Investment in new wind and solar projects dropped by 64 per cent in the first half of 2025, compared to the same period in 2024, underscoring concerns that Australia’s energy transition is not attracting nearly enough capital.
The worrying dip in investment is detailed in the latest half-yearly market outlook from BloombergNEF (BNEF), which warns that the pace and depth of decarbonisation must be ramped up for Australia to meet its international climate commitments and domestic energy and emissions targets.
It comes amid suggestions that key policy levers like the Renewable Energy Target (RET) and Capacity Investment Scheme (CIS) may be needed well beyond 2030, although on Monday new “stretch” targets and plans for more and bigger tenders were announced for NSW, the country’s biggest state grid.
“In the first half of 2025, Australia saw $556 million of investment in utility-scale solar, falling sharply from $1.6 billion in the same period in 2024,” the report says. No wind projects at all reached financial close over the period.
This is a far cry from the roughly $US59 billion ($A92 billion) BNEF has said that Australia needs to invest some every year between now and 2030 to meet its economy wide net zero target – currently set for 2050.
BloombergNEF says at least eight deals were financed over the past six months, with a total of 586 megawatts (MW) of capacity, the largest being the 339 MW Bungama solar farm and battery in South Australia, which secured $404 million in investment.
The 108MW Fulham solar farm, with a DC-coupled battery, also reached financial close in April 2025. Another five solar projects to reach final investment were smaller than 15MW, the report says.
“Slower activity over the first half reflects the ongoing challenges facing project implementation today,” BNEF says.
“Key transmission projects like the VNI West and Marinus Link are delayed and are experiencing cost overruns. The permitting and grid connection process remains tedious, and social licensing issues are causing significant delays and cost overruns for big projects.
“Additionally, uncertainty over the federal election in May likely contributed to delays in investment decisions.”
The May federal election is also cited as a contributing factor to the complete absence of new wind projects reaching financial close in the first half of 2025 – something BNEF says hasn’t happened since the first half of 2021.
“Investment fell as protracted permitting processes, slow grid expansion, and social licensing issues continued to pose significant headwinds in the sector,” the report says.
But the report also notes that the slowdown in wind farm development has come despite government support for wind being at an all-time high – as compared to the political environment in 2021.
Looking ahead, the report identifies a total of 9 GW of utility-scale solar and wind projects as current under construction around the country – “a significant decrease from projections in the last half.
And BNEF expects another 42.9 GW of new large-scale wind and solar and 18.2GW of behind-the-meter solar to be built by 2035.
Energy storage capacity is also growing rapidly, the report adds, with 9.1 GW of utility-scale batteries currently under construction. BNEF’s base case forecasts energy storage capacity to reach 20.1 GW by 2035.
