Australian wind, solar investment hits record high as NEG threatens to push it off a cliff

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The race to meet Australia’s large-scale renewable energy target has helped drive record investment in 2017, says BNEF. But the RET’s fulfilment could also see investment go off a cliff, with only the Coalition’s proposed National Energy Guarantee to cushion the fall.

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Despite the Coalition’s best efforts to pour cold water on Australia’s transition to a low-carbon power network, things are really hotting up in the clean energy sector.

Latest data from Bloomberg New Energy Finance reveals a “record-smashing” year for investment in solar and wind in Australia in 2017, totalling $A11.2 billion ($US9 billion) and propelling the nation to 7th position on the world leader board.

Driving this tidal wave of investment in the Australian market – a 150 per cent improvement on 2016, according to BNEF – has been the industry scramble to meet the federal government’s Large-scale Renewable Energy Target, as well as the groundswell of consumers seeking solutions to rising power prices.

Standout figures from the BNEF Australia report include $US7.5 billion investment in 4.2GW of large-scale projects, up 222 per cent from 2016; and $US1.5 billion investment in small-scale clean energy, an 18 per cent improvement on the year before.

“2017 was a breakout year for the Australian Clean Energy sector. Total investment in clean energy in Australia rose to a record $US9 billion, smashing the previous record of $US6.2 billion set in 2011,” said Leonard Quong, a senior analyst with Bloomberg New Energy Finance in Sydney.

But just as the race to meet the RET – 33,000 gigawatt-hours of additional renewable energy generation by 2020 – has helped drive the current boom in clean energy investment, its fulfilment could see investment go off a cliff, with nothing but the Turnbull government’s proposed National Energy Guarantee to cushion the fall.

Says Quong: “2017 will likely mark a peak – investment will begin to taper over the coming years unless there is a significant change in government policy.”

The issue, explains BNEF’s head of Australia, Kobad Bhavnagri, “is that the NEG, as currently devised, is slated to achieve just the 26-28 per cent emission reduction target by 2030.

“For the power sector alone, that is a very weak target. …By our calculation, the NEG would require only about 1.5GW of large-scale renewable energy to be constructed over the coming 10 years to achieve the 26-28 per cent target.

“So what’s required is a more ambitious emissions reduction target under the NEG, or for state governments to continue to develop policy to ramp up investment,” Bhavnagri told RenewEconomy in an interview.

In particular, he added, the focus would be on Queensland and Victoria – two states that have “already been a sort of lifeline to the industry.” Other states, namely NSW, would have to lift their game.

But it might not have to come down to the states, going it alone.

Bhavnagri has not written off the possibility that the Coalition will come to the party on more ambitious, longer-term emissions targets – not just to drive investment in renewables; not just because the growing policy chasm between Canberra and the states is starting to make Malcolm Turnbull look really bad; but because that is what Australia signed up for when it joined the Paris climate accord.

“I think this is a key thing to watch in 2018,” Bhavnagri told RE. “Because every state and territory in the NEM has signed up to targets (more ambitious than the federal government’s).

“States should be throwing their weight around the COAG table and only signing up to a NEG if it ups ambition on a pathway to net zero emissions by 2050,” he said.

“That’s the only viable option,” he says, if Australia is truly committed to the global climate goal of restricting warming to less than 2°C.

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13 Comments
  1. john 1 year ago

    I think regardless of Federal policy the investment in RE will power on regardless why?
    Because it is cheaper than any other source of power expect companies to go into agreements with developers to deliver them power expect States to do the same.
    I expect to see more wind built on land and at sea I expect to see solar during the day and Concentrated Solar and Storage to be built all over the grid together with pumped hydro both with Solar and with Wind.
    I think this is unstoppable and the more built the cheaper the next contract will be.

    • Heinz L Dahl 1 year ago

      Yes John, agree with you. As the cost of renewable energy continues to reduce, more demand pressure will increase. The UNSW PPA recently signed for 15 years from large scale solar trend will continue & increase!

  2. Aluap 1 year ago

    Do the governments of other countries try to hold back economic progress like the Turnbull government does? What do the conservtives and lobbyists have on Turnbull? Is he a crossdresser or a psychopath or a child molester? Is he being blackmailed? Why does he try to hold back the tide like this? I can see him retired and being asked by his grandchildren “Poppa, what were you doing in 2018? Did you lead the revolution?

    • Roger Brown 1 year ago

      Poppy , why did you buy a very Large Pink House so close to the water and why didn’t the nasty insurance company , not pay out , on your lost house and land ?

    • neroden 1 year ago

      In answer to your first question, yes, Trump is trying to hold back economic progress in the US, and just like Australia, the states are taking the lead. And May is trying to hold back economic progress in the UK, with middling success. And Merkel is subsidizing lignite in Germany. And worst of all, Rajoy has quite succesfully killed rooftop solar in Spain with an insane “tax on the sun”.

      • Paul 12 months ago

        Leaders are holding back progress because of their commitment to their lobbyists (corruption). States are driving the demand for change because they can no longer ignore the screams of constituents desperate to save not only their nation, but their planet. This in turn will create a whole new technological revolution and invigorate economic resurgence. Only This time it will be sustainable.
        WAKE UP PEOPLE , THIS IS THE ONLY INHABITABLE PLANET AVAILABLE.
        THERE ISNT ANYWHERE ELSE TO GO! ALL THE MONEY IN THE WORLD ISNT GOING TO CHANGE THAT. HOW LONG DO YOU THINK WE HAVE LEFT….20 YEARS? 40 MAYBE? …….HOW OLD ARE YOU NOW…?

  3. orko138 1 year ago

    Soooo, NEG pushes investment ‘off a cliff’, but also NEG ‘to cushion the fall’.

    Mixed messages much??

    • Peter F 1 year ago

      Typo investment falls off a cliff because of the end of the fulfilment of the RET

      • john 1 year ago

        There is so much more investment so much for your fall of a cliff

    • nakedChimp 1 year ago

      BNEF are bankers – bean counters – at heart.
      Anything that slows down – read: stagnating growth rates or god forbid sinking growth rates – are like red lights of doom for them.

      With the RET drawing to an end, the expansion and growth will slow down and the whole RE business stagnates or even shrink a bit.
      Very very bad for bean counters.
      Anyone else in the industry will probably cope in this situation though, as the margins will be able to buffer this and it’s not a complete shut down = i.e. the cushion effect by the NEG.

      But if your business is money, lending it to projects with ever increasing sizes to increase the amount and give you ever bigger returns.. well, bleak times ahead.
      If liquid money would just work at 0% interest he, orr even negative rates..
      How would the world look like then?
      Imagine how relaxed everybody could be.

  4. Peter F 1 year ago

    I alternate between pessimism and limited optimism. The current generator linked storage proposals by Neoen, Windlab, DP energy and Lyon will be cheaper than peaking gas anyway so where there is competition with gas, renewables + storage will still be installed. As there is still 8GW of gas on the system that is equivalent to 1-2GW of renewables +storage per year.
    Domestic and C&I will continue unless the price of grid supplied electricity actually falls 20-30% so that will continue at 1-1.5 GW per year

    Then old coal and gas plants will become increasingly unreliable. With all this competition, the marginal coal plants whose CF falls below 35%, or which are now forced to buy fuel in the spot market or which need major work for life extension will close, forcing prices up again and restarting the cycle.

  5. RobSa 1 year ago

    AU$7.5 billion in clean energy spending in Australia is amazing.

  6. Aluap 1 year ago

    What an awful Coalition government we have, and possibly corrupt given the lack of rationality on renewables.

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