What’s Ahead for the Renewable Industry in the Next 6 Months
As we transition into the latter half of the year, both industry and government must prioritise ensuring the efficiency of tenders, funding allocation, and incentive strategies until year’s end. This is especially crucial for optimising the $22.7 billion Future Made in Australia Fund, allocated in the 2024-25 Federal Budget, and the $65 billion injection into green projects through the Capacity Investment Scheme (CIS).
However, recent reports from Rystad Energy have sounded alarm bells, highlighting a concerning dip in large-scale solar PV projects, which have hit their lowest levels in seven years. This downturn threatens to drive away much-needed EPC companies and investors due to market inefficiencies. Such hurdles, at a time when Australia’s renewable energy ambitions are soaring, are simply untenable.
The situation may change if the federal government’s Capacity Investment Scheme, which has formally opened its first 6 GW tender for new wind and solar, delivers as promised through this and subsequent auctions.
Projections from Macromonitor’s latest Renewable Energy Construction Outlook Report anticipate that renewable energy will be the largest contributor to growth in Australia’s construction sector over the next three years, with annual activity reaching $20 billion by FY2026. Given this projection, Australia cannot afford to derail projects, both for economic viability and to meet the 2030 decarbonisation targets.
The recent openings of Australia’s largest tenders come at a critical time when the country faces pressing questions about the adequacy of green energy project outputs to replace coal generators.
The Federal Government’s record 6 GW focus on new solar and wind capacity and the NSW Government’s up to 1 GW of long-duration storage capacity are great examples of where investments should be directed in the next half of 2024.
The 6 GW auction will allocate 2.3 GW of new capacity for NSW, 1.4 GW for Victoria, and 0.3 GW each for South Australia and Tasmania. This auction will be repeated biannually as part of the government’s strategy to secure 23 GW of new renewable energy and 9 GW of four-hour storage capacity.
NSW has also launched its largest tender for energy storage, seeking 1 GW of new capacity capable of delivering at least eight hours of storage. This tender is part of the state’s Long Duration Storage (LDS) program, which aims for a total of 2 GW and 16 GWh of storage capacity by 2030.
NSW Energy Minister Penny Sharpe emphasised the importance of long-duration storage in ensuring reliable power as coal-fired stations like Eraring Power retire.
It’s essential for EPCs and investors to see continued efforts and tenders, as they are the key stakeholders who will drive Australia’s renewable targets and deliver critical projects needed in the next six months and beyond.
The strategies and actions taken in the next six months will have long-lasting impacts, and the success of tenders like these and the broader allocation of funds will determine whether Australia can maintain its trajectory towards 2030 decarbonisation targets.
