New large scale renewable projects accounted for 5 per cent of all non-mining business investment in Australia according to a recent bulletin released by the Reserve Bank of Australia (RBA).
The new RBA paper “Renewable Energy Investment in Australia” predicts slowing renewables investment driven by changing wholesale electricity prices, government policy (or lack thereof) and the escalating constraints on parts of the electricity grid where future projects are planned.
Large scale renewables accounted for more than $20 billion of new investment between 2016-19, although the rate of committed projects halved last year to 2GW from the record high of 4.3GW in 2019.
The growing importance of renewable generation as both a major source of private sector investment and as an integral part of the transformation of the Australian economy is reflected in the growing interest the RBA has taken in the sector over the past year.
In March last year Deputy Governor of the RBA Guy Debelle put climate change on the Bank’s watch list with a major speech outlining the risks a warming climate created for the Australian economy. Debelle said climate change would increasingly inform the bank’s decisions around setting monetary policy.
Then in September the RBA examined the future of Australian coal exports in the face of growing global demand for renewables.
In its most recent Bulletin on renewables investment, the RBA warned that while the cost of renewable generation continued to fall, wholesale prices would be less likely to drive future projects as more renewables result in softer wholesale prices at times of high renewable generation, like the middle of the day.
All this points to the need for revised national electricity policy to manage the investment of a broader suite of technologies to complement further renewables investment to deliver the reliability and affordability required by consumers.