Australia’s states are seen as the driving force behind the country’s shift to renewables, given the lack of policy at the federal level. But how are the various state governments of Victoria, New South Wales, Queensland, and South Australia tracking against their renewable energy or emissions targets?
In this article we take a good look. The longer term trend suggests that the eventual retirement of coal power stations will lead to a rise in wholesale power prices and then investment in new renewables capacity (and in some cases storage), but over the shorter-term in the next few years we are faced with collapsing wholesale electricity and LGC prices and a grim outlook for new large-scale renewables investment.
In the absence of a federal mechanism to drive new renewable capacity or early coal exit; state government targets and policies are likely to be crucial to supporting new investment.
We estimate that in total, NSW, Queensland, and South Australia will need around 7.95GW of new capacity to meet their 2030 targets. Victoria and the ACT will meet their targets based on projects with existing contracts.
Tasmania’s target was not examined given it appears to be dependent on other governments either funding another interconnector or creating demand for Tasmania to export more power.
Table 1 summarises each state’s targets and the remaining generation gap to meet them. It shows that in total 21,227 gigawatt hours (GWh) of additional generation is needed. NSW has the largest task of all the states, followed by Queensland.
If we assume half of the demand is met by solar and half by wind then a further 4,890MW of solar farms (AC-rated capacity) and 3,460MW of wind farms are needed.
The ACT Government has announced it has already met its 100% renewable energy target, through contracting of new renewable energy supply. It has just announced the two winners of its most recent auction, which will ensure that as ACT electricity demand grows with electrification of sectors such as transport, it maintains the 100% renewables share.
Victoria will meet its renewable energy target assuming Yallourn power station retires by 2030
Victoria is expected to meet its 2030 target of renewables representing 50% of supply (note this is different to other states’ targets which are relative to demand) without any further initiatives beyond its already announced next 600MW contracting round.
The 600MW contracting round, in addition to projects already under construction or with power purchase agreements (PPAs) in place, are expected to deliver a bit over 30,000GWh in 2030, post transmission losses.
So, in 2030 Victoria will reach a 56% renewable energy share, up from an expected 30% share this year. Table 2 details our estimates of the various sources of renewable generation in Victoria between 2020 and 2030.
It is worth noting that a very large part of the reason Victoria is expected to exceed its target is that rooftop solar generation is expected to grow threefold between now and 2030, and we expect the Yallourn brown coal generator will close faster than currently planned.
Queensland needs another 6,081GWh of renewable energy to meet its 2030 target
Queensland will need new investment in renewable energy to generate another 6,081GWh to meet its 2030 target of 50% of electricity consumption. This is in addition to the 1400MW of new renewable generation CleanCo Queensland has been committed to either build themselves or contract from others.
Table 3 details our current forecasts of likely renewables generation inclusive of projects with PPAs that are not yet committed and assuming CleanCo meets its 1400MW target. This suggests that by 2030 Queensland will reach 40% renewables as a share of demand, double the expected share of 20% this year.
South Australia needs another 1,509GWh to meet its 2030 target
South Australia is within reach of its renewable energy target of 100% net renewable energy by 2030, but needs a further 1,509GWh of generation.
We interpret 100% net renewables to mean that over the course of the year total renewable energy generation (including that exported to other states) will be equal to state electricity consumption.
Current projects underway put it on track to 13,232GWh of renewable generation by 2030 – equal to 90% of state electricity consumption.
South Australia benefitted from early strong renewables investment underpinned by the RET and a favourable wind and solar resource and is on track to generate an amount of electricity equal to 61% of SA consumption this year.
New South Wales needs another 13,637GWh of renewables to meet its 2030 emissions target
As shown in Figure 1, we currently project renewables in NSW will supply 24,906GWh of generation by 2030 which is equivalent to 35% of NSW consumption, up from a share of around 19.8% this year. The state will need a further 13,637GWh of renewable energy to meet its emissions target of 35% below 2005 by 2030.
As NSW does not have a renewable energy target, the state-wide emissions target was converted to an emissions budget for electricity generation emissions. Based on the emissions target – 35% below 2005 levels – NSW cannot emit more than 103.6m tonnes across all sectors of the economy.
We estimate non-energy industry emissions at 75 Mt CO2-e. Therefore our 2030 budget estimate for energy industries, which includes electricity, is just 28.6 million tonnes CO2-equivalent (Mt CO2-e). Allowing 5 Mt CO2-e for non-electricity fuel combustion, this implies a budget for electricity emissions of 23.6 Mt CO2-e.
Fossil-fuel generation will need to contract to meet this budget. We assume this allows for 25,535GWh after the retirement of Liddell and Vales Point, with reduced output from Eraring and also gas-fired generation.
Table 6 shows that the 25,535GWh of NSW fossil fuel generation, as well as 24,906GWh from existing renewables projects and rooftop solar and 7,148GWh from Victorian imports there is a remaining supply gap of 13,637GWh to meet 2030 demand.
If NSW is to reach its emissions target this must be met by additional NSW renewable energy generation.
This article is an abridged version of an Insights Paper from Green Energy Markets. Visit greenmarkets.com.au for the full version, including more detailed assumptions. Tristan Edis is Director – Analysis & Advisory and Sarah Morton is Senior Analyst, Green Energy Markets.