Increased investor confidence in clean energy
27 October 2022 at 1:24 pm
Government collaboration and support are key drivers for increased optimism in green energy investment, but risks remain a deterrent, say renewable energy investors.
The legislation of climate targets and demonstrable government support is increasing confidence among investors looking to enter into the clean energy industry.
The Clean Energy Investment Confidence Survey revealed greater optimism in the market for renewable energy over the first quarter of this financial year. The survey considered insights from members of the Clean Energy Investor Group, an advocacy body for Australian and international renewable energy investors.
Government decisions including legislated national climate targets, demonstrated minister support for clean energy transition, state-based policy to drive investment and Australia’s first offshore renewable energy infrastructure area all contributed to the result.
The findings come just days after the federal government handed down a climate-focused budget, with $45.8 million allocated towards clean energy trade partnerships and international climate engagement, among a raft of other renewable spending initiatives. It also enshrined in law emissions reduction targets of 43 per cent by 2030 and net zero by 2050.
“Investors were very positive about the adoption of national, legislated climate targets and progress made by the three biggest states on their clean energy plans,” said Clean Energy Investor Group CEO Simon Corbell.
“During the quarter, NSW opened up the first renewable energy and storage tenders for the Central-West Orana REZ, Victoria announced its energy storage targets and Queensland released its 10-year energy and jobs plan.”
Yet the survey found that clean energy investors continue to face critical risks that delay projects and increase costs.
Uncertainty over emissions policy; unrealistic National Electricity Market scenario planning and coal closure timetable; complex and lengthy transmission development processes; a lack of marginal loss factor reform; and the potential introduction of locational marginal pricing were all cited as key deterrents by respondents.
Corbell called on the federal government to take more control over the reform agenda and seek greater collaboration across industries.
“Investors are more optimistic this quarter but remain cautious because Australia needs to deliver an extraordinary amount of transmission in a short period,” Corbell said.
“The most important issue for investors this quarter is that energy ministers are now collaborating to actively support the clean energy transition, in particular by agreeing to add an emissions objective in the National Electricity Objective and instructing senior officials to drive energy market reforms.
“According to AEMO’s 2022 Integrated System Plan, the Step Change scenario for the National Electricity Market will require something like $320 billion up to 2050 to build and operate new generation, storage and transmission assets.
“To unlock private capital at that scale, governments should work closely with investors to get the policies and market settings right.”
The Clean Energy Investment Confidence Survey launched at the start of the 2021-2022 financial year and regularly surveys Clean Energy Investor Group members on the key issues affecting them.
