Momentum continues to build for Australian renewable energy sector

ARENA

Momentum is building for the Australian renewable energy sector as it makes progress toward the national 2020 Renewable Energy Target (RET) and develops a growing pipeline of projects that can deliver higher ambitions beyond the end of the decade, according to the Clean Energy Council (CEC).

CEC chief executive Kane Thornton said major projects under construction had created strong momentum and increased confidence across the industry, though many more commitments would be required in order to meet the current 2020 target.

The council’s latest analysis said that about 700MW of projects had been committed under the RET scheme since the legislation was amended with bipartisan support in mid-2015.

“About 450MW of projects have been committed in the past three months alone, helping to provide some much-needed momentum for the sector. The flow on benefits of these projects in terms of investment and jobs into rural Australian communities is significant,” Mr Thornton said.

“In order to meet the 2020 target, approximately 6000MW of new capacity will need to be installed. The good news is that about 10,600MW of projects already have planning approval and a further 6600MW were being progressed towards approval.

There is no question that 2016 will be a big year for the renewable energy industry. At the end of 2015, Australia was just under halfway towards the delivery of the RET, with 15,200 gigawatt-hours (GWh) of renewable energy generation of the 33,000GWh required to meet it.

Australia’s renewable energy capacity even made the global top 10, however, Mr Thornton said projects need to be committed in the next two years to ensure progress continues.

“Most electricity retailers have banked enough Large-scale Generation Certificates (LGCs) to meet their obligations for about the next two years. But projects need to be committed in 2016 and 2017 to ensure retailers meet their future liability. A wind farm takes a couple of years to build, while solar power plants can be constructed more quickly,” he said.

“As the sector builds momentum, confidence is rising that the industry’s long pipeline of projects can achieve the 2020 target and go much further in years and decades to come.

Recent progress towards the RET includes:

  • Commencement of construction at the 175MW White Rock wind farm in New South Wales in late April 2016.
  • Construction underway on the Ararat wind farm in western Victoria, with 80MW of capacity sponsored by the ACT reverse auction and a further 160MW being built under the RET scheme, with debt financing from the Clean Energy Financing Corporation.
  • The 56MW Moree Solar Farm was opened in northern New South Wales, the second largest in Australia. Origin Energy issued a Power Purchase Agreement (PPA), to buy the electricity produced by the farm for a 15-year period.
  • The 100MW Clare Solar Farm in Queensland has struck a Power Purchase Agreement with Origin Energy. Fotowatio Renewable Ventures (FRV) will commence construction in 2016, with operations expected to commence in 2017. The PPA will run for 13 years from the commencement of operations until December 2030.
  • The 175MW Mt Emerald Wind Farm project in Queensland struck a 15-year PPA with Ergon Energy and is expected to commence construction in 2017.
  • AGL announced its Powering Australian Renewables Fund – a new entity tasked with funding a portfolio of new renewable energy projects, which AGL believes will add up to $2-3 billion worth of investment that it expects will deliver about 1000MW of new renewables. The company will contribute $200 million in equity and is seeking investment partners for the new fund.
  • A range of commercial-scale solar projects between 100kW and 1MW that contribute towards the LRET scheme.