The Clean Energy Council’s latest Clean Energy Australia report has highlighted a significant fall in the number of renewable energy projects in the pipeline.
According to the Clean Energy Australia Report 2022, the level of investment in new large-scale renewable energy projects in the country has fallen by more than 17 percent, from A$4.5 billion ($3.4 billion; €3.1 billion) in 2020 to A$3.7 billion in 2021.
In a statement, CEC chief executive Kane Thornton said: “This significant reduction is due to continued policy uncertainty combined with the challenges associated with connecting renewable energy projects to the grid.
“While investors are enthusiastic about investing in new large-scale renewable energy projects, these challenges have increased risks and slowed down the number of new projects coming forward. The slowdown is concerning in light of expectations that coal-fired power plants will continue to close earlier than previously anticipated.”
Simon Corbell, chief executive of the Clean Energy Investor Group, confirmed the latest CEIG survey of its members had found investors continue to perceive significant risks in the Australian market compared with other OECD markets. According to the Clean Energy Investment Confidence Survey for the quarter ending in December 2021, overall investment activity for utility scale renewables remained “very subdued”, with only one transaction worth 50MW recorded during the quarter, as well as two further transactions of an unspecified capacity.
“That’s a very low level of commitments in terms of projects and certainly confirms the feedback we’re getting from our members, which is that key risks around congestion and congestion management as well as connection risk and broader policy uncertainty remain key factors in keeping investor sentiment subdued,” Corbell told Infrastructure Investor.
While CEIG’s members remain optimistic about the opportunities in the Australian market, the level of investment would need to increase at a quicker pace for Australia to meet its Paris Climate Agreement targets, he added.
“We want to see the cost of capital in the Australian market reduced so that the Australian market becomes competitive with other OECD markets in terms of the cost of capital that can be deployed here. And the only way to do that is through improved policy certainty and reduction of risk in those key areas of congestion management and connection [to the grid],” he said.
The CEC report also revealed almost 3GW of new large-scale renewable energy projects had been completed in 2021, with 1.7GW of new wind capacity added during the year. In addition, 30 large-scale batteries of a combined capacity of 921MW were under construction at the year’s end, in what Thornton said was “a breakthrough year for big batteries”.
“Energy investors are clearly confident about the important role and commercial viability of big batteries to deliver the reliable power of the future,” he added.
According to the report, renewable energy makes up 32.5 percent of Australia’s electricity generation, up from 16.9 percent in 2017.