A power market analyst has warned the government’s energy “policy vacuum” will lead to investment uncertainty in the renewable energy market.
Power analyst at GlobalData Arkapal Sil says the Australian government’s decision in September not to revise the renewable energy target (RET) after 2020 in addition to scrapping the National Energy Guarantee (NEG) has brought about investment uncertainty in the Australian renewable energy market.
“[These factors have] brought about a certain degree of investment uncertainty in the Australian renewable energy market,” Sil says.
“As a result of this uncertainty we may see Australia increase its conventional power capacity in order to maintain its annual base-load power requirements.”
Related article:Labor calls to resurrect the National Energy Guarantee
According to GlobalData, 30 per cent of Australia’s total installed energy capacity in 2017 was generated from renewables, including 10 per cent from solar and 7 per cent from wind power. By 2030, this figure is estimated to be 57 per cent with a compound annual growth rate (CAGR) of 19.5 per cent. However, solar PV capacity is likely to decline by a CAGR of 5 per cent to 2030 while overall power demand is expected to increase by 20 per cent from 2018 to 2030.
“Owing to policy uncertainty and a lack of clarity on the future direction of the national energy sector some large international players are looking to exit the Australian renewable market,” Sil says.
“The Chinese wind turbine supplier and project developer Goldwind is reportedly looking to move out of the market by offloading its wind and solar assets. This is a significant development as the sector needs private investment to kick-start projects with the high nature of their initial capital funding requirements. This is also despite the fact that the country is expected to exceed its 2020 renewable energy generation target of 33,000 GWh.
Related article:Craig Kelly: Coalition must ditch SRES subsidies
Sil says that while the current uncertainty is limiting investment funding for large-scale renewable projects, smaller state-funded projects have largely been unaffected as they strive to achieve their renewable energy targets.
Victoria has a renewable energy generation target of 25 per cent by 2020 and 40 per cent by 2025, while Queensland’s target is 50 per cent renewable energy by 2030.
Companies such as Windlab, Tilt Renewables, Genex Power, Kalina Energy and others continue to work on state-funded renewable energy projects like the 336 MW Dundonnell wind farm in the State of Victoria.
‘‘Any sort of regulatory intervention needs to be carefully thought through so as not to affect the commercial viability of the smaller players which could lead to reducing market competition,” Sil says.