POLICY BRIEFING: DESPITE COALITION VICTORY, THE CLEAN ENERGY TRANSITION WILL CONTINUE

By Simon Corbell

An unexpected federal election victory for the conservative Liberal / National Coalition led by Scott Morrison signals a new environment where state, territory, corporate and community action will need to drive and bolster the momentum for renewable energy development in Australia.

With an inadequate renewable energy policy at the federal level, a significant amount of grassroots support for climate action and renewable energy development will be a main driver to stimulate new policy approaches and renewable energy projects. Key market fundamentals, such as the cost competitiveness of renewable energy, will also continue to influence the deployment of wind, solar and, increasingly, battery storage to replace the anticipated retirement of over 25,000MW of thermal coal capacity by 2040.

In many respects the election result signals that the past 3 years of strong growth in the renewable energy development is anticipated to continue, despite, rather than because of, federal government policy. Current projections from the Clean Energy Regulator (CER) confirm renewable energy development of 5523MW is committed this financial year.

State governments will now need to do much of the heavy lifting to support higher levels of renewable energy development and grid augmentation. With the ambitious Renewable Energy Targets (RETs) of Victoria (40% by 2025) and Queensland (50% by 2030) states will be under increased pressure to set higher state based RETs, announce further rounds of reverse auctions and implement additional measures to support grid expansion, electric vehicles and battery storage. In NSW, a renewed focus on renewable energy growth may not see an explicit state based target but instead an acceleration of its Transmission Infrastructure Strategy. With the Coalition in power, the impact of state and territory policy will be a key factor influencing the investment environment for renewable energy development over the next three years.

Ongoing development of corporate Power Purchase Agreement’s (PPA) will also be a key market driver. The maturing of initiatives such as the Business Renewables Centre - Australia which acts as a clearing house for aggregating off takers and connects buyers with generators and other service providers will continue. We can expect to see more corporates also join the RE100 movement, with major banks such as Westpac and ANZ having already signed on and more planning to follow. As corporate Australia continues to see the moral and financial imperative of responding to climate change, and the ongoing impact of volatile energy prices, we expect to continue to see a significant strengthening and deepening of the corporate PPA market.