This part of the energy economy has so far been immune to COVID-19
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Recession-busting stocks are usually in sectors like telecommunications and health, which has development timelines so long a months-long crisis may barely register.
But solar is looking increasingly like it too might be recession-proof — just not the part of the sector that gets all the headlines.
There are three parts to the solar industry: large scale farms that are at battling with the Australian Energy Market Operator (AEMO) for grid connections; smaller off-grid projects designed to support remote telecommunications towers or communities and are becoming interesting to remote mine sites; and rooftop solar.
Despite bushfires and pandemics (as WHO upgraded the COVID-19 outbreak to overnight), rooftop solar still hit records in February, according to data from solar statistician SunWiz.
And consultant Wood Mackenzie says off-grid solar is booming in emerging markets.
SunWiz found that while registrations of large-scale generation certificates were falling, meaning fewer projects were being finalised, registration of small systems of 0-100KWh were at record levels in February, according to RenewEconomy.
February registered capacity hit 218 megawatts (MW), led by installations in Victoria.
While demand from Australian households and businesses may remain strong, supply may not be able to withstand coronavirus however.
China manufactures the majority of the world’s solar panels, and the fallout from its mass industrial shutdown that was designed to stop the spread of coronavirus is yet to be fully felt.
There is a subsection of ASX companies that operate purely in the off-grid power space and are not exposed to any of the regulatory turmoil with AEMO.
Generally these consist of solar, the cheapest form of small-scale power generation, and battery backup.
Wood Mackenzie analysis shows $2.1bn was invested by companies into off-grid energy access between 2010 and 2019, globally.
“The market for off-grid renewables holds a lot more promise beyond lighting unlit households or reducing costs and fuel variability for remote, diesel-dependent industries; it represents a fundamental and dramatic evolution in the utility business model towards customer-centricity,” Benjamin Attia, Wood Mackenzie senior research analyst, said.
“Off-grid deployments will take an increasingly larger bite out of present and future power demand on the grid, particularly where systems and incomes are large enough to support modular system upgrades over time.”
Wood Mackenzie says the boom in low-cost renewables has made solar PV, increasingly combined with battery storage, “highly convincing” when pitted against costly and polluting diesel for commercial and industrial demand applications.
“The last decade saw the birth of a trillion-dollar market opportunity but the 2020s will reveal the true pace of change,” Attia said.