New data from the Clean Energy Regulator has shown how the Australian clean energy sector confirms the stunning progress of the wind and solar sector, with record investment in new projects expected to continue beyond the renewable energy target being achieved in 2020.
The data released as part of the regulator’s 2018 administrative report shows the astonishing recovery of renewable energy investment, with new capacity installed surging to a new records of 5,000MW in 2018, more than double the capacity installed in 2017, and the Clean Energy Regulator expects even more will be built in 2019, and in the years beyond 2020.
The record investment came despite, and maybe because of, the concerted attacks on the industry under the Abbott-led Coalition Government that almost crippled the industry, with market fundamentals now driving investment in an industry no longer dependent on government subsidies to underpin new projects.
The Abbott government tried, but failed, to repeal the RET, but succeeded in slashing it from 41,000GWh to 33,000GWh, arguing that the original number would be impossible to achieve. Energy minister Angus Taylor, who vowed to kill the RET when he entered parliament in 2013, has said there is too much wind and solar in the grid. Both have been proved wrong.
The Clean Energy Regulator believes that there are sufficient renewable energy projects that are operating, or currently under construction, to meet the 33,000 GWh Renewable Energy Target in 2020. And go well beyond that thanks to state-based targets and corporate demand.
“The current pipeline of projects that the Clean Energy Regulator is tracking suggests that we could see similar levels of capacity commissioned in 2020 and 2021 as we expect in 2019, though with less certainty,” the Clean Energy Regulator said in its report.
“The strong momentum in new firm project announcements continued in 2018 and early 2019, well beyond the point where it was clear the 2020 target would be met. Hence, it is likely that during 2018 the key driver of new announcements shifted from Renewable Energy Target incentive to commercial factors and state procurement processes.”
Strong investment has seen greenhouse gas emissions in the electricity sector continue to fall, despite emissions increasing across almost all other sectors of the Australian economy.
Following the election of the Abbott Government in 2013, investment in large-scale renewable energy projects in Australia came to a standstill, as investors anticipated the demise of the renewable energy target, following the scrapping of the carbon price. Many would recall the devastating impact on employment in the sector, with 4 in 10 jobs lost between 2011 and 2015.
Bloomberg New Energy Finance estimated, that at the bottom of the slump in 2015, just $207 million was invested in Australia’s clean energy sector, having a catastrophic impact on employment in the sector.
In what felt like an adventure into a bizarre parallel universe, the future of the RET was secured by mining magnate Clive Palmer, who announced that he would oppose the RET’s abolition, making the announcement while standing on stage alongside climate campaigner, and former US vice-president Al Gore.
Australia has churned through three energy ministers in that time, each resisting the emergence of renewable energy in Australia, with current minister Taylor continuing to run scare campaigns over the claimed costs of renewables, and making ridiculed claims about the performance of electric vehicles.
But the RET survived, and spurred on by continued cost reductions in wind and solar technologies, and progressive policies to incentivise more renewables put in place by the States and Territories and strategic investments by the CEFC and ARENA, Australia’s large-scale renewable energy sector has re-emerged, setting new records for investment and the scale of new projects.
Data from the Clean Energy Regulator shows that while the Coalition Government succeed in putting a dent in the renewable energy sector, it was never going to be able to hold the sector back in the long term.
Investment has now recovered in extraordinary fashion, with industry advocate the Clean Energy Council estimating in its 2019 Clean Energy Australia report, that $20 billion in new investment occurred in the 2018 year, double that of 2017, setting a new record for the Australian clean energy sector.
It’s worth stressing, investment in Australian large-scale renewable energy projects has recovered by a factor of almost 10,000% between 2015 and 2018.
However, the regulator sees some challenges to the continued expansion of renewables, with potential constraints in network infrastructure needing to be overcome, and the issue of Marginal Loss Factors emerging as an issue that could undermine the financial viability of new, and some existing projects, as has been reported previously by RenewEconomy.
“In relation to potential ‘headwinds’, there has been much public discussion on grid and connection constraints in a number of areas as well as changing Marginal Loss Factors impacting a number of projects as more power stations become connected in constrained parts of the grid,” the regulator said.
While the regulator is certain the 2020 target will be met, it does not see investment in large-scale renewables slowing down and it sees record investment continuing into the foreseeable future.
Crucially, the Clean Energy Regulator sees investment continuing to grow without being reliant on the additional financial support that has been provided under the renewable energy target to be viable.
Renewable energy projects are now the cheapest source of new electricity generation, and investment is now unlikely to head off the ‘cliff’ that may have feared would happen upon the 2020 renewable energy target being achieved.
“This suggests that 2018 was the year in which commercial factors became a stronger driver for ongoing investment in renewables than incentives coming from the Large-scale Renewable Energy Target.
Large-scale generation certificate prices fell significantly over this period as new generation came online and as the scale of the pipeline of new investment became clearer,” chair of the Clean Energy Regulator David Parker said.
The falling costs of solar haven’t just allowed more households and businesses to install solar, but it has also spurred a shift towards the installation of larger systems. As the regulator’s data shows, there has been a dramatic shift in the size of solar installations, with the average size rooftop system almost tripling between 2011 and 2018.
In 2011, the vast majority of solar installations were smaller than 5kW. By 2018, systems smaller than 5kW are now a tiny fragment of the market, with larger systems dominating as systems become more affordable.
There has also seen substantial growth in the number solar installations at schools and universities, that can take advantage of a large amount of available roof space, and a demand profile that closely matches solar generation during the day.
More than 1,000MW of small-scale rooftop solar capacity was installed 2018, the first time the milestone has been achieved in Australia.
While the improving economics of renewable energy technologies now means that it is the cheapest form of new generation, government policies still play a crucial role in guiding and shaping the transition to a decarbonised energy system. Australia was singled out by the World Economic Forum as being amongst the least prepared to handle the energy transformation.
More renewable generation capacity will be needed as Australia’s ageing fleet of coal-fired generators are retired over the next couple of decades, including the 2,000MW Liddell power station scheduled for closure in 2022. Strong and stable government policy will be needed to ensure the right investment is made in the right places.
One only needs to look as far as the current situation in Victoria to see the challenges that can be created when poorly designed, albeit well meaning, policy goes wrong.