Investor confidence soars in Australia's renewable energy

State governments mobilising investment

Also, 2020 saw state and territory governments roll out ambitious programs to stimulate renewable energy. In Western Australia, for example, the state government has brought forward its renewable hydrogen target. Meanwhile, New South Wales has pledged to make the state a renewable energy superpower and has mandated the construction of 12GW of clean energy and 2GW of storage over the next ten years – potentially unleashing AU$32bn in private investment.

The confidence in Australia’s renewable energy sector is strong but continues to face challenges in accessing a grid that has been developed at an earlier time for a thermal-based generation fleet. Improving our network issues – which could be assisted by the development of renewable energy zones in various Australian jurisdictions – will remove a significant risk for investors and their financiers.

Momentum for energy-storage technologies and hydrogen

However, it is clear that momentum is building behind firming and storage technologies that make better use of existing grids. Battery deployments have moved further and faster than expected with Victoria’s recently proposed mammoth 300MW Tesla battery near Geelong slated to be among the biggest in the world.

Hydrogen is less dependent on grids and paves the way to lucrative energy exports”

 

Meanwhile, interest in green hydrogen is growing. Hydrogen is less dependent on grids and paves the way to lucrative energy exports. All of this bodes well for the future of utility-scale renewables.

Overall, international and domestic renewables investors are confident in the market, with positive sentiment pointing to a robust year ahead. Indeed, 65% say they will increase investments as they search out clean energy opportunities in Australia. Also, while some investors sat out 2020 amid the COVID-19 health crisis, half (50%) have charged ahead with investments and another 35% will return to the market within the year. Australia’s vast energy market continues to inspire – and the outlook has never looked better.

Mining and agriculture industries turn to renewables

Australia’s vast agriculture and natural resources industries stand to benefit from renewables as both sectors increase their adoption of renewable solutions.

We are seeing miners rethinking their operational processes and existing power supplies to invest in and integrate renewable energy sources. The benefits of investing directly in solar and wind power and smart storage, or otherwise buying green power, are clear: to drive down energy costs, curb emissions, improve safety, and lessen investor scrutiny.

Australia’s agriculture sector continued to grow throughout 2020, despite disruption caused by the pandemic. Agribusiness is currently worth AU$60bn, but this is expected to climb to AU$100bn by 2030.

Like mining, the agriculture sector is a significant energy user. For example, processes such as water pumping, desalination and temperature control in greenhouses require huge energy inputs. In addition, the need to be on-grid limits the range of locations available for some types of farming activity.

Investors are clear that renewable energy will play a critical part in delivering this growth: 80% of respondents in our recent report on Australian agribusiness (Ahead of the Harvest: 2020-2022) said that increasing use of renewables would have a positive impact on the industry’s growth, with 39% saying that renewables will have a transformative effect.

This article first appeared in ANZ BlueNotes in April 2021.