Australia has two stark options, we can backtrack or step up.
Our nation’s goal to achieve 82% renewable energy by 2030 is ambitious, and we aren’t currently on track to deliver it.
Energy and climate change has inflicted plenty of political casualties over the past few decades. Cutting and running would be the advice from plenty of political apparatchiks carrying the scars of the past. But Australia isn’t known for squibbing on the tough call and big goals.
Right now, we need vision, courage and leadership and we need to back ourselves that we can get the job done, drive down power prices and become a clean energy superpower.
This week’s federal government announcement was a massive commitment.
It aims to put Australia back on track to achieve the government’s policy of 82% renewables by 2030, replacing aging coal fired generation with cheaper renewable energy and driving down power prices.
There will always be voices saying it can’t be done, or shouldn’t be done. They are the same sceptics that said we couldn’t achieve the 10% target for renewables and again when it got increased to 20%. Each time, with clear focus, strong policy and an industry growing in confidence and capability, we got it done ahead of time and at lower cost.
This week, the government starred down the naysayers, and doubled down.
The task for achieving 82% renewable energy has been getting tougher. As a nation, we haven’t planned well.
The closure of coal generation is now speeding up as old generators get beyond their life. We have under-invested in new renewable generation despite knowing it will be critical to an energy system that is clean, reliable and low cost.
Investment in renewable energy has seriously slowed over the past year, as a result of increased global competition and an accumulation of the challenges associated with the lack of planning and leadership over the previous decade.
We wasted the past decade bickering about climate change and swapping energy policies as often as we switched Prime Ministers.
So far this calendar year, just 0.6GW of new large-scale wind and solar projects have been committed, at a time when we need closer to 7GW per annum.
Thankfully, Australian households and businesses are helping to fill the void with continued strong uptake of rooftop solar systems that helps to keep Australia on track.
With increased power prices and growing anxiety about cost of living, there is more to be done by governments to further support homes and businesses go solar and batteries. This will be important to filling the void alongside accelerated deployment of large wind and solar, more energy storage and a modernisation and expansion of the grid.
Credit where it’s due – the federal and state governments are working hard to accelerate investment in energy storage and bringing forward long overdue grid expansion.
These have been big challenges that are rapidly being overcome. But the missing piece – until yesterday – was the policy to overcome the challenges and accelerate large-scale generation investment.
Investors are keen and have plunged some $30 billion into new wind and solar projects and big batteries over the past five years.
This was underpinned by the Renewable Energy Target, a market-based policy that incentivised significant investment in new generation. The RET was achieved in 2020 and has begun to phase out.
While renewable energy remains the lowest cost form of new generation, there is a clear role for government to facilitate the enormous levels of investment needed to transition our energy system.
There always has been. Government doesn’t need to build, own and operate power stations, but they do need to put policies in place that provide some level of confidence for investments that are capital intensive and long lived.
This week’s announcement builds on the Capacity Investment Scheme, providing contracts for some 32GW of new renewable energy capacity and generation. Getting the detail right is critical, so is moving quickly to rebuild lost momentum on the energy transition.
Government will need to move swiftly and leverage the existing institutions and learning from the Capacity Investment Scheme that it has been based on. The devil will be in the detail.
There will need to be clarity and transparency of how decisions will be made and which criteria, beyond cost, will be used to determine which projects are successful; and how to ensure the contracts can flex in line with changing projects costs and market prices.
Government rightly recognised the need to unlock other constraints in the system, including much needed reform to planning regimes across each state and territory and helping develop the workforce necessary to deliver these projects.
It’s crucial that this new policy provides increased certainty to investors and the enormous private sector capital and capability that will be essential to Australia becoming a clean energy superpower. Get it right, and Australia’s 82% target will be smashed ahead of time and budget. Like all the targets that have gone before.
Kane Thornton is the CEO of the Clean Energy Council
