Just two renewables projects approved in quarter suggests pipeline has stalled

Ambitious targets to wean the economy off its coal dependency are faltering with only two major projects securing investment approval in the September quarter.

Just two large-scale renewable energy generation projects secured final investment commitments during the three months to September 30, data from the Clean Energy Council shows.

The figures illustrates how Australia is struggling to meet its ambitious target of rapidly weaning the economy off its coal dependency.

The Clean Energy Council said the two renewable energy projects that did secure financial commitments could produce about 161 megawatts of new capacity at a cost of $150m – the fourth-lowest quarterly figure since it began tracking project data in 2017.

The council also said just 13MW of storage capacity secured financial commitments during the third quarter, a decline from the previous quarter when batteries were the lone bright spot in the data.

Clean Energy Council chief executive Kane Thornton said the figures underscore why the government decided to move to significantly bolster its signature capacity investment scheme.

“These numbers are a clarion call for strong and decisive action, and we welcome the federal government’s commitment to bringing forward the necessary generation in order to make sure that we can deliver the low-cost, clean electricity we need to replace ageing coal-fired generation,” Mr Thornton said.

The federal government has committed to a target of having renewable energy generate more than 80 per cent of the country’s electricity by 2030 – a target that Australia’s energy market operator said would require urgent investment if it were to be met.

“Investment in renewable energy has been in gradual decline since the Renewable Energy Target – a policy that delivered substantial new investment – was met in 2020.

“The rate of investment slowed more dramatically over the past year as a result of higher project costs, complex permitting processes, a congested grid and intensifying global competition in the race to net zero.”

Federal Energy Minister Chris Bowen last week said the government would underwrite 32 gigawatts of new renewable energy generation and storage projects under a so-called contract for difference model.

Revenue shortfalls below a floor will be reimbursed by the federal government with the cap and floor determined on a project-by-project basis.

Mr Bowen said the new scheme would drive enough private investment to install 9GW of battery capacity and 23GW of variable capacity, which was largely expected to be wind and solar by 2030.

Mr Thornton said the scheme had the potential to drive the much-needed investment, but the success would be determined by the details of the plan.

“We can unleash the strong investor interest in Australia with the right policy settings to address the barriers to investment, and we look forward to working with the federal Government on the implementation details of its new Capacity Investment Scheme for renewable energy generation,” said Mr Thornton.

Australia can ill afford for the scheme to not materialise as promised. The country’s energy market operator expects nearly two-thirds of Australia’s coal-powered generators to be retired inside the next decade as the traditional source of power comes under economic and social pressure and many approach the end of their technical lifespan.

If Australia is unable to adequately replace the lost generation capacity, wholesale electricity prices will rise, which eventually flows through the bills of households and businesses.

Originally published as Just two renewables projects approved in quarter suggests pipeline has stalled