Investment in new wind and solar farms has all but stalled with developers facing a “raft of barriers” despite strong political support, the Clean Energy Council said in its latest quarterly report.
The first half of 2023 produced the slowest pace of final investment approvals in the council’s six years of data tracking. Just four generation projects accounting for 348 megawatts – or roughly the size of a single coal-fired power station unit – secured financial commitment in the June quarter.
While an improvement on the March quarter, investment levels so far this year are running at half the pace of the rolling 12-month average of just under 700MW. The combined investment value of the four projects was $225m, or less than a fifth of the 12-month average of $1.3bn.
“While there is now strong political support for the clean energy transition, there remains a raft of barriers as a result of the historic lack of leadership, planning and foresight over the prior decade,” Kane Thornton, the council’s chief executive, said.
“There is an enormous pipeline of renewable energy projects in Australia, but investors are swamped with global opportunity at a time where these barriers make Australian projects less attractive.”
Investments in storage, particularly batteries, offered a more promising result. The Waratah super battery in New South Wales with its 850MW/1,680MW-hour capacity led the way, accounting for about half of the new storage reaching financial approval in the quarter. The six projects were valued at a record $2bn, the council said.
The slowdown in new investments being signed off comes despite a pipeline of some 108 generation and storage projects either reaching financial closure or being under construction.
The sector was “a long way off the pace necessary for Australia to achieve an 82% renewable energy share by 2030”, the council said, referring to the Albanese government’s inferred target from its emissions reduction goals.
The federal energy minister, Chris Bowen, said the former government had overseen a decline of 3GW of dispatchable power with the closure of coal plants not made up with new clean energy capacity.
“Our strong stance on climate, leadership and policy certainty is paying dividends with $2bn worth of storage projects reaching the investment stage in Q2,” Bowen said. “The surge in storage investment shows the government’s focus on ensuring reliability as renewable penetration grows above 35% of generation is making an impact.”
The disappointing rate of recent investments in new generation capacity is prompting the state governments to consider ways to ensure sufficient coal-fired power stations remain available to the grid until renewables arrive.
On Monday, Victoria’s Andrews government signed an agreement with AGL Energy, Australia’s biggest electricity generator, to ensure its Loy Yang A power plant in the Latrobe Valley operates until June 2035.
The Minns government in New South Wales has also received its “energy supply and reliability check-up report” that examined the state’s energy security.
Speculation has been mounting that it will recommend the government ensure the 2880MW Eraring power station – the nation’s largest single plant – remains at least partly available beyond its August 2025 scheduled closure date.
“NSW has not ruled anything in or out, which has been the same position since first coming to office,” a spokesperson for the energy minister, Penny Sharpe, said. The report and the government’s response will be made public by the end of the month.
A spokesperson for Eraring’s owner, Origin Energy, said the company had yet to see the report.
“We continue to engage with the market operator, the NSW government, our people, and the local community regarding plans Eraring’s closure,” she said. “As we stated in the closure notice to Aemo [the market operator], we will continue to assess the market over time, and this will help inform the final timing for the closure of all four units.”
Also being watched is the fate of the 1400MW Mount Piper power station near Lithgow to Sydney’s west, which provides about a tenth of NSW’s electricity. The community has been preparing for an abrupt closure of the plant, well before the 2040-or-later date previously stated by owner EnergyAustralia.
“We are positioning Mount Piper to enable it to transition to a reserve role which we anticipate being in the early to mid-2030s,” the Hong Kong-based firm said on Monday.
“We will reduce reliance on it but maintain its ability to contribute to system stability and the orderly entry and exit of capacity,” EnergyAustralia said. “Its closure by 2040 completes our exit from all coal assets.”
Sharpe’s office said the government was “closely monitoring the impact that the retirement of coal-fired power stations may have and will respond if there is adverse advice from the Aemo on NSW’s future electricity reliability”.
