Why Investment Continues to be Critical in Australia’s Green Energy Industry
Despite renewables constituting nearly 40% of Australia’s total electricity supply and adding an additional 5.9GW of power in 2023, there persists a significant decline in investment, particularly in large-scale generation projects, within the sector.
According to the Clean Energy Australia Report recently released by the Clean Energy Council, there was a decrease in new financial commitments to utility-scale green projects in 2023 totalling 921 MW of capacity – down from 10 projects totalling 1.5 GW by the end of 2022. This stagnation in investment poses a substantial challenge to Australia’s transition toward a renewable energy future. Inadequate investment may impede the country’s ability to meet its emissions reduction targets and ensure long-term energy security.
One of the primary contributors to this decline in investment is the complex and protracted project approval processes within the NEM. These processes often entail multiple layers of bureaucracy, extensive assessments, and uncertain timelines, which can dissuade investors and developers from committing to renewable energy projects.
Investors rely on stable and predictable policy frameworks to accurately assess the risks associated with renewable energy projects. This includes having the confidence to allocate capital to large-scale renewable energy projects.
For instance, in Western Australia (operating within the WAM), there are reports of sluggish acceptance of new large-scale renewable energy projects, jeopardising the state government’s target of achieving 80% renewable energy on the South West Interconnected System (SWIS) by 2030 and falling short of the Energy Policy WA SWIS demand assessment report’s goal of 50GW of renewables by 2042.
Additionally, the industry’s lack of clear planning is undermining investor confidence. This, coupled with lengthy connection times and other delays, is impeding the delivery of renewable energy in Western Australia, particularly on the SWIS. Consequently, without significant and timely investment, coal generation may persist longer or be replaced by increased gas generation.
The Climate Council’s “Seize the Decade” Report indicates that solar power can help safeguard Australia’s economy while significantly reducing climate pollution by 75%.
However, these ambitious targets set forth by the Climate Council can be achieved through proper steering, grants, and funding initiatives. While the progress is promising, we must also address the challenges associated with intermittency and storage capacity.
Proper steering of resources, along with targeted grants and funding programs, can incentivise the development and deployment of grid-scale battery storage solutions.
Australia can accelerate its transition towards a renewable energy future by strategically allocating resources and providing financial support to projects focused on addressing intermittency and storage capacity. These investments can not only bolster energy security and grid stability but also contribute to significant reductions in greenhouse gas emissions.
While the goals set by the Climate Council are ambitious, they are attainable with the right support and investment. This is particularly crucial for regions like Western Australia, which faces unique challenges in its energy transition journey. Overcoming hurdles such as sluggish acceptance of new large-scale renewable energy projects and lengthy connection times, requires concerted efforts and targeted interventions.
Investing in grid-scale battery storage and innovative technologies for energy storage can also help stabilise the grid and ensure a reliable energy supply, even when the sun isn’t shining or the wind isn’t blowing. To do so properly would require streamlining approval processes, reducing bureaucratic barriers, and providing greater certainty around energy policies. These are essential steps toward creating a more conducive environment for renewable energy investment within both the NEM and the WAM.