Investment in new large-scale renewable energy capacity plummeted by nearly 80 percent in the preceding year due to a myriad of challenges, including grid bottlenecks, sluggish planning and environmental approvals, escalating costs, and constrained labor markets. These obstacles have significantly impeded Australia’s progress towards achieving its 2030 climate objectives.
Kane Thornton, the chief executive of the Clean Energy Council (CEC), characterized 2023 as an arduous period for the renewable energy sector. The CEC’s analysis revealed a sharp decline in new financial commitments for replacement generation, plummeting to $1.5 billion from $6.5 billion in 2022, particularly impacting wind energy projects, with no new wind farms advancing during the year. This downturn marked the lowest level of new commitments to large-scale renewables since the CEC began tracking investment in 2017, indicating a concerning trend for future expansion.
Although investment in large-scale batteries surged to a record high and rooftop solar installations accelerated, commitments to new clean energy generation fell short of the 6-7 gigawatts required to meet the federal government’s target of achieving 82 percent renewable energy by the end of the decade. Thornton emphasized the urgency of reversing this trend promptly to meet the 2030 renewable energy target, acknowledging the substantial work required ahead.
The sluggish investment in clean energy corroborates concerns expressed by energy industry leaders regarding Australia’s insufficient pace in transitioning away from aging coal power stations. This trend suggests a probable extension of Origin Energy’s Eraring coal power station, slated for closure in August 2025, further emphasizing the necessity for accelerated investment in renewables.
The CEC characterized 2023 as a particularly challenging year for new investment in large wind and solar projects, underscoring the sector’s direction. Notably, no new large-scale wind farms reached financial close, and only seven solar projects received final approval, a significant decline from the previous year.
The decline in investment was reflected in the December quarter’s record-low quarterly average, dropping below $1 billion for only the third time since 2017, highlighting the increasingly complex investment landscape. The government’s expanded Capacity Investment Scheme, announced in November, aims to reverse this trend by delivering an additional 32 gigawatts of capacity by 2030, albeit without addressing the critical issue of transmission grid expansion, which many consider a major obstacle.
Thornton emphasized the pivotal role of grid expansion in achieving 2030 targets, citing the government’s Rewiring the Nation policy as a crucial initiative. In contrast, investments in batteries experienced substantial growth, surpassing $4.9 billion in new projects, driven by the imperative for increased storage capacity. Rooftop solar installations also continued to expand, contributing 3.1 gigawatts of capacity, nearing the record set in 2021.
Overall, the addition of renewable energy to Australia’s grid increased significantly in 2023, elevating its share of total energy generation to 39.4 percent. However, despite this progress, renewable energy’s share remains below the 2030 target, underscoring the ongoing dominance of coal in the energy mix.