The numbers show that renewable energy is booming in Australia. Data released last week by the government’s Clean Energy Authority indicate that 6.3 gigawatts of new solar and wind power – roughly equivalent in capacity to four large coal plants – will be installed across the country this year.
It would equal the record set last year, and is nearly five times greater than what was installed in 2016.
The governments of Victoria, Queensland and New South Wales are creating renewable energy zones in the regions, with the goal of giving developers confidence that they can connect to the grid, something that has not been guaranteed recently.
Labor governments in Victoria and Queensland also have plans to purchase power from a set amount of large-scale clean energy farms at a fixed price, giving developers a revenue guarantee that helps them secure financing in the troubled investment market.
The Andrews government said last week it would look to register another 600 megawatts through its targeted auction program for renewable energy. It tracks the 927 MW it backed up in 2017. The two rounds together will support clean energy roughly equivalent to the capacity of the giant Hazelwood Coal Station that shut down nearly four years ago.
Victoria’s Minister of Energy and Climate Change, Lily D’Ambrosio, said the auction should be seen as part of the global push for what are often called “green recovery” programs.
“This will help advance our economic recovery from the Coronavirus,” she said. “Not only is it good for our economy, it will also provide more reliable and affordable power to families across Victoria.”
Although still in its relative infancy, large-scale lithium batteries that will provide part of the flexible supply needed to support variable solar and wind power are gaining support at a largely unannounced rate.
The owner of the country’s first giant battery farm in Hornsdale, in South Australia, announced last week that it had completed a 50% expansion. There are battery projects promised or under development in Queensland, Victoria and New South Wales.
A growing group of large companies, some of which are facing increasing pressure from shareholders to tackle the climate crisis, are also increasingly supporting clean energy.
In the past 10 days, mining and emissions giant BHP has announced an agreement to get half of the electricity it needs to run Queensland’s coal mines from wind and solar power; Aldi supermarket chain has promised it will run 100% renewable energy by next year; Tech giant Apple has said it will invest in renewable energy in Australia as part of a global drive to be carbon-neutral by 2030.
The Morrison government, which was primarily promoting the need to expand gas, a fossil fuel, funded by taxpayers, has said to drive the economic recovery, and clean energy regulator data said renewable energy is booming.
In a statement, Energy and Emission Reduction Minister Angus Taylor said more renewables are good news for the economy, the environment and people flocking to lower energy prices.
“Australia is a world leader in renewable energy,” he said. “This dispels myths that some people continue to spread about a stall in investment.”
But is this? It can also be shown that investment in renewable energy not only stopped but also collapsed in a way that is likely to emerge in the coming years.
The data from the regulator relates to connectivity – the amount of renewable energy that gets connected to the grid and rooftops. Since it can take two years to go from an investment decision to a major power project in the ground, this means that communications are a lagging indicator of what is happening in the market.
The most recent picture comes from new investment decisions. Dylan McConnell, a researcher at the University of Melbourne’s School of Climate and Energy, last week Spread Data from Bloomberg New Energy Finance shows that investment has decreased by about $ 500 million (A $ 687 million) in each of the past three quarters.
From a peak of around $ 3 billion (A $ 4.12 billion) in the last three months of 2018, new spending fell to just $ 400 million (A $ 549 million) in the June quarter of this year.
This generally aligns with research by economists at the Reserve Bank, who have observed the economic impact. They found that large-scale renewable energy accounted for nearly 5% of non-mining investment across the country in 2018 before declining significantly.
McConnell says the fixtures and investment data are legitimate measures, but the latter is worth paying attention to. He said: “In a year or two we expect the new connections to be completely different because of that.”
Analysts say investment has fallen for two reasons – the growing challenge of connecting an increasing number of new large farms to the grid and the efficient end of the incentives from the national renewable energy goal.
The target requires energy retailers to sell at least 33,000 GWh of electricity, roughly 23% of all generation via the grid, from renewable sources by 2020. This level of generation has been reached by mid-2019 As a result, the goal ceased to be a catalyst for new projects. It has not been replaced.
Without it, and without a policy to tell investors when to shut down the country’s fleet of old coal-fired power plants, there is no national policy to keep private investment at record levels in recent years.
The federal government is satisfied with this. While it claims the credit for record growth in solar and wind power, its policies are designed to slow the increase in the coming years. It says transmission links are needed and promised to ensure flexible power supplies that could be connected at any time.
These sources include pumped hydropower, and although the Australian Energy Market (Aemo) operator has suggested that it may not be the cheapest option for consumers, the new gas-fired energy.
Analysts say development of these programs has been slow – nearly 18 months have passed since the insurance plan was pledged – and that what you are planning is an unnecessary intervention that will scare away new investment from other companies.
The key question is whether states – particularly the three major eastern states, which follow South Australia and Tasmania in renewable energy generation by a given distance – can fill the relative void in the new renewable energy investment that has been inaugurated over the past year.
Both Victoria and Queensland have plans that guarantee minimum energy prices to ensure the construction of solar and wind farms. New South Wales promised new renewable energy areas in the Midwest and New England, and pledged $ 119 million for the planning, coordination, transportation and storage needed to support it.
Tristan Edis, director and analyst at Green Energy Markets, says the torrent of projects already in development, assuming all of them built, along with state programs, should lead to about 50% of the supply coming from renewable sources by 2030. This in In line with government expectations, up from around 25% today.
To put this in perspective, ClimateWorks, a respected nonprofit organization, has estimated that Australia will need 79% of clean energy by 2030 to be on track to play its part in achieving the goals of the Paris Agreement.
The exceptional absorption of solar energy on rooftops is likely to continue, based on what is projected to be a 45% growth in the number of panels that will rise this year. It is forcing regulators to consider ways to harness the explosive surge in solar power when the sun is high in the middle of the day, in part by subsidizing household batteries that it could save for use at other times.
But the generational growth on a large scale is starting to slow. The clean energy regulator expects new project approval to drop by about 17% in 2020 compared to last year. Edis says a large number of solar and wind energy projects are already under development that will enter the market over the next two years, but are then expected to decline.
According to green energy market estimates, Victoria should jump from 30% of renewable energy by the end of this year to 65% by 2030, but Queensland and New South Wales will grow more slowly, from 20% by the end of the year to 38% and 35% over Straight.
Edis says governments are right to focus on upgrading the grid, improving state and regional connections, and developing energy storage programs. But he says these steps can be taken while continuing to drive rapid uptake of renewables in lagging northern states.
“We have a real problem here, which is the lack of coordination,” he says. “The states do their best, but ideally, if this were coordinated nationally, we wouldn’t build many solar farms in northwest Victoria, but rather in northern New South Wales and Central Queensland.”
While everyone, from government down, agrees that the ongoing transition in the electricity system is historical and complex, McConnell says the current approach suffers from being fragmented and ad hoc.
“You need a renewable energy target, or a carbon price, or a coal shutdown program,” he says. “If we don’t have them, you won’t get the investment we need to meet our climate commitments.”
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