The Australian clean energy industry is finally “on the verge of a major breakthrough” according to the Clean Energy Australia Report launched by the Clean Energy Council this week, which highlighted the industry’s record-breaking 2017 in terms of investment and rooftop solar installations.
Clean Energy Council Chief Executive Kane Thornton launched the report on Wednesday, which provides a comprehensive overview of the state of Australia’s clean energy sector and the latest key figures and statistics on the national energy market. Specifically, the Australian renewable energy industry saw investment worth over AU$10 billion in 2017 for large-scale projects, which is expected to deliver 5,300 megawatts (MW) worth of generating capacity and 5,750 new direct jobs. This is in addition to the 700 MW of new large-scale renewable capacity added in 2017.
“Perhaps most significantly, the large-scale renewable projects either under construction or which had attracted finance add up to more than seven times the amount of work completed in 2017,” explained Kane Thornton. “These 50 projects add up to 5,300 MW of new capacity and 5,750 direct jobs.”
“There are now enough projects in the system to meet the 2020 Renewable Energy Target (RET). Given we were only about halfway to the large-scale target at the beginning of 2017, it shows the remarkable level of deal-making and project activity during the year. However, it also shows that long-term bipartisan policy has been critical for investment in the energy sector, and that policy certainty beyond 2020 is becoming increasingly urgent.”
It was also a record year for the country’s rooftop solar sector, which installed 1.1 GW worth of new generating capacity in 2017 — of which 12% included a battery, up from 5% the year before. There was also impressive growth in the medium-scale solar sector as well, with 131 projects adding 53 MW of new capacity.
Despite impressive figures for investment and development, the share of renewable energy in the overall energy mix fell marginally, from 17.3% in 2016 to 17% in 2017. This was due primarily to lower hydro generation than in previous years due to reduced rainfall in key catchment areas.
All of which creates a very topsy-turvy picture for anyone new to the Australian renewable energy industry, which has suffered under apathetic and outright-hostile Federal governments for several years.
“The record amount of clean energy investment in 2017 was the inevitable result of the Independent Review of the Renewable Energy Target, conducted in 2014 by the then Abbott Government,” explained Leonard Quong, an Australian analyst with Bloomberg New Energy Finance, referring to the ill-fated Tony Abbott-led Liberal Government of 2013-15. “The ‘Warburton Review’ completely undermined industry confidence in the scheme, freezing investments in large-scale renewables for nearly two years. By the time the Federal Government secured a lower, bipartisan target the industry was forced to rush in order to secure enough new capacity to meet its obligations leading up to 2020, resulting in the investment boom witnessed in late-2016 and across 2017.”
Kane Thornton, speaking on Wednesday, furthered this opinion: “The RET has been the key policy encouraging investment in both small and large-scale renewable energy, and the large number of projects which will come online over the next few years is predicted to reduce power prices by an average of 6.2%.”
“With the 2020 target now in hand, the whole energy sector is looking for policy certainty that will enable it to continue to invest far beyond 2020.
“The development of the National Energy Guarantee seems to be heading in the right direction, but the level of emissions reduction currently planned under the policy is unlikely to encourage the new renewable energy to continue to drive down power prices as our old coal power plants continue to close,” Mr Thornton added.
Which raises the question, where to from here — or, more importantly, who to from here. While Mr Thornton might hope for the best from the National Energy Guarantee, not everyone is similarly impressed. So, as is happening in the United States, the development of Australia’s clean energy industry and the achievement of legitimate clean energy targets might fall on the shoulders of others.
I asked Leonard Quong who he thought would be the major stakeholders driving the growth of Australia’s renewable energy industry: “There are three main forces driving growth in the renewable sector outside of the Renewable Energy Target.”
“Households and businesses are building solar on their rooftops at record rates, it may get lost in the excitement of the large-scale growth story, but 2017 was also a record year for the small-scale sector. State policies, particularly in Victoria and Queensland, are likely to secure new investment in the short- to mid- term, but the exact amounts are anything but clear. Companies looking to save money or lift their green credentials are starting to sign energy contracts directly with large-scale projects, right now these only account for a small number of deals, but this business model is growing rapidly.”
As for whether or not the current growth and success has any long-term impact on post-2020 goals?
“Renewable energy and carbon policy has always been a political football in Australia, made harder by the more conservative members of the Federal Coalition continuously throwing flares and empty beer cans on to the pitch,” Quong said, perfectly capturing the feel of Australian politics.