Labor’s energy target all miss and wind as turbine construction slumps

Australia's wind farm construction has ground to a complete halt as costs soar, putting Labor's ambitious 82 per cent renewable energy target in serious doubt.

Paul Garvey and Perry Williams

Anthony Albanese and Climate Change and Energy Minister Chris Bowen.

5 min read

11 hours ago.

Updated 3 hours ago

Construction of new wind farms for the national electricity grid, which are crucial to Anthony Albanese’s clean-energy ambitions, came to a halt in the first half of this year, as the godfather of Labor’s climate policies warns the government will miss its 82 per cent renewables target by “a big margin”.

Soaring costs for wind turbines, combined with uncertainty around wind farm policy at the recent federal election and a sharp rise in the frequency of negative energy prices around the country, meant no new wind farms entered construction in the first six months of this calendar year, according to an analysis by Rystad Energy.

Amid rising pressure from the international community for Australia to adopt more onerous climate targets, and with the Liberal Party debating whether to maintain support for net zero, the slowdown in wind farm developments is set to leave Australia drastically short of the Albanese government’s goal of 82 per cent renewable energy nationwide by 2030.

Ross Garnaut, a long-time adviser to the Labor government and a backer of renewable energy, declared on Tuesday that the end-of-decade goal was unachievable even with an expanded capacity investment scheme, which aims to fast-track construction of major solar and wind projects. “Australia is currently on a trajectory to miss its renewable targets because of low investment and output in grid-scale solar and wind – not by a little, but by a big margin,” Professor Garnaut said in Sydney.

The Albanese government announced on Tuesday it would expand its capacity investment scheme by a further 8GW to 40GW, amid warnings not enough renewables will be built before big coal plants exit the power grid.

Professor Garnaut was critical of government policy and the CIS for distorting the market, arguing the best solution was to introduce a carbon price. “There are now virtually no new investment commitments for solar and wind generation that do not have CIS or other government underwriting,” Professor Garnaut told the Australian Clean Energy Summit.

“The underwriting falls far short of the levels necessary to reach the 82 per cent target. The big gap on the current trajectory is growing wider now that demand for power through the grid is growing again with electrification and data centres.”

Government policy had “pushed private decisions based in competitive markets to the margins of power generation investment decisions, removing a source of knowledge and economic dynamism that is essential for achievement of the objectives”, he added.

A wind farm near the town of Bungendore in southern NSW. Picture: AFP

Mr Bowen, responding to Professor Garnaut’s warning on Tuesday night, said there were countries with a carbon price that were not doing “as well as we are on renewable energy”.

“Let me make that respectful point to Ross. So, while I have a lot of respect for him, I fundamentally disagree on that point,” Mr Bowen told ABC.

“He has a different view about carbon taxes to me and the government. He’s always thought that was the right policy response. That’s not our view. It hasn’t been and won’t be. We are providing the right policy environment.”

Professor Garnaut was the architect of Labor’s climate change policy, beginning the task under Kevin Rudd and completing it under Julia Gillard. His warning backs a string of experts who forecast Labor will not deliver enough new renewable generation in time to hit the 2030 target.

While work will begin on new wind farms in NSW and Queensland over the coming months, Rystad analyst David Dixon found Australia was on track to deliver its worst year for new wind farm construction in a decade.

More than 5GW of onshore wind capacity needs to be added to the National Electricity Market every year under the Integrated System Plan modelling by the Australian Energy Market Operator, but Australia has struggled to install more than 2GW a year even before the cost of wind turbines began to soar. “There has to be recognition that we’re not going to hit the targets and to stop planning around like 82 per cent (renewable energy) in 2030 is going to be there,” Mr Dixon said. “Because even if hypothetically the costs were cheap enough, we still don’t get anywhere near the installation rates required.”

While the price of solar and battery storage have fallen significantly following a collapse in the price of commodities such as lithium, nickel and cobalt, Mr Dixon said wind-turbine costs had climbed by between 50 and 80 per cent over the past 18 months. The cost of installing those turbines had also increased sharply.

“Project costs now are basically 50 to even 100 per cent more than they were two years ago, and it doesn’t take a genius to realise that that’s obviously challenging the economics of wind at the present time,” Mr Dixon said.

The bleak diagnosis for Australia’s wind industry came as Mr Bowen announced an expansion of the CIS. In a speech on Tuesday night, he indicated that the government would be increasingly looking towards solar and batteries. He noted both technologies had fallen, by about 8 per cent and 20 per cent respectively in the past year. “We will be further expanding the CIS with a further 3GW of generation, enough to power more than one million households,” Mr Bowen said. “It’s right that the sunniest and windiest continent remains at the forefront of solar and wind innovation – and this backing shows the government intends for it to stay that way.”

Climate Change and Energy Minister Chris Bowen on Tuesday. Picture: NewsWire / Martin Ollman

He said the expanded CIS would underwrite another 5GW of dispatchable capacity or storage, building on what he said was the best annual record for new storage projects.

Mr Dixon said slower delivery of wind power meant Rystad was preparing to downgrade its forecast that already had the NEM falling well short of the 2030 target of 82 per cent renewables.

Rystad’s analysis found the only wind farms to start construction in the first half of the year were in WA, which is not part of the national electricity market. Its forecast is for 64 per cent of the NEM’s energy to come from renewables by 2030, but Mr Dixon said that was likely to be cut to closer to 60 per cent.

Beyond the pressure of rising costs, the challenge for wind had been exacerbated by the rise in negative prices and wind farm curtailments. Rystad noted that the number of periods of negative energy prices rose to record levels in 2024, which prices in South Australia and Victoria respectively going negative for 25 per cent and 21 per cent of the time. That corresponded with record amounts of wind farm curtailments, with NEM wind farms switched off for 7 per cent of last year, according to the analysis.

With solar and wind installation expected to continue to outpace the addition of more storage, Rystad expects curtailments to worsen over the next two years.

One of the industry’s top forecasters, Wood Mackenzie, said in May Australia would fall short of the goal with its modelling showing green energy only reaching 68 per cent by the end of this decade. Renewables’ share of generation in the national electricity market was about 40 per cent in 2024 and is likely to grow to between 44 and 46 per cent this year, according to the Clean Energy Regulator.