A surge in the solar construction market should force less efficient solar EPCs out, research reveals.
Despite an increase in projects entering the pipeline, the utility solar construction sector will lose solar players, data shows.
The latest report by Sustainable Energy Research Analytics (SERA) shows the solar engineering, procurement and construction (EPC) market in Australia is booming.
Some 311 MW is currently in play, with one GW under construction and a further six GW in the advanced design stage.
Existing uncommitted projects are worth more than $14.7 billion to EPC providers.
The fight is on for Australia’s solar EPCs
According to SERA Director Ben Willacy, the opportunity for EPC companies in the Australian solar sector is enormous.
Five major players dominate the current market, a mixture of established domestic engineering firms and recent-entrant renewable companies from Europe.
However, Mr Willacy says there is plenty of scope for a broader selection of solar organisations to step up.
He says around 80 per cent of future project capacity could yet lock in to an EPC partner.
“Competition will intensify in the near term as new players enter the market, sub-contractors step up as full EPC providers, and margins are squeezed to gain market share,” he adds.
“But at these returns, the market will enter a ‘survival of the fittest’ phase.”
Cheaper solar and lower PPAs driving change
SERA notes a number of upward cost drivers affecting the Australian solar construction market.
Mr Willacy says: “Ongoing pressures for lower PPAs (Power Purchase Agreements) and cheaper solar combined with upward pressure on costs are squeezing EPC margins.”
Furthermore, trends pushing future EPC prices up include panel prices, labour costs and grid connection.
“Delivering projects at today’s prices is proving a challenge. Contractors will take a hard look at the current crop of projects to identify opportunities for productivity gains.”
The Australian utility-scale solar market is gaining momentum and real growth potential, SERA concludes.
SERA provides research analytics in Asia Pacific’s utility solar, wind and storage markets.
