CEC warns pace must pick up as renewables investment hits $4.3 billion

New data shows that $4.3 billion (USD 2.84 billion) was invested in financially committed renewable generation and storage projects throughout Australia in the final quarter of 2022, a 10-fold increase on the previous quarter but the Clean Energy Council (CEC) said it may still not be enough to achieve the federal government’s renewable energy ambitions.

The Renewable Projects Quarterly Report for Q4 2022 shows developers made the highest quarterly investment since Q3 2018. Six renewable energy generation and storage projects reached financial close, representing 1,923 MW of new installed generation capacity and 800 MWh of energy storage. In terms of installed capacity, this was 1,523 MW more than Q3 2022 and 1,824 MW more than the same period 12 months ago. For storage, this was 516 MWh more than Q3, however 647 MWh less than 12 months ago.

The year-end figures lifted investment commitments to $6.2 billion for 2022, a 17% increase on the previous year but CEC Chief Executive Officer Kane Thornton said the level of investment may still not be enough to achieve the federal government’s ambition to increase the share of renewable energy in the National Electricity Market (NEM) to 82% by 2030.

“While the uptick is encouraging, one quarter doesn’t mean a trend. Australia is deploying new large-scale generation – wind and solar farms – more slowly than needed to reach the 82% target for renewable energy on the NEM,” he said.

“The fact remains that the rolling quarterly average investment over 12 months has not risen above $2 billion since the second quarter of 2019.”

Thornton said the increase in investment was a response to the “more positive political and policy environment” and greater coordination by governments but urged those same governments to review their policies to ensure ongoing increased investment.

“The current policy settings are only going to get us so far, and it’s clear that with significant shifts in capital overseas through the United States Inflation Reduction Act and other responses from the likes of the European Union and the Gulf States, Australia needs to do more,” he said.

The release of the report comes a fortnight after the Australian Energy Market Operator (AEMO) warned of potential “reliability gaps” in the grid if renewable projects are not accelerated as coal and gas generators continue to exit the system.

In its updated Electricity Statement of Opportunities, AEMO noted that all mainland states in the NEM are forecast to breach the reliability standard from 2027 onwards without “urgent” action to encourage more clean energy capacity and storage.

“Urgent and ongoing investment in renewable energy, long-duration storage and transmission is needed to reliably meet demand from Australian homes and businesses,” AEMO Chief Executive Officer Daniel Westerman said.

The CEC quarterly report shows that in 2022, 26 projects across Australia reached financial commitment. This was seven projects fewer than 2021 and the lowest annual tally of new projects reaching this stage since the council began recording data in 2017.

A total of 26 generation and storage projects began construction in 2022, while only 18 were commissioned. In 2021, these totals reached 32 and 46 respectively.

New South Wales contributed the most financially committed projects in 2022, with its five generation projects accounting for 1,559 MW and an additional six projects contributing 5700 MWh worth of storage. Victoria and Queensland each contributed five projects for 2022, followed by South Australia with three.