Renewable energy target now overshot by nearly 1GW, says regulator

Australia has already overshot its 2020 renewable energy target by nearly 1GW since accumulating enough completed and committed projects to meet the goal in late August, according to the latest data from the Clean Energy Regulator.

In its October 2019 Large-scale generation certificate market update, the CER said that at the end of September 2019, the accredited capacity for the year so far was 7.3 GW – up from 6.4GW on August 30.

“Since 2016, over 13GW of new large-scale renewable energy projects are generating, under construction, committed or probable to be built,” the report said, noting that recent additions to the pipeline had been driven by smaller players and corporate PPAs.

Of this 13GW, 7.3GW is accredited, 4.3GW is fully financed and under construction, and 1.6GW is subject to power purchase agreements, the data shows.

The CER said that investment in large-scale renewables had continued at a moderate pace in 2019, with around 4GW of new capacity forecast to be accredited for the year, up from 3.5GW in 2020.

“Significant announcements, such as the Coles PPA, suggests new investment may come from large Australian corporate entities and other activities additional to the LRET such projects from equity,” the report said.

The Regulator said that while the LGC (large-scale generation certificate) balance would be tight a the end of the year, it was expecting there to be around 35.3 million LGCs in the market by February 2020, including a small surplus of 7.1 million LGCs.

“It is expected that around 4.7 million of these LGCs may be unavailable for surrender due to shortfall charge refunds and voluntary surrender,” the CER said.

On shortfalls, the Regulator’s said it was still recommending liable entities to defer through paid shortfall, and then to tap into the surplus when it came around.

“LGCs surrendered for shortfall charge refunds are not subject to the vintage rule, this means that entities who intend to surrender LGCs for the refund in February 2020 can use LGCs created and validated in 2020,” it said.

Mid-October LGC spot prices were still quite high, at $44. Forward prices for 2020 and 2021 are forecast at $34.75 and $15.60 respectively.

Other points of note for the month included the observation by the CER that only 19 per cent of projects tracked on its pipeline (since 2016) had been underpinned by the three largest Australian electricity retailers.

“Recent drivers of demand for large scale renewables from PPAs has come from new players, corporate entities and smaller retailers looking to expand their market share,” the report said.

And it noted that mid-scale solar was expected to increase to 200MW in 2019, up from 113MW last year – “a strong area of growth as the economics of behind the meter solar remain strong.”