29 April Trends in the Australian renewables market April 29, 2021 By Sally Parker Environment, General, Resources and Energy RenewableEnergy, COVID-19, Solar, Wind, Hydrogen 0 In its Australian Renewables Report 2021, MinterEllison looks at trends in the renewable energy market and identifies opportunities for the future. While the COVID-19 pandemic has significantly impacted many markets, investor confidence in renewables has been maintained with 65% of investors saying they will increase investment over the next 24 months. Australia is particularly attractive to domestic investors and those in the Asia Pacific seeking to manage global volatility. More than half of the respondents also said that the pandemic didn’t impact their strategy thanks to how Australia managed to control the spread of the virus. There are several reasons that Australia is particularly attractive for investors including: With more solar potential than any other developed nation, 79% of respondents cited our favourable climate and topography. 74% of respondents cited greenfield opportunities as a significant positive to investing in Australia. This is thanks to the relatively low cost of acquiring land rights compared to other developed countries. Australian state and territory governments have also supported new and advanced renewables technology which is a drawcard for 67% of respondents. In addition the growth in ESG lending and investing is also encouraging for the industry, with many lenders actively decarbonising their portfolios. The favourable tax environment and rules-based legal system was cited by respondents as another drawcard, along with our political and regulatory stability. However, uncertainty around incentives for renewables was a detractor for 63% of investors. 86% of respondents believe that Renewable Energy Zones (REZ) are critical in facilitating further investment in renewables projects. At present, New South Wales, Victoria and Queensland have all committed to developing REZs to provide large-scale renewable energy generation and storage. The areas with the greatest opportunity include solar, wind and batteries with low risk and ability to provide reliable energy generation. 81% of respondents believe that hybrid solutions that combine wind, solar and storage have huge potential for Australia. Hydrogen also continues to grow in attractiveness as it becomes less risky. 69% of respondents believe that Australia has the potential to become a primary supplier of hydrogen to energy markets in the next two years. Interestingly, there is a divergence in opinions regarding fossil fuels. While 47% of respondents believe government is acting quickly to retire coal-fired power stations, 27% believe steps are not being taken. This may be in part due to different policies between the states and the relative importance that coal continues to hold for Australia economically - it is our second-biggest export. Looking forward, international investors, particularly from Asia Pacific and Europe, are expected to continue to play an important role in Australia. The most active investors are expected to be renewables developers according to 99% of respondents. Power producers and investment funds are also expected to play an important role in the investor landscape. The report demonstrates that, despite a global pandemic and significant climatic events, there continues to be significant opportunity in Australian renewables. Related Articles Dealing with market volatility in the oil and gas industry The oil and gas industry is experiencing unprecedented volatility since prices slumped in March following the collapse of the OPEC+ supply pact. In the past week alone oil prices have reached historical lows with West Texas crude reaching approximately -US$40 a barrel in future trades. Volatility has been driven by reduced output from Russia quickly followed by lockdowns associated with the COVID-19 pandemic. This is impacting economic growth across the world, with the OECD already lowering its global economic growth estimate for 2020 from 2.9% to 2.4%. The longer the outbreak continues, the greater the decline in global growth and the corresponding fall in demand for energy. ARELJ - Case Note - Australian Offshore Petroleum Regulation: Defining and Protecting the National Interest Submission - DISER Consultation Paper December 2020 ‘Enhancing Australia’s decommissioning framework for offshore oil and gas activities’ China’s cut to coal imports In October, China’s coal imports dropped by 47% compared to the same period last year. This equates to almost 12 million tonnes in one month and was a result of escalating trade tensions between Australia and China. A gas-led recovery is on the way The COVID-19 pandemic hit the Australian economy hard. In the March and June quarters of 2020, GDP plunged 7.3%, placing the country into recession. While the economy has since partially rebounded, the government has developed a long term plan for a gas-fired recovery. The economic benefits could be significant. A recent Ernst & Young report found that the oil and gas industry could boost the economy by over $350 billion and create 220,000 new jobs over the next 20 years if key projects are supported. This will be delivered across three key areas. Of the measures outlined, some are well on the way with others yet to come. The states boost the energy and resources sector This year will be remembered for the many challenges that it brought to both individuals and industry. As Australia starts to return to some normality, many states are looking to boost industry, increase jobs and innovate for the future. In this article, we look at various state initiatives designed to boost the energy and resources sector. Showing 0 Comment Comments are closed.