2020 – the year in renewables

Even Covid-19 could not slow down the rush to renewables in Australia. Predictions that either the impact of the virus and associated lockdowns or the plateauing of the large scale renewables obligation would lead to a dramatic drop off in deployment appear unduly pessimistic.

Based on the Clean Energy Regulator’s (CER) December data, there was a total of 3,855MW large scale* renewables accredited for renewable energy certificates in 2020. The final figure may turn out to be larger still, as installed systems can take a few months to confirm accreditation. Almost 2/3 of the capacity was wind, while solar PV was just over a third. Only 6MW was biomass.

Geographically Victoria (2GW) and NSW (almost 1GW) dominated. WA managed to add 566MW, too.

While the annual total is lower than 2019, when 4.1GW was accredited, it is far from the collapse in renewables investment some had feared. The project pipeline continues, with 3.4GW considered to be committed by the CER at the end of the year and 3.3GW rated probable. This compares to 3.8GW and 1.5GW respectively at the end of 2019.

The ongoing pipeline is supported by a mix of corporate and electricity retailer PPAs and the prospect of government contracts, with all jurisdictions using their own methods to attract investment. The “regional jobs and investment” story along with the “keeping the lights on and prices down” story are too much for governments for resist, even if neither story stands up well to hard economic analysis.

Of the corporate PPAs, the standout in recent months was Newcrest mining’s deal with Tilt renewables for 220MW (specifically 55 per cent of the output of a 400MW wind farm) from Rye Park wind farm in NSW. This will cover 40 per cent of the energy needs if Newcrest’s Cadia mine and may be the largest corporate PPA with a single buyer to date.

Meanwhile, the rooftop PV market continues to grow like Topsy. While the CER’s final figures aren’t in yet, at September the market was on track for 2.9GW versus 2.2GW in 2019. The total capacity added of both large and small scale is thus around 6.8GW, beating the record set only last year.

Record investment is leading to records in the electricity market too. AEMO’s quarterly energy dynamics report for October-December lists a few: record wind and solar output; record incidence of negative prices; lowest quarterly demand (operational) since 2001 – i.e. around market start; new minimum demand records for Victoria on Christmas day and South Australia on 11 October. The latter also saw total solar output (large-scale and rooftop) equivalent to underlying demand. Outside of microgrids, this is the first time this has happened anywhere in the world. Notably, to keep the grid secure during this event, the market operator had to tell a handful of gas generators to run too and then export the resultant surplus energy to Victoria, as we’ve yet to work out how to keep a grid stable on solar power alone. So, another record broken was the amount paid to gas generators for running under direction.

Records in and of themselves aren’t that much more, just an eye-catching headline. It’s the changes in the underlying dynamics of the market that really matter. And depending which metrics you focus on, that change may seem fast or slow. For example, coal’s share of total generation in the NEM has only slipped by an average 1 per cent per year in the last decade. What we are seeing in the NEM (and also the WA market) are the impacts of an ongoing trend towards more variable renewables, more distributed generation, more intervention by the market operator to keep the lights on (and so more costs over and above the wholesale energy price), more transmission to connect the regions more tightly and to connect new renewables precincts and more regulatory change as policymakers scramble to keep up.