According to the Clean Energy Regulator (CER), Australia is on track to meet its 23.5% Renewable Energy Target (RET) by 20201 and may even exceed it.2
The RET was established to help Australia not only use more renewable energy and reduce emissions, but to promote the development of a renewable energy industry.3 It works by creating a market of renewable energy certificates that help drive investment in the renewables sector.4 Since 2011, it has operated in two parts: the Large-scale Renewable Energy Target and the Small-scale Renewable Energy Scheme.5 On the supply side of the market, participants create certificates for each megawatt hour (MWh) of renewable energy generated, while on the demand side, energy retailers source certificates to meet their renewable energy obligations in proportion to the total electricity sold to consumers.6
In 2015, the Australian government reviewed the RET and reduced it from its previously legislated 41,000 gigawatt hours (GWh) to its current target of 23.5% (or 33,000 GWh) – a deal brokered by the Clean Energy Council, following more than a year of lost investment confidence caused by the review.7 Despite the reduction, Australia’s renewable energy capacity is indeed set to exceed the target that the government said was impossible.8
According to the CER, in order for Australia to meet its target, 6,000 megawatts (MW) of large-scale generation capacity would need to be announced or built between 2016 and 2019.9 Chairman David Parker said 6,532 MW of new large-scale generation was firmly announced during that time, meaning the investment in renewables has not only reached the target, but could exceed it by 2020.10 Green Energy Markets echoed the regulator’s sentiments. According to its research, estimated eligible generation could reach 41,381 GWh by 2020 – not only exceeding the 33,000 GWh RET, but the original target as well.11 The CER’s Progress in 2017 report found that more than $10 billion was invested in large-scale renewable energy in Australia last year – a surge that has continued into early 2018.12 More than 2,000 MW of additional renewable energy capacity was installed in 2017 across both the RET’s Small-scale Renewable Energy Scheme and the Large-Scale Renewable Energy Target, and by the end of March 2018, more than 7,500 MW of projects were operating or firmly announced.13
Of all projects announced since 2016, solar generation made up some 46% of the total new capacity, up from just 4% during the first 15 years of the RET.14 As more businesses have responded to rising energy and declining technology costs, the investment in commercial and industrial-sized solar systems has increased. In fact, some large-scale users have even begun supplying their own energy through renewables.15 For example, the Sunshine Coast Council opened its on solar farm in 2017 in an effort to curb rising energy prices and fully offset its power needs.16 And the prevalence of solar has continued through to the small-scale space, as one in five homes and businesses now generate their own renewable energy through rooftop solar.17 Indeed, a big increase in investment in the small-scale space saw 41% more renewable capacity installed by households and businesses in comparison to the previous year.18
Looking ahead, the regulator anticipates that 2018 will be twice as big as the year before,19 and as Australia continues its energy transformation and contributes to the global shift towards renewable energy, it is clear that solar should have a significant role to play in the movement.
For more information about the RET, you can visit the website.
Liam serves as Chief Investment Officer for New Energy Solar. He has 15 years’ experience in M&A, corporate and business development, projects, and commercial management in the energy, infrastructure, mining and agribusiness sectors.