Investor confidence in Australia’s clean energy sector improved in the first half of 2020, buoyed by strong and steady policies from state and territory governments and defying global disruptions caused by Covid-19 and an ongoing lack of meaningful policies from the Morrison federal government.
Investor confidence surged to its highest level recorded by the Clean Energy Council’s investor survey, on the back of strong policies from State and Territory governments – both Labor and Liberal – were providing investors sufficient confidence to expand portfolios of wind, solar and energy storage projects.
The Clean Energy Council’s investor confidence index rose to 7.3 in June 2020, compared to a score of 6.1 recorded in December last year.
Since that time, the South Australian Liberal government has reinforced its commitment to reach net 100 per cent renewables by 2030, the Tasmania Liberal government has announced a goal of 200 per cent renewables by 2040, and the NSW Liberal government has moved forward with its plans to create three new renewable energy zones to ensure enough new generation and storage to replace its ageing coal fleet.
The Victoria and Queensland Labor governments remain committed to their targets of 50 per cent renewables by 2030, the W.A. Labor government has moved forward with the redesign of its markets to deal with a new world of distributed energy, the ACT has reached 100 per cent renewables – and plans more – and the NT also has a 50 per cent renewables target.
At the federal level, there remains a lack of any meaningful energy and emissions reduction policy, which still weighs as a major concern for investors.
While every state and territory government has made a commitment to reaching zero net emissions by 2050 or earlier, the Morrison government has refused to make an equivalent commitment, and has worked to short-cut its way to emissions reduction targets.
Additional market interventions, such as federal energy minister Angus Taylor’s pet scheme to underwrite new generation projects has hampered – rather than encouraged – investments because the uncertainty created by the vague proposals from the Morrison government has led to some developers delaying their investment decisions. Grid connections and marginal loss factors also remain a concern.
“State governments are leaning in, and it’s working. There is increased competitiveness following the lead shown by South Australia, Tasmania and the Australian Capital Territory,” CEC chief executive Kane Thornton said.
“Over 80 per cent of the Australian population lives on the east coast, and with that comes the vast majority of the nation’s carbon emissions.”
The barriers to increased investment in the clean energy sector cited included the ongoing challenges around getting projects connected to the grid and under investment in new network infrastructure to address capacity constraints.
Unhelpful government interventions in the energy market, such as proposals from the federal government to build new coal fired generators, ranked highly as a concern amongst clean energy investors, in addition to an ongoing lack of aligned energy and climate change policy at a federal level.
Despite these challenges, the Clean Energy Council’s survey of clean energy sector participants found that most would be looking to grow their workforce over the next 12 months, recognising that there was a strong pipeline of new projects that would commence construction.
Fifty-six per cent of companies surveyed said that they expected to increase their employment over the next year. However, this figure was down from 70 per cent of respondents of the December 2019 survey.
Just 12 per cent of companies said that they expected their workforce to shrink over the next 12 months.
“This is great news coming out of COVID-19, but we also know from our recent Clean Energy At Work report that the industry could lose up to 11,000 jobs unless a strong policy landscape is developed that supports renewables,” Thornton added.
“It’s vital that the investment pipeline can give the renewables business the confidence to invest in the development of solid workforce and training practices.”