The wave of wind, solar and battery energy investments across Australia is becoming a tsunami, with $11 billion of projects under way or set to begin construction this calendar year.
AGL Energy and QIC's blockbuster 453-megawatt Cooper's Gap wind farm in north Queensland won financial close on Thursday, pushing the combined power of projects in the pipeline to 5661 MW, the Clean Energy Council says.
That's close to the 5900MW that Bloomberg New Energy Finance says is needed to meet the federal Renewable Energy Target of about 23 per cent of total generation by 2020.
"There's no question that 2017 has been a game-changing year for the industry, with record investments being made in renewable energy projects across the country," said Clean Energy Council chief executive Kane Thornton.
Cooper's Gap will cost the $2-3 billion Powering Australian Renewables Fund (PARF) – backed by AGL, QIC and the Future Fund – $850 million, and deliver electricity and renewable energy credits to AGL for below $60/MWh.
Low-cost energy
It's the latest in a series of big wind and solar projects to promise energy at lower prices than a new high-tech coal-fired power station of the kind promoted by former Prime Minister Tony Abbott could manage commercially.
On Monday US company Solar Reserve said it would build a 150MW solar thermal power plant near Port Augusta, South Australia, for $650 million, and sell the power to the SA government for $78/MWh or less.
Earlier this year Origin Energy sold its 530MW Stockyard Hill wind farm in Victoria to China's Goldwind with a deal to buy the power and renewable energy credits for about $52/MWh, and AGL sold its Silverton wind farm in NSW to PARF with a power and credits purchase deal at $65 /MWh.
According to figures compiled by the Clean Energy Council and AFR Weekend, 2600MW of wind and solar projects are under construction or have already been commissioned in 2017 at a cost of $4.6 billion. Another 3190MW of projects worth $$6.35 billion are committed or expected to begin construction this year or in January.
More conservatively, Bloomberg New Energy Finance counts about $3.7 billion of renewable energy investment commitments for the first half of the year, and $1.1 billion for the September quarter to date – or nearly $5 billion.
Post-2020 challenge
Smaller-scale solar rooftop installations are not included in these figures and are also running at record levels for the first half of the year, with more businesses installing panels as the price drops.
But the boom in large-scale renewables may not continue after 2020 if the Finkel energy review's proposal to extend the Renewable Energy Target into a Clean Energy Target is not adopted.
Bloomberg New Energy Finance's Kobad Bhavnagri said that from 2020 to 2025 not much new capacity will be needed, because rooftop solar installations by households and businesses will continue to grow and "crowd out the need for large scale" wind and solar.
He expects the installed base of rooftop solar to jump from 6400MW by end of this year to 16,100MW by end 2025.
"Without further policy we think there'll be a large-scale downturn from 202 to 2025," Mr Bhavnagri said.
"Without a Clean Energy Target that can finally provide much-needed policy certainty to replace old coal generation and drive down power prices," Mr Thornton said.
