Australia has reached its highest position ever on the Ernst & Young (EY) Renewable Energy Country Attractiveness Index, jumping to third place for the first time thanks to a big boost from its green hydrogen and solar energy export plans.
In the latest edition of the biannual RECAI, which ranks the world’s top 40 countries based on investment in renewable energy, EY moved Australia up one spot from number four in the May rankings, putting it behind only China and the US, in that order.
The report notes a global “surge of interest” in green hydrogen in 2020, from policymakers and investors alike, highlighting its potential to support decarbonisation – particularly for countries with limited potential for their own renewable generation capacity.
But Australia was given a special mention on the subject, with EY’s Oceania power and utilities leader Igor Sadimenko noting on Wednesday that its shift up the leader board suggested Australia was poised to become a green energy exporting leader.
“This is largely due to developers and investors driving renewed growth in Australia’s renewables sector, while the market has ambitious green energy export plans,” Sadimenko said.
These plans refer largely to two “mega projects” highlighted in the 56th RECAI report: Sun Cable’s 10GW/30GWh solar/battery project that aims to send renewable electricity to Singapore via a 4,500km cable; and the 15GW Asian Renewable Energy Hub.
The latter project, backed by Macquarie Bank, Vestas, CWP Energy and InterContinental Energy, is described in the report as the world’s largest wind-solar hybrid project, with plans to generate “vast amounts of renewable energy” to produce green hydrogen and ammonia for export.
“The two mega-projects would elevate Australia to a renewable energy export superpower,” writes Jomo Owusu, director, infrastructure advisory at Ernst & Young, in a breakout article as part of the REACI report.
“But it must still be proven to investors that the projects are profitable and there is the know-how to conquer the complex technical challenges posed.”
Owusu notes that Australian policymakers have already pledged their support for renewable hydrogen, with both the federal and state governments supporting renewable hydrogen pilot programs and trials, and helping to fast-track projects like the Asian Renewable Energy Hub.
“Australia has long been a net exporter of energy, with predominantly coal and gas equaling to around two-thirds of production,” he writes.
“As the country’s energy sector transitions to a low-carbon future, however, it seeks to also transform its exports and become a renewable energy export superpower.”
Australia is also gets a gong from EY for “betting on big battery storage,” as regulators and grid operators begin to realise the important role storage needs to play to allow the smooth shift to renewable energy.
“This year, Australia is set to add 1.2GW of energy storage, more than double last year’s total … as developers look to maximise returns from their wind and solar projects,” says Owusu.
“Power prices look set to drop with the country’s trailblazing battery storage expansion,” he adds.
“Amid these favorable conditions, the costs of energy storage systems are expected to decline by 27% over the next five years.
“By 2025, the levelised cost of electricity of solar-plus-storage and solar-and-wind-plus-storage are expected to be lower than that of gas plants, which should mark a tipping point for Australia’s renewables sector.”
But the view is not all rosy, of course. The EY report also notes that problems around price volatility and grid stability could “cloud the picture” for renewables, if solutions are not found to bolster system strength and network capacity.
“While developers and investors are driving renewed growth, and ambitious export plans lie in the pipeline, the sector is facing headwinds on grid stability and price volatility,” says Owusu.
“Renewables projects have been held back by grid bottlenecks and have faced the risk of radical curtailment because of insufficient network capacity and system strength.”