Although not without some headwinds, the Australian renewable energy sector continues to experience growth, driven by strong Government support for new generation and storage, reducing capital costs for renewable and storage projects and the progressive retirement of coal-fired power stations. However, our grid and market rules are still transitioning from an earlier time, and a significant reform program is underway.
Government support for renewable energy
The Federal Government has set-up the Australian Renewable Energy Agency and the Clean Energy Finance Corporation, both of which have been instrumental in supporting and financing renewable projects in Australia. Both agencies are now focusing more on adjacent industries (such a 'green' hydrogen).
The Australian State and Territory Governments have also demonstrated support for renewable energy. New South Wales aims to achieve net-zero emissions by 2050 and has legislated to implement a $32 billion Electricity Infrastructure Roadmap. Other States and Territories have their own renewable energy targets, with the ACT, Tasmania and Victoria passing legislation to enshrine their respective targets. Several jurisdictions have committed funding to the sector by running reverse-auctions for renewable projects and going to tender to procure renewable-sourced power to supply their departments and agencies. Queensland, New South Wales and Victoria have committed to developing several Renewable Energy Zones in those jurisdictions.
Foreign investment requirements
Renewable energy is a somewhat sensitive sector from a foreign investment perspective. Australia's foreign investments regime generally requires that 'foreign persons' investing in renewables projects and related acquisitions notify the Australian Treasurer, advised by the Foreign Investments Review Board (FIRB), to that effect. The Treasurer may choose to prohibit or impose qualifications on the investment if it deems that the investment may be contrary to Australia's national interests. Even where not required on a mandatory basis, it is generally advised that foreign renewables investors voluntarily apply for FIRB clearance, given these sensitivities and the risk of a transaction being ‘called in’ for up to 10 years if no voluntary clearance was obtained.
International Comparative Legal Guide - Renewable Energy 2022
In the Australian chapter of Renewable Energy 2022 we:
- provide an overview of the renewable energy sector in Australia;
- describe the renewable energy market in Australia;
- outline the financial incentives available in the sector in Australia;
- summarise the regulatory consents and permits required to develop a renewable energy or storage project in Australia;
- describe the approval requirements for foreign investors;
- provide guidance on the competition and anti-trust laws in Australia; and
- outline the mechanism for resolving disputes in the sector and how those avenues coexist under Australia's treaty commitments concerning international disputes.
Further updates and developments
The National Electricity Market is on the verge of considerable change, with the Energy Security Board (ESB) having recently put forward its final advice on the post-2025 NEM market redesign. This advice is currently before the National Energy Cabinet of Australia, comprising all of the Energy Ministers in Australian jurisdictions, for consideration. The ESB's report, which was issued after we wrote the Australian chapter of Renewable Energy 2022, proposes four reform pathways to address Australia's energy transition needs in relation to resource adequacy mechanisms, essential system services and ahead mechanisms, the integration of distributed energy resources and flexible demand and transmission and access.
Access our complete analysis of the Australian renewable energy sector as featured in ICLG's Renewable Energy 2022.