Investment in Australian renewables sank in 2019

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Large-scale wind and solar energy projects were the biggest casualty of the last year’s drop in investor confidence in Australia. According to data compiled by Bloomberg New Energy Finance (BNEF), investment in utility-scale assets fell 56% year-on-year, to just US$3.2 billion, its lowest level since 2016.

Investment in onshore wind farms plunged to just US$1.6 billion from US$3.7 billion, while investment in utility-scale solar fell to US$1.2 billion from US$3 billion in 2018. The figures posted by the rooftop solar sector were the only bright spot in the final tally, reducing the overall drop in renewables investment to 40%, BNEF finds.

The robust health of the rooftop PV segment was earlier confirmed by solar analyst SunWiz, which put the final tally of sub-100kW systems registered in 2019 at 2.13 GW. Speaking of large-scale solar, SunWiz also warned the volume of solar farms capacity commissioned fell considerably in 2019, with sub-20MW solar farms the notable exception. The consultancy said 23 solar farms totaling 1141 MW were connected to the grid in 2019, noting that a similar number was commissioned in 2018 but significantly higher capacity (1500MW).

Given grid connection hold-ups, curtailment, transmission losses, and negative power prices, 2019 was destined to be a tough year for investors in Australian large-scale renewable energy. However, the country’s slow-to-adapt transmission network remains part of a bigger picture – the federal government’s climate change inertia, which has led to – among other things – under-investment in network capacity to address congestion and constraints. With the 2020 Renewable Energy Target officially achieved and surpassed by a substantial margin, a policy vacuum beyond 2020 took its toll on investor confidence, as showed in earlier surveys

“Australia’s major political parties took ideologically opposed clean energy platforms to the May 2019 federal election, once again stymieing any hope of long-term policy certainty,” Leonard Quong, an energy analyst at BNEF, said. “Conditions across Australia’s thinly spread out electricity network continued to deteriorate. Falling loss factors cut revenue expectations for many, curtailment began to bite for some and connection delays were a major source of pain for a few.”

Noting that 2020 will once again test the mettle of the market, Quong says that cost reductions of renewable energy, innovations in risk management strategies, new services from battery storage and state-based renewable energy programs, all played an important role in preventing a greater collapse in new investments.

Investment in small-scale solar was the bright spot in the Australian renewable energy investment landscape in 2019. Record demand for behind-the-meter solar, from households and increasingly businesses, secured US$2.4 billion of new investment – a 15% increase from 2018.

Australia’s drop in renewable energy investment was at odds with global trends. Investment in renewable energy capacity worldwide was $282.2 billion last year, up 1% from 2018’s $280.2 billion, with the world’s biggest market (China) slipping back, but the second-largest (the U.S.) hitting a new record, BNEF finds.
Looking at the overall renewable energy capacity investment figures for 2019, wind (onshore and offshore) led the way with $138.2 billion globally, up 6%. Solar was close behind, at $131.1 billion, down 3%. Falling capital costs in wind and solar meant that the two combined are likely to have seen around 180 GW added last year, up some 20GW in 2018, BNEF data show.