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Unhelpful and unpredictable government intervention has increased risk and undermined confidence for new investment in the sector, according to Australia’s clean energy investors in the latest edition of the Clean Energy Outlook – Confidence Index.
The Clean Energy Outlook is the only index of its kind, surveying the Australian renewable energy and energy storage industry’s leaders and experts in June 2021 to gain an insight into the current status of the sector.
Overall, investor confidence has continued to fall over the past year and is now at its lowest level since December 2019.
“This is the time to be opening the doors to new investment in utility-scale clean energy projects, boosting jobs and regional development and ensuring that sufficient new generation is in place before old fossil-fuel generators retire or are priced out of the market,” said Clean Energy Council Chief Executive, Kane Thornton.
“Instead, we’ve seen governments backing two gas plants in New South Wales, the surprising decisions from the Federal Government not to support the Kaban Green Power Hub and then reject the world-leading Asian Renewable Energy Hub hydrogen project, on top of moves to change the funding remit of the Australian Renewable Energy Agency. It’s a concerning series of events and not a particularly welcoming environment if you’re an investor in clean energy.”
As the clean energy transition continues to progress – over a quarter of Australia’s electricity supply now comes from renewable energy sources – the impacts of connection delays and no emissions targets are also weighing on confidence for new investment in the sector.
Thornton said that grid connection was the most significant challenge facing large-scale renewable energy projects, with substantial delays and changes in technical requirements impacting projects and investor confidence. This is why the Clean Energy Council and the Australian Energy Market Operator (AEMO) recently launched a joint response, the Connections Reform Initiative, to improve the connection process.
“In bringing together Clean Energy Council members, AEMO, network service providers, the Australian Energy Market Commission, the Australian Energy Regulator and the Energy Security Board, we are working towards a solution where everyone benefits from a seamless connection process. The interest and high levels of engagement in this project from industry is evidence of the urgency of this reform,” he said.
The nation’s aging transmission infrastructure is also a concern for investors.
The 2020 Integrated System Plan (ISP) identified the highest priority transmission projects with a clear business case to benefit electricity customers concerning the price, security and reliability of the energy system. The ISP also recognised that new renewable energy – wind and solar power – will not enter the energy mix as quickly as necessary without adequate investment in transmission infrastructure. The Clean Energy Outlook shows that this impact is already being keenly felt by clean energy industry leaders.
“These transmission projects are nation-building projects that will see us through into the next century,” said Thornton.
“Build the transmission infrastructure, and the renewable energy investors will come, benefitting the entire Australian economy, keeping the lights on, supporting low emissions technologies and delivering low-cost energy to consumers.
“Without transmission investment, congestion will increase, creating greater risks for generators and further stalling investment.”