Solar power is more expensive than wholesale electricity; however, the Australia Institute report found if the RET remains untouched, large-scale solar could compete with gas by 2018.
The future of the RET, which requires 20 per cent of Australia’s electricity to come from renewables by 2020, is uncertain after a government review found the scheme would surpass the target.
Investment in the renewable sector stalled after the Abbott government announced plans to cut the target from 41,000 gigawatt hours to about 27,000.
The think tank report found reducing the RET would stop development of solar, which would then rely on support from initiative such as the Clean Energy Finance Corporation – the future of which is also uncertain.
However, extending the RET to 40 per cent by 2030 would trigger major solar investment and drive down costs.
Solar PV is the next low-cost source of large-scale renewable energy to wind, the report says.