Head honchos in renewables focus on the connection dilemma and shrug off 2030 federal net-zero ambivalence.
If the federal government is struggling with the concept of a transition to clean energy then the states will step in. That’s the message from the more than 60 CEOs and senior managers in the renewables industry surveyed in the Clean Energy Council’s Clean Energy Outlook Confidence Index, a bi-annual measure of optimism — or pessimism — about Australia’s pathway to an emissions-free future.
In the latest survey, conducted in November, investment confidence had returned to July 2020 levels, the strongest since the survey began in July 2018. Respondents gave the local renewables sector a score of 7.3 out of 10, up from 6.3 just six months ago.
Among the states and territories, NSW placed first (7.9 confidence score out of 10), followed by Queensland and Victoria (6.7 each), South Australia (5.6), the ACT (5.4), Western Australia (5.1), Tasmania (4.9) and the Northern Territory (4.7).
Some clues about the survey pool’s reservations could be found in comments that accompanied the numbers: “Australia will be the hottest investment target for clean energy,” said one, so long as the “right policies and government subsidies” are in place.
“The main uncertainty is a result of lack of clarity on federal climate policy,” said another, who also pointed to the substantial work required to ensure the grid is up to the task of linking distant and disparate generation with the few cities on Australia’s vast eastern seaboard.
CEC chief executive Kane Thornton said investment in generation will only be truly freed up if the market recognises a serious intention to upgrade the grid. “Reform has been slow and a lack of transmission investment is now becoming a major impediment to a smooth and low-cost energy transition,” Thornton said in a statement.
In the aftermath of the Glasgow Climate Change Conference in November, the survey showed wary support for the Australian government’s pledge to achieve net-zero emissions by 2050: 48 per cent said the decision did not alter their intentions to invest, whereas 38 per cent said it increased their confidence and 14 per cent said the opposite.
There was strong consensus, however, that an interim 2030 emissions reduction target from Canberra would push things along: 79 per cent agreed it would increase investor sentiment and 21 per cent said it would not move the needle.
“While a stronger 2030 target wouldn’t necessarily change the renewable energy roll-out speed, it would provide stronger signals from the government to the broader economy and communities,” one respondent said.
Most of those surveyed (82 per cent) expected their companies to be recruiting over the next 12 months, with the remainder expecting no change in staff numbers.
The biggest challenge (no surprises) is the grid-connection process and technical requirements, the bigwigs agreed (a view they have shared since 2019). Other major worries in descending order are: under-investment in network capacity, unpredictable government intervention in the energy market, a lack of long-term integrated federal energy and climate policy, concerns around future market design and marginal loss factors.
The CEC, said Thornton, is already working on it. “The Connections Reform Initiative – which the Clean Energy Council has developed with the Australian Energy Market Operator to bring together Clean Energy Council members, network service providers and key market bodies – will shortly release a roadmap to overhaul the connection process,” he said.
Or, in the words of one survey respondent: “Grid, grid, grid, grid — like everyone else we worry about the three C’s: connection, curtailment and current.”