Remarkable growth made 2017 a record year for renewables, but ongoing policy uncertainty means that continued growth is not guaranteed.
The Australian renewable energy industry had an extraordinary year in 2017. Fifty large-scale renewable energy projects were either actively under construction or had secured financial commitment by the end of the year. Together they add up to more than $9.3 billion of investment which will lead to 4670 MW of new generation capacity and more than 5440 new direct jobs around the country.
When compared to the 264 MW of new capacity completed in 2016, the optimism across the sector this year has been nothing short of phenomenal.
The rooftop solar market also experienced its best ever year, with more than 1000 MW of new small-scale capacity installed by Australian households and businesses. Australia’s total installed rooftop solar capacity passed 6000 MW in 2017, and this will continue to grow as more Australian consumers and businesses recognise and take advantage of the significant cost benefits it provides. In fact, Australia Post finished off the year by installing the country’s largest rooftop solar power system, a 2.1 MW installation at its Sydney Parcel Facility.
The remarkable growth in all parts of the sector in 2017 was largely due to the Renewable Energy Target (RET). There are now enough projects in the system to meet the large-scale RET, and the industry is confident of meeting it well ahead of the 2020 deadline.
Considering the state of the industry just a few years ago – and the many pundits predicting we wouldn’t make the cut – the fact that we will meet the RET ahead of schedule is an extraordinary achievement. It highlights the increasing competitiveness of renewable energy, and it shows how well having a long-term energy policy works if we can avoid constant reviews and tinkering every few years.
Other notable milestones for the industry in 2017 included the Victorian Government legislating a state renewable energy target of 40 per cent by 2025, the completion of the world’s largest battery in South Australia and the South Australian Government meeting its 50 per cent renewable energy target almost a decade ahead of schedule.
There is no doubt that strong demand exists in the Australian energy market. However, the ongoing uncertainty around long-term energy policy means that the continuation of this growth into 2018 and beyond is far from assured.
From a long-term energy policy perspective, it is hard to believe that we started 2018 in a similar position to where we started in 2017 – particularly when it felt that energy policy was almost constantly in the headlines.
A year ago we were waiting on the Chief Scientist to deliver his review on the Australian energy market. Now we are waiting on the Energy Security Board (ESB) to deliver more detail on its National Energy Guarantee (NEG). While we at least have the outline of an energy policy, what it will look like and how it will affect our industry is anyone’s guess.
If the NEG is to be successful, it will need strong support from the major state and federal political parties as well as the electricity industry. But to gain this support it must deliver new clean energy investment, meet emissions targets and reduce power prices. If it fails to achieve even one of these goals it is highly unlikely it will be implemented.
While the Clean Energy Council continues to believe that the Finkel Review’s Clean Energy Target is the best policy option for the renewable energy industry, we are keeping an open mind about the NEG until more details are made available.
The industry badly needs some certainty, and the last thing that we want is for a viable policy option to once again fall victim to partisan politics.
This sets up 2018 to be another crucial year for the Australian energy sector. With state elections due in South Australia, Tasmania and Victoria throughout the year and the potential for a federal election as well, the political landscape will not be easy to navigate. When coupled with the task of delivering affordable, reliable and clean energy, the ESB faces the unenviable task of producing a policy that will be acceptable to all the relevant stakeholders.
The decade-long failure of successive federal governments to implement a lasting national energy policy is being borne out by the high energy prices being paid by Australian consumers and businesses. As 2017 showed, having a viable long-term energy policy is crucial to creating an environment of investment certainty, which the energy market needs to build the new generation assets that will reduce energy prices and help Australia transition to a clean energy future.
This article was first published in the February 2018 edition of ecogeneration