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 Victorian and Western Australian State Budgets In recent weeks we’ve seen both the Victorian and Western Australian Governments deliver budgets for their State. Both have included significant investments in the energy and resources sector. In Victoria, the budget has signalled the importance of the mineral industry to regional development. Victorian mines directly contribute $510 million into the state economy in 2020-21. 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. What to expect from the new Australian government? In May, the Australian Labor Party (ALP) achieved a majority government while the Greens and independents hold the balance of power in the Senate. This signals a new era for Australia, with voters clearly putting climate change high on the agenda for the next three years. ARELJ - Case Note - Australian Offshore Petroleum Regulation: Defining and Protecting the National Interest What to expect in 2022 Despite an unpredictable two years, the energy and resources sector has weathered tumultuous conditions and come through stronger. All signs indicate that 2022 and beyond will see strong growth in demand and exciting new developments. Submission - DISER Consultation Paper December 2020 ‘Enhancing Australia’s decommissioning framework for offshore oil and gas activities’ Showing 0 Comment Comments are closed.