Australia large-scale renewable investment plunges again to near record low

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BNEF data shows Australian renewables investment down again, with households, businesses accounting for nearly all of it.

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Australian investment in large-scale renewable energy projects fell sharply in the first quarter of 2016, more than six months after the Coalition government promised “certainty” after forcing Labor to agree to slash the renewable energy target to 33,000GWh.

New data from Bloomberg New Energy Finance showed that investment in large-scale renewables – wind and solar – slumped to just $US69 million, falling back to levels seen in the midst of the investment freeze, when the then Abbott government sought to abolish the RET altogether, or seek bigger cuts.

The impact in 2014 was so dramatic that large-scale investment actually dried up completely in the last quarter of that year, but the market is still struggling as utilities avoid contracts and financiers baulk at the lingering uncertainty of the market.

BNEF said unless investment in large-scale assets picked up by the end of the year, there was a real risk of falling short of the large-scale renewable energy target by 2018.

So far, nearly all the investment in large-scale renewable energy has come from projects contracted by the ACT government, and its reverse auction scheme, or through the Clean Energy Finance Corp.

Only one project, the White Rock wind farm in northern NSW, owned by China wind energy giant Goldwind, has committed to construction relying on the RET and market prices. Dozens of other projects are in the pipeline but are struggling to get finance.

bloomberg australiaThis table above (please click to enlarge) shows the pattern of investment over the last few years. BNEF notes that the bulk of investment in renewable energy has come from homes and businesses investing in rooftop solar, and increasingly battery storage.

“The small-scale PV market continues to prop up Australia’s renewable energy sector, now estimated to represent 86 per cent of all new investments,” BNEF said of the latest quarter.
That is also despite a modest fall in the amount of rooftop solar installed across the country, which other groups have estimated to total just over 150MW for the first three months of the year. Battery storage is also starting to make inroads into the market.
Utilities are expected to exhaust their stock of LGCs – large-scale generation certificates – unless they sign new contracts within the next 12 months. Estimates of how much needs to be committed before the penalty price is incurred varies between 2,000MW and 4,000MW.
If the penalty price is incurred, the cost is borne by the consumer, with the money going to government revenue rather than renewable energy projects. There is no penalty on retailers, as RenewEconomy points out in this story.
BNEF also released a report overnight that said Australia will need to lift its ambition in coming years to keep up with its trading partners as they respond to climate science, and increased commitments to the Paris climate agreement.
“In our view, the carbon-clean energy virtuous circle suggests that Australia’s major trading partners could well pledge stronger 2030 emissions reduction commitments at the five-yearly review points in 2020 and 2025,” BNEF said in its analysis.
“Australia – which is essentially a follower on climate policy – will likely follow suit as it seeks to keep pace with peers and retain its place as a ‘diplomatic middle power’.
“Australia’s current emissions reduction target of 26-28 per cent below 2005 levels by 2030 should thus be regarded as a low-case scenario. Australia’s final 2030 target is likely to be higher and somewhere between this and a high-case scenario of 45-63 per cent, which is Australia’s fair-share of burden to limit warming to 2°C.
“Australia’s current climate policy framework is insufficient to meet the current targets, let alone deeper commitments. Market participants should thus expect further policy measures, including in the power sector (to modernise and decarbonise the generation fleet) and the broader economy (to achieve national targets).”
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12 Comments
  1. Andrew Woodroffe 3 years ago

    close old coal plant
    close old coal plant
    close old coal plant

    Until and unless they start being phased out now (not in 2 years’ time, Dr Nahan – but at least you get the idea).

    The term phase out is deliberate, it will take roughly 2 and 1/2 times as much wind plant and 5 times as much rooftop solar to replace coal plant at rated max MW. This will take time. Of course, oldest and dirtest first would be most economic.

    This will be essential to get some 6000MW of shovel ready wind farm across Australia signed off. Interestingly, this will require roughly a million tonnes of high quality steel or so for towers and reinforcing in the concrete foundations, a life line for Whyalla?

    • Vernham 3 years ago

      You can’t save Whyalla when towers and nacelles are built overseas. As for the masses of concrete – isn’t it accepted that concrete is also a toxic substance for the environment.
      And what do you suggest to replace the unreliable production of energy from Wind which cannot be relied on to produce energy when it is needed and at a steady reliable intensity. You cannot build a modern economy on unreliable energy supplies.
      Many countries around the world are not accepting this and are turning off the subsidies to Wind and looking at more reliable methods of energy production, such as cleaner use of coal, as well as the use of gas – and yes the USA us a large amount of the ridiculously termed ‘unconventional gas’ sourced by blasting below the surface of the earth to crack open rock with toxic chemicals, to keep the cost of energy down – do you want that for our beautiful land.

      • Andrew Woodroffe 3 years ago

        Foundations are built overseas? Towers can, and have been in the past, built here. I would expect blades and nacelles to be fully imported.

      • Mathew 3 years ago

        You talk as if new coal power stations do not also require large amounts of steel and concrete in their construction.
        Also the grid load is ever changing and variable but somehow the power has been kept reliable. If we only had coal power plants then the grid would also be unstable, hydro and fast response gas plants keep the system stable when load changes.

        • Alastair Leith 3 years ago

          you talk as if the issue is not an urgent need to address the climate catastrophe marching one step closer every day. GBR is now officially toast. !m SL rise by 2050 if polar ice melt is at a ten year doubling rate (possible according to Hansen et al 2016) tens of metres SL rise by 2100.

          there’s all kinds of ways to stabilise variability and provide ancillary services, that’s why there are now four detailed 100% RE plans for australia that address these kinds of issues.

          http://arena.gov.au/news/pumped-hydro-storage-design-beats-expectations/

      • Alastair Leith 3 years ago

        Towers are built in Australia though, Kepple Price in Portland for example.

  2. Phil 3 years ago

    I became a “Lifter” and not a “Leaner” by going 100% off grid…. 🙂

    The Australian Treasurer in 2014 said to do this , so it must be the right thing to do.

  3. lin 3 years ago

    Just one of many reasons the current government needs to be removed asap.

  4. Peter 3 years ago

    Like Phil I also became a “lifter” but my lifting started 29 years ago and I will never go back near the grid.

  5. onesecond 3 years ago

    Why didn’t Labour just say “NO DEAL” to any RET cuts and stick with it?

    • Alastair Leith 3 years ago

      Wind industry asked them to do a deal with Torries in the vain hope that it would mean some contracts signed to keep them alive. Turned out to be a strategically bad move, just gave Hunt and co something to crow about like destroying carbon pricing and zero contracts signed. The Australian Greens were right to oppose changes to the RET, as history has it.

      The way things are heading big solar is going to start eating some of their lunch when large scale RE does get built.

  6. Tim Buckley 3 years ago

    The Liberal tea party has achieved its aim, holding back the inevitable technology driven transformation of the Australian electricity grid – helping support Liberal donors at the ongoing, long term expense of Australian voters. Time for lobbyist / donor reform to stop this rort.

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