Renewables – shining through the policy smog

Topic
John Martin5 February 2019

Last year was an eventful year – from geopolitical tensions to market volatility and, of more relevancy, ongoing energy policy uncertainty. Australia wasn’t immune.

In 2018, the Australian government steered further away from the transition to renewable energy – effectively abandoning its National Energy Guarantee,dismissing findings from the IPCC’s landmark report on climate change and reaffirming its support of coal.2 Nonetheless, findings revealed that Australia was not only on track to achieve its 2020 Renewable Energy Target,3 but could even exceed it.4 Below, we highlight some areas of growth which shone through the smog of uncertainty in 2018 and discuss what consumers could expect to see for renewable energy in Australia this year.

In the absence of federal policy, some states took energy matters into their own hands. As previously discussed, Victoria added to its suite of household energy incentives by announcing it would provide subsidies of up to $5,000 to help as many as 10,000 households install battery storage in their homes.5 In the Northern Territory, three new solar farms and a large-scale battery storage system were announced to be built, co-funded by the federal government’s $5 billion Northern Australia Infrastructure Fund.6 And South Australia confirmed it would roll out its Home Battery Scheme by allocating $180 million towards installing small-scale battery storage in 40,000 homes, as well as large-scale batteries and demand management schemes.7

Meanwhile, Australia’s two-millionth household went solar by year’s end,8 marking a total of 20.3% of all homes with solar power systems.9 The sunny states of Queensland and South Australia neared installation rates of nearly one third of all homes, while other states lagged, installing between 13–26%.10 However, some of the country’s leading postcodes for rooftop solar installations were based largely in Western Australia, with roughly 23 MW, Queensland, with some 26 MW, and Victoria, with an estimated 12.4 MW installed.11 According to the Australian Energy Market Operator (AEMO), reaching two million households represented an estimated six solar panels being installed every minute across small-scale projects – a number that increases to between 10–20 panels a minute including large-scale projects.12

And in the corporate world, more businesses signed power purchase agreements or greenlit new projects. The Commonwealth Bank not only signed on to the RE100 led by the Climate Group but also plans to source much of its national electricity needs from Sapphire Windfarm from January 2019, while Macquarie Bank is currently developing a wind and solar farm that is said to be bigger than every existing farm in the country combined.13

What’s next?

Although the Australian government appears to have steered further away from the transition to renewable energy, the country has still installed more solar panels than ever before.14 New solar installations tripled in capacity last year, with growth in rooftop solar eclipsed by an increase in utility-scale ventures.15 While solar farms added roughly 2,000 MW of capacity, rooftop solar has still continued to expand at estimated annual rates of more than 40%.16 In addition, falling battery storage costs could further boost the battery sector’s momentum, indicating a “new era” of energy storage in 201917 after strong support for the resource in 2018.

Meanwhile, renewable energy project developers in Australia could see a larger range of debt funding sources set to enter the market this year,18 meaning consumers could see even more renewable energy development in 2019. The Guardian reported that at least 40 large-scale wind and solar projects are currently under construction in Australia, totalling more than 6,000 MW of new generation capacity.19 And according to the Australian Financial Review, the Council of Australian Governments, the Energy Security Board and the AEMO have continued their work to manage the transition towards lower-emissions energy supply and allow for the integration of more intermittent renewable energy supply – even without an overarching federal policy.20

Even in the face of continued energy policy uncertainty, New Energy Solar believes that the rate of adoption of renewable energy will continue to increase in Australia, driven by a combination of attractive economics and environmental benefits. And in the next few years, we could see a bright future for Australia as it transforms from laggard to leader in the global transition to renewable energy.

John joined New Energy Solar as Managing Director and CEO in May 2017. He brings a wealth of experience and capability to the role after more than two decades of experience in corporate advisory and investment banking, with a focus on the infrastructure, energy and utility sectors.

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