Australia’s Energy Transition Gathers Pace!
Current Energy Mix: Based on recent data released by Australia’s Federal Government, fossil fuels continue to power Australia’s electricity production contributing 68% of total electricity generation in 2022 whereas renewables share of Australia’s energy generation reached 32% by 2022. By various industry estimates , energy generation from renewables (mainly solar and wind) has since grown to represent c35% of total energy mix.
Renewable Energy Powers Ahead! Share of renewables in Australia’s energy mix has increased progressively over the past few decades rising from 10% in the mid-90s to reach c32% by 2022. Importantly, energy produced from renewables has doubled from 16% in 2016–17 to c32%–35% currently underscoring the increased emphasis on renewables and resulting transition taking place in Australia’s energy mix.
A notable milestone in Australia’s energy transition story was achieved in 2021–22 period whereby as a result of continued growth in production in recent decade, renewable energy supply (primarily from solar and wind) exceeded the annual electricity consumed by Australia’s nearly 10 Million households according to latest data released by the Australian Bureau of Statistics (ABS). Data from ABS also highlighted that renewable generation from wind, solar and hydro grew by c19% YoY during 2021–22 which further underscored the shifting momentum in Australia’s energy transition. Although there remains a significant way distance to travel if Australia is to meet its ambitious target of 82% energy generation from renewables by 2030, the recent progress has is encouraging.
However it is important to underscore that renewable sources collectively still represent only c32% of Australia’s electricity output with traditional fuels including coal and natural gas still representing a dominant share of Australia’s electricity mix. Notably, Australia’s household consumption represents only c5% of the Nation’s electricity generation with Industry consumption (represented by businesses, factories and plants) still dominating electricity output (representing c15%) and energy exports representing c80% of the grid generation. The graph below underscores that this mix across domestic, industry and export usage has remained relatively unchanged over the past 10 years .
2030 Ambitions of Solar Transition! Australian Government has set ambitious climate transition goals which include doubling the target for emissions reductions by 2030 and setting the goal of reaching net zero emissions by 2050. On the Renewables Energy front, Australian Government has announced plans to generate more than 82% of its power from renewable sources by 2030 admist increasing apprehensions from industry experts/ advisory groups.
Where there is Will, there is a Way! A key aspect of this energy transformation remains investing in Australia’s grid infrastructure to ultimately make renewable energy accessible and affordable across different parts of Australia. To this end, Australian Government has announced $20Bn concessional loans and equity investments program to fund its “Rewiring the Nation” objective which has been set up under the management of the Clean Energy Finance Corporation (CEFC) — Australian Government owned “Green Bank” that promotes investments in clean energy finance projects . Under the “Rewire the Nation” program, CEFC aim remains to ensure capital is deployed to modernize Australia’s electricity infrastructure ensuring provision of renewable energy across Australia with a focus on transmission, distribution and storage projects paving the way for growth of renewable generation and distribution across Australia.
Key Role of CFEC: CEFC has a crucial role in ensuring delivery of this infrastructure as it has made commitments of $1.2Bn in renewable energy and grid-related projects in 2022–23 working with project developers and investors on 14 large scale solar , wind and storage projects across Australia. CFEC has played a crucial role in helping developers overcome challenges such as supply chain and grid constraints in an inflationary investing environment. CFEC has forecast that an estimated $3.6GW of renewable generation will need to be installed each year to ensure achievement of 2030 targets by Australian Government. To this end, Australia has made significant progress in 2023 including deployment of capital for initial projects under Rewiring the Nation Program. On a whole 2023, was a record breaking year for CFEC as it committed c$1.9 Bn in new investments in the 2022–23 financial year (including a record $1.2 Bn in renewable energy and grid-related projects).
82% Energy Transition to renewables remains an ambitious target by 2030 however with continued deployment of capital on an expedited basis by CFEC targeting key energy corridors across the country and continued support from policy makers, Australia remains on course to make significant progress by 2030!
