The growth in the renewable energy sector in Australia over the past five years has been significant. Australia’s electricity system has become cheaper, more reliable, and cleaner. The industry passed a significant milestone in 2021, with renewable energy accounting for 32.5% of Australia’s total electricity generation, the first time that more than a quarter of the country’s energy came from renewable sources.
With electricity prices surging in Australia up to 18.3% in 2022, which amounts to over $200 per year, the federal government is focusing efforts to increase renewable energy and storage. The government has a strong mandate for game-changing climate action. The government aims for renewable energy to make up over 80% of Australia’s electricity mix by 2030. The government plans to reduce Australia’s emissions by 43% by 2030.
Much of progress up to 2021 has been driven by state and territory governments, which introduced a number of world-leading renewable energy policies and targets in 2020. New South Wales, Victoria, and Queensland committed to developing Renewable Energy Zones. In NSW, the Government will support over 6,300 construction and 2,800 ongoing jobs, mostly in regional NSW. The NSW Government’s Electricity Strategy and Electricity Infrastructure Roadmap delivered the state’s first 5 Renewable Energy Zones (REZs) in the Central-West Orana, New England, South-West, Hunter-Central Coast, and Illawarra regions. Meanwhile, the Victoria government has pledged $391 million to establish 6 Renewable Energy Zones (REZs). As a result, the Australian renewable energy export industry has the potential to create almost 400,000 new jobs.
Offshore wind farms represent a key opportunity for Australia’s decarbonization. Australia introduced federal legislative framework for offshore wind in 2021. Energy produced from wind is Australia’s main sources of renewable energy, generating enough electricity to meet 7.1 percent of the nation’s total electricity demand. In Australia, there are set to be more wind farm projects taking place in 2022. There are 60 wind projects slated for the next 5 years with a total value of $25 billion. This energy type is one of the lowest-cost sources of new electricity supply in Australia, along with utility-scale solar PV. The cost of utility-scale wind energy in Australia is expected to continue falling, with new wind farms expected to deliver electricity at around $50-65/MWh in 2020 and below $50/MWh in 2030.
With large potential for renewable energy, large fossil fuel resources, and good potential CO2 storage sites, Australia is well placed to become a major producer of hydrogen for domestic use and as an export industry. Several noteworthy steps were taken in 2020 to develop Australia’s emerging renewable hydrogen industry. The most significant of these was hydrogen’s inclusion in the Federal Government’s Technology Investment Roadmap. A network of 13 regional hydrogen technology clusters has been unveiled across Australia as part of a drive to establish a nationwide hydrogen cluster. With $1.85 million to be invested in the clusters, the network will foster a multi-billion dollar, globally competitive hydrogen industry. The states and territories also upped their investment in renewable hydrogen, committing millions of dollars to various pilot projects and new initiatives throughout the year. For example, South Australia, Hydrogen Jobs Plan will power new jobs and industry through the build of a 250MWe hydrogen electrolyser facility, and a 200MW hydrogen power station – both amongst the world’s biggest.
Improved technologies, more complex electricity market designs, and increased penetration of renewable energy has been driving the deployment of energy storage solutions in Australia. It is expected that up to 400 new energy storage installations will be rolled out to assist with the green energy transition in Australia and provide grid security. Sixteen large-scale batteries were under construction at the end of 2020, representing more than 595 MW of new capacity. This will increase the country’s cumulative storage capacity to 2.7 gigawatt-hours, according to Wood Mackenzie’s latest report on Australia’s energy storage market. It is forecasted that the industry in Australia could implement dynamic tariffs (time-of-use tariffs) to shift some peak load and flatten peaks in electricity demand, leading to a decrease in the costs of running the electricity transmission and distribution networks. As energy storage continues to grow, micro-grids will become more dependent on renewable fuels rather than fossil fuels.
There remains a need for additional investment in transmission capacity to support the energy connections. The Australian Government’s Powering Australia plan provides significant opportunity for US Companies.
The plan will:
- Upgrade the electricity grid to fix energy transmission and drive down power prices.
- Make electric vehicles cheaper with an electric car discount and Australia’s first National Electric Vehicle Strategy.
- Adopt the Business Council of Australia’s recommendation for facilities already covered by the Government’s Safeguard Mechanism that emissions be reduced gradually and predictably over time, to support international competitiveness and economic growth – consistent with industry’s own commitment to net zero by 2050.
- Allocate up to $3 billion from Labor’s National Reconstruction Fund to invest in green metals (steel, alumina and aluminum); clean energy component manufacturing; hydrogen electrolysers and fuel switching; agricultural methane reduction and waste reduction.
- Provide direct financial support for measures that improve energy efficiency within existing industries and develop new industries in Regional Australia through a new Powering the Regions Fund.
- Roll out 85 solar banks around Australia to ensure more households can benefit from rooftop solar.
- Install 400 community batteries across the country.
- Demonstrate Commonwealth leadership by reducing the Australian Public Service’s own emissions to net zero by 2030.
- Invest in 10,000 New Energy Apprentices and a New Energy Skills Program.
- Establish a real-world vehicle fuel testing program to inform consumer choice.
- Work with large businesses to provide greater transparency on their climate related risks and opportunities.
There are a number of other opportunities available for U.S. exporters:
Advancing Renewables Program supports a broad range of development, demonstration, and pre-commercial deployment projects that can deliver affordable and reliable renewable energy for Australian businesses and families.
Regional Australia Microgrid Pilots Program aims to support pilot projects for microgrids in regional Australia.
National Hydrogen Roadmap provides a blueprint for the development of a hydrogen industry in Australia.
Renewable Energy Zones will accelerate the transition away from fossil fuels and towards zero-emissions electricity.