Trapped in transition torture: solar, wind investment crash puts renewable target in doubt

Australia needs 6 gigawatts annually of wind and solar added to meet its 2030 renewable targets. This year is shaping up as a decade low for signed off investments despite a giant supply pipeline.

A slump in renewable energy investment has sparked fears Australia will miss its 2030 target.

Australia faces its worst year of investment in large-scale solar and wind in a decade, heightening concern the nation will fail to meet its 2030 renewable energy target.

With only a small number of projects backed by Labor’s flagship green power scheme getting sign off from investors, experts warn there is increasing uncertainty in Australia’s renewables sector.

Large-scale investment in solar and wind generation totalled 1.05 gigawatts at the end of October compared with 4.5GW for the 2024 calendar year, Clean Energy Regulator data shows. 

The investment drought could deliver a hammer blow to Australia’s ambitions to hit 82 per cent renewables by the end of this decade, with this year’s investment in danger of falling short of the current decade-low level of 1.31GW of utility solar and wind added in 2016. “While the renewable energy projects reaching final investment decision have been lower in 2025 than recent years, we are expecting announcements to strengthen over 2026,” the CER said. The regulator still forecasts investments could reach 2.5GW in 2025, based on an estimate of 1.5GW being announced by December 31, an estimate hinging on a string of pending developments to be sanctioned.

The country’s Climate Change Authority estimates about 6GW of new large-scale capacity must be added annually for Australia to reach its 2030 renewable goal. Approved large-scale capacity is likely to reach 3.8-4GW in 2025, following a record year in 2024 of 4.3GW.

Energy Minister Chris Bowen revealed in his annual climate statement to parliament last week that while Australia will fall only 1 per cent short of meeting its 2030 emissions reduction target of 43 per cent below 2005 levels, it is nowhere near on track to reach its recent 2035 commitment.

The statement has Australia headed for a 48 per cent reduction by 2035 – well short of the 62-70 per cent target the government announced in September.

International investors were anxious about green policy settings, according to energy consultancy Rennie Advisory.

“There is no doubt that international investors are becoming increasingly uncertain about policy settings for renewables in Australia. We expect this will continue into 2026,” said Rennie’s executive director for capital advisory, Matt Rennie.

Mr Bowen has come under fire over juggling one of the federal government’s most critical portfolios with his role as global climate negotiator for the 2026 UN climate summit in Turkey.

A spokesman for Mr Bowen said: “Under the Albanese government records are tumbling, with renewable generation at all-time highs and a strong pipeline of new wind and solar backed by our capacity investment scheme. We know there’s still more to do.”

Businesses around the country – from hairdressers to bakers, brewers to local supermarkets – are feeling the squeeze of increased energy prices, not only reducing their profit margins but forcing them to cut staff, increase prices and otherwise cut costs.

The Australian has also reported the nation’s east coast energy transition blueprint significantly underestimates how severe future wind droughts could be, in a critical flaw that casts doubt on whether a weather-dependent grid can keep the lights on, a forensic analysis shows.

Labor has been banking that its capacity investment scheme, designed to fast-track new renewable generation, would kickstart new supplies into the market, with the program targeting early-stage projects to be delivered by 2030.

While the taxpayer scheme has generated huge slabs of potential capacity, 96 per cent of wind and solar capacity announced in two of the government tenders has yet to be given the investment green light. The regulator said while 12.5GW of the 13GW capacity investment scheme had not been signed off, it was confident next year would deliver a better outcome. “As the more advanced Tender 1 projects totalling over 5.5GW progress, there is a real potential for these projects in combination with non-CIS projects to achieve a strong year for final investment decision announcements in 2026,” the CER said in its quarterly report last week.  

Critics say the early performance of the CIS is a cautionary tale about relying heavily on government schemes to drive rapid technological transformation. While Australia has advanced in rooftop solar and wind, translating policy frameworks into large-scale, commercially viable projects remains a formidable challenge. Origin Energy chief executive Frank Calabria last week said Australia’s shift away from coal was increasingly being held back by a stubborn gap in onshore wind development. No onshore wind project in Australia has reached a final investment decision this year – a striking absence that has cast doubt over Anthony Albanese’s climate ambitions.

The shortfall in new onshore wind capacity – once considered the simplest form of large-scale clean generation – is increasingly difficult amid a surge in construction costs and delays in building the transmission lines that connect wind turbines to the grid. The regulator has said annual investment figures can fluctuate. Capacity reaching formal investment approval in 2022 was double that in 2023, it has noted. Even with the sluggish investment figures so far for 2025, the regulator said capacity being added to the grid remained strong.

With rooftop solar added in, the CER estimates close to 7GW of renewable capacity will be added to the grid in 2025. The CCA does not include rooftop solar in its large-scale estimates.

“We have seen low final investment decision years before,” the regulator said. “While capacity reaching FID has been down on 2024, the CER is still tracking around 21GW of capacity in projects categorised as probable.”

The energy transition was forecast to pick up pace with record years expected from 2027 as a giant pipeline of capacity is delivered to the market. “This is a short-term issue. Renewable energy, combined with battery storage and occasional gas peaking, will comprise the energy mix of the future,” Mr Rennie said.

“We expect 2027 and onwards to be record years in renewable project developments as the economics of decisions to keep coal open become clearer and closure timetable decisions begin to again form part of state energy policies”.

It comes as the Albanese government is in negotiations with the owners of Tomago aluminium smelter over an energy deal to secure the future of the plant, NSW’s biggest electricity user accounting for 10 per cent of power use there.