Will the Budget bring enough speed to renewables projects?

By Rob Bryant, EVP, Asia Pacific & Japan, InEight

The federal government sent a signal in this year’s budget when they increased profit tax paid by the offshore LNG industry and pledged to invest $2 billion to assist green hydrogen projects. Yet, given the targets the signals sent were relatively mute.

Given Australia’s vast solar and wind resources and reserves of minerals needed to transition to net zero, the country is perfectly placed to take a leading role. However, the existing pace of renewable capital projects is simply not fast enough, nor the scale vast enough, and much more must be done to avoid falling short of net zero targets.  

Related article: Green hydrogen funding is a step forward—but a step doesn’t win the race

The journey to net zero has proven a mammoth change management undertaking for nations and companies alike. To achieve Australia’s ambitious net zero goals in this space, the government and private sector will need to turbo charge the pace of energy infrastructure whilst compressing costs. Government, private investors, owners, and contractors will need to demonstrate exemplary examples of collaboration. There is much to learn in this process if we are to see accurate and affordable bids executed, and mega-projects managed swiftly in full ESG compliance and with minimised risk to budget and schedule when both pace and cost are under sharp focus. This is no easy ask in today’s constrained supply chain and labour shortage environment.

These challenges are beginning to be addressed by government action. The budget invested a total of $4 billion to become a renewable energy superpower, of which $83.2 million over four years will fund the establishment of a national Net Zero Authority. However, aside from the $2 billion allocated to green hydrogen, the budget was relatively light when it came to allocating funds specifically for renewable energy infrastructure. This calls into question whether the construction industry will have enough time and resources to deliver on Australia’s superpower ambitions.

The ‘need for speed’ in renewables construction

To build the clean infrastructure needed to meet climate targets, organisations must radically shorten development and construction timelines. However, contractors aiming for massive renewable energy infrastructure projects will be unable to win bids or deliver with efficiency if they are still using manual project management processes. Many renewable projects are first-of-their-kind projects on a unique scale, creating a sharp learning curve in the industry. There is a major lack of benchmarking around building wind and solar projects compared to what exists around building tunnels and bridges. Forward-looking renewable construction firms are leveraging tech for dynamic, adaptable benchmarking, resulting in less wasted time, materials, and labour. As an industry that has been relatively reluctant to lean into the digital transition, there is an opportunity for stakeholders to recognise the role of technology and the benefits for both planet and profitability.

Interoperable technology cultivates frictionless collaboration

Open, interoperable tools are key to encouraging and enabling more open and collaborative project management models and will provide a single source of truth to keep all eyes on the same project data. Replacing traditional siloed, sequential project delivery methods with more agile, collaborative approaches will drive leaner and faster project delivery.

Renewable energy projects carry some inherent complexity. Each consists of three components in their construction. Access to the site selected, which might mean building of access roads, or port and handling facilities. Second, the assembly of the energy-generating asset, turbines, or panels. And thirdly the powerlines which transmit the power to the grid or battery.

Facing unexpected challenges in unknown geology, weather or supply chain issues is commonplace. An agile, real-time and easily accessed view of project data is therefore essential. A single source of truth in renewable construction project data makes a complete real-time view of projects possible, saving significant time when it comes to generating and distributing reports, and making important decisions. Construction management tech can help prevent delays and costly surprises when, inevitably, field issues or scope and design changes pop up. McKinsey reported that per cent by implementing a cloud-based control tower that assembles accurate data in near real time that is both backward looking and predictive.

Artificial Intelligence (AI) has a very real benefit that is already being applied in project controls software. By taking past project estimates and schedule data, it is possible to offer suggestions and help project teams arrive at the optimum plan, as well as quickly review and adjust to changing circumstances with scenario planning.

Inclusive industry ecosystem approach

Even though the budget provided $7.4 million to support the introduction of a Fuel Efficiency Standard and incentives to help businesses save on their power bills. Australia’s audacious vision to reimagine our decarbonised energy grid is a Herculean undertaking that will be at risk if electricity transmission deployment cannot catch up with electricity generation. State governments’ role is central, and their ownership of the outcome (and potentially the power generating asset in some cases) will, I believe, call for them to lead the change. Alongside private capital and investment in IP.

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Programmes of work such as Victoria’s Level Crossing Removal Project provide a good example of how alliance partners each work to their strengths for different aspects of a project, and incentives to share innovation for the good of the programme, not just the project or package, have been successful.

The Federal Budget has created good incentives to move the energy transition forward. However, successful execution of a renewable future that is sustainable, efficient, and resilient will require a clearer pathway from the government for the construction industry, to deliver on renewable infrastructure at speed and within budget.