Future Fund tweak will not accelerate energy transition, says industry

Labor will use the Future Fund to help deliver its policy agenda, but energy industry figures say it alone cannot drive the transition away from coal.

Forcing the Future Fund to prioritise renewable energy projects will give developers a new avenue for funding but it will not accelerate the transition away from coal as developments remain curtailed by transmission delays and planning hindrances, industry figures say.

Labor has set an aggressive target of having renewable energy generate 82 per cent of the country’s power by 2030 – a milestone that remains a long way off.

Industry officials, however, lauded the ­Albanese government’s move to set priorities for the Future Fund’s investments, including renewable energy projects.

Simon Curie, principal at Energy Estates, said: “What is the point in the Future Fund if it’s not going to invest in the future of Australia? This is our Norway and Qatar moment.

“We have the ability to drive ­investments and the Future Fund is a halo moment. If countries like Canada and Japan see the Future Fund investing, they will follow.”

Australia desperately needs extra capital if it is to accelerate its transition to renewables. NSW earlier this year was forced to extend the lifespan of the state’s largest coal power station after conceding it had not developed sufficient replacements of renewables to safely allow the closure.

To accelerate the transition, the federal Labor government has announced a scheme to underwrite some 32GW of new renewable energy projects.

Once approved, many of these projects will need funding and industry figures said nearly all would meet the Future Fund threshold.

“A large-scale renewable energy project will have a return on investment of between 7-9 per cent,” said one industry executive. “This is not deemed attractive for retailers but it meets the requirement of the Future Fund.”

While funding will facilitate progress of the projects, industry figures said major inhibitors such as planning and transmission ­remained.

Rockhampton Regional Council's $6.3m 1.3KW solar farm at the Glenmore Water Treatment Plant is almost complete and expected to begin operation in early 2025.

Another energy market executive who spoke on condition of anonymity said: “The Future Fund can’t accelerate transmission, it won’t approve projects quickly so not sure it does much to allow the nation-building plan the government seems to think it is.”

Labor acknowledges roadblocks remain and it is taking steps to develop transmission, over which the government has more responsibility.

Some 10,000km of high-voltage transmission lines must be developed by 2050 to meet net-zero targets, but the infrastructure remains unpopular in some regional communities.

States are also moving on planning. NSW earlier this month said it would accelerate approvals as it moved to stymie the capacity of opponents to block proposed developments.

So-called phantom dwellings had been a popular tactic used by opponents to curtail proposed wind farms. Previous rules allowed landowners to inform wind developers that they intended to build a dwelling on their property in the future. These would typically be strategically located nearby to proposed wind turbines.

Developers would then be forced to remove the proposed turbines to comply with distance rules and if enough “phantom dwellings” were intimated – developments would often become unviable.

Victoria, too, has limited opposition. In March, the Victorian Labor government removed the requirement for applications to go before a planning panel, referring them instead to an in-house panel in the planning department, and revoking the right for third parties to appeal to the Victorian Civil and Administrative Appeals Tribunal.

Originally published as Future Fund tweak will not accelerate energy transition, says industry