is expected to continue increasing in the years to come, the future of solar in Australia looks very bright.

    Challenges Facing the Solar Industry

    On the downside, the solar industry in Australia faces several significant challenges that could impact growth if left unaddressed.

    1. Curtailment

    With increasing solar penetration, the electricity grid struggles to handle the influx of solar power during peak generation periods. When there is too much solar power, grid operators are forced to curtail solar output by reducing exports from rooftop solar systems. 

    The Grattan Institute’s 2020 Energy Report found that curtailment could cost solar homeowners up to $2.2 billion in lost revenue by 2030.

    Solutions like increased transmission infrastructure, distributed energy storage, and demand response programs can help reduce curtailment.

    2. Grid stability

    The surge of rooftop solar also impacts grid stability. Traditional power plants provide inertia which helps keep the grid at a consistent frequency.

    On the other hand, solar inverters don’t provide inertia, so more rooftop solar installations mean less inertia.

    The Australian Energy Market Operator (AEMO) estimates Australia will need around 4,000 MW of new inertia by 2023-24 to maintain a secure grid. Synchronous condensers and grid-scale batteries are two options to address decreasing inertia.

    3. Battery costs

    While battery costs have also rapidly declined, storage is still not economically viable for most homeowners.

    The average cost of a residential battery system in Australia is $10,000-$15,000 which can take 10-15 years to pay off through energy bill savings and solar self-consumption.

    As production scales up and technology improves, costs are projected to drop to $5,000-$8,000 by 2025 making batteries more affordable and making the solar + storage combination a more compelling option for homeowners.

    Rising challenges may slow progress, but if there are collaborative solutions focused on modernizing infrastructure, advancing technology, and incentivizing storage, the solar industry will witness  continued growth and will be a major success in Australia’s energy transition.

    By 2030, Australia aims to have over 60% of its electricity produced from renewable sources like solar and wind.

    Meeting these targets will require addressing obstacles and opportunities in a sustainable, forward-thinking way.

    The Outlook for 2023 and Beyond

    The outlook for solar energy in Australia in 2023 and beyond is looking bright According to projections from the Australian Energy Market Operator (AEMO), solar photovoltaic (PV) capacity is expected to reach 30 gigawatts by the end of 2023, over 3 times the capacity  in 2019.

    Residential solar continues to dominate

    The majority of this growth will come from residential solar installations. AEMO forecasts over 2 million homes will have rooftop solar by 2023, up from around 1.7 million in 2019.

    The reasons are clear: solar is more affordable and accessible than ever, electricity prices continue to rise, and homeowners want more control over their energy sources.

    Challenges remain but the future is bright

    Despite its huge potential, solar still faces obstacles like grid integration challenges, transmission constraints, and a lack of comprehensive energy storage options.

    However, with continued reductions in the initial costs, technological improvements, and more energy storage coming online, solar energy in Australia seems poised for strong, sustained growth into the next decade and beyond.

    Key Takeaways

    So there you have it, the solar energy market in Australia is set for massive growth over the next few years.

    With the decreasing costs of solar panels, rising and fluctuating energy prices, and alarming environmental concerns, solar will continue its meteoric rise as a source of renewable energy.

    According to recent reports, over 2 million Australian homes now have rooftop solar panels, a number that will skyrocket to over 4 million by the end of 2023.

    The future is bright for solar in Australia. Government incentives, technological improvements, and a growing desire for energy independence mean solar energy will likely dominate Australia’s renewable landscape for decades to come.

    The sun is shining on Australia, so take advantage today of the savings and environmental benefits of solar adoption.


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      E-Green Electrical is a top tier energy efficiency company based in Sydney. We focus on utilising government rebates to help reduce our clients energy consumption by installing energy efficient solutions. E-Green boasts a rich heritage within the realm of energy efficiency, consistently staying up to date with cutting-edge technologies to deliver optimal results for our valued customers.

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