Australia on track to hit 2020 Renewable Energy Target
The Clean Energy Regulator has announced that there will be enough renewable energy projects built over the next three years to meet the Renewable Energy Target in 2020.
The Regulator had previously said that to meet the 2020 target of 33,000 GWh of additional renewable energy, approximately 6000 MW of large-scale generation capacity would need to be announced and built between 2016 and 2019. This milestone has now been surpassed ahead of schedule, according to Clean Energy Regulator Chair David Parker, following a record level of investment in renewable energy in 2017.
“While announcements started slowly in 2016, the momentum we saw in the later part of that year continued throughout 2017 and has now reached a level that we believe will be sufficient to meet the 2020 target,” Parker said.
Of the 6532 MW of new large-scale generation firmly announced since 2016, more than 4900 MW is fully financed, with most already under construction or operating, while the rest is expected to begin construction early this year. A further 1600 MW of projects have a power purchase agreement in place, which the Regulator expects will progress to financial close. Queensland will see the bulk of this new construction, followed by Victoria and NSW.
“In 2017, more than 1000 MW of renewable projects were completed and began generation, the biggest year ever for new build coming online,” Parker said.
“We expect 2018 and 2019 to be even bigger, with each year having more than double the new build completed compared to 2017.”
One of the major shifts in the market is the huge increase in share of large-scale solar. In the first 6000 MW committed under the scheme, solar contributed only 4% of the total. In the firmly announced projects since 2016, solar now makes up 46%.
“Solar is an important emerging player in the energy mix, particularly on long summer days,” said Parker. “Over the next few years as more of these projects become operational they will make an increasing contribution to meeting peak electricity demand.”
This increase will ensure significant additional electricity supply is available in the market well ahead of 2020. It is also expected to apply downward pressure on wholesale electricity prices over the next three years.
This year should see around 2600 MW of new renewables projects commence operating, which will further strengthen reliability and reduce emissions in addition to reducing electricity prices. The additional supply is expected to lead to a reduction in spot prices for large-scale generation certificates, which are purchased by liable entities — mostly electricity retailers — to meet their renewable energy target obligations.
In response to the news, Minister for the Environment and Energy Josh Frydenberg thanked the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA) for helping to get a number of projects off the ground. Importantly, he said, ARENA helped with the early learning that drove down the deployment costs of solar allowing it to be more cost competitive with wind.
“There is still a long way to go on the journey to reach the 2020 target, but we believe it will be met due to the hard work and tenacity of the electricity sector, the renewables industry and those that have financed these projects,” said Parker.
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