The level of new investment commitments in large-scale renewable energy projects has collapsed by more than 50% according to new analysis by the Clean Energy Council, which reveals a fall from 51 projects worth $10.7 billion in 2018 down to 28 projects worth $4.5 billion in 2019.
While the strong flow of projects that were committed in 2017 and 2018 are now coming online, the pipeline of new projects commencing construction has dropped significantly due to the stalling of commitments in 2019.
Clean Energy Council CEO Kane Thornton said mounting regulatory risks, under investment in transmission and policy uncertainty have contributed to increased risks for investors and resulted in a lowering in confidence and slow-down in investment commitment.
“A continued slow-down in new investment will put greater pressure on reliability and power prices as Australia’s old coal-fired power stations continue to close. New investment is critical to replacing these coal-fired power stations and delivering on Australia’s emission reduction targets,” Thornton said.
Reduced investment confidence was reflected in the Clean Energy Council’s recent Clean Energy Outlook Index, which revealed a clear fall in investor confidence in the sector.
Top reasons for a decline in investor confidence were grid connection issues, a lack of strong national energy and climate policy and network congestions and constraints.
Many of the rules relating to grid connection, network investment and market design are no longer fit-for-purpose and are a significant deterrent to potential investors.
“These issues need to be resolved urgently if Australia hopes to attract investors and ensure the necessary level of new energy generation capacity,” Thornton said.
“Renewable energy has been the shining light in reducing emissions in Australia. If we hope to maintain this, we need strong leadership and collaboration to address the policy gaps and regulatory barriers facing new generation.”