Could grid and regulatory constraints curb Australia's renewables boom?

Developers eye the country’s falling costs and demand for contracts.

Reuters reports that grid constraints and extra scrutiny from network operators could not curb Australia’s wind and solar boom as developers eyes the country’s abundant wind and sun, falling turbine and panel costs, and corporate demand for contracts to hedge against rising power tariffs.

“Confidence is high as the industry enters 2019, with unprecedented levels of construction activity under way,” the report quotes Anna Freeman, a director at the Clean Energy Council, an industry group.

Companies like Neoen, its compatriot Total-Eren, India’s Adani, U.S. utility AES Corp and Germany’s Sonnen are expanding in Australia, looking to fill a gap as ageing coal-fired plants are retired over the next two decades.

“We believe that we have a great future in Australia, because we have the right answers,” said Neoen CEO Xavier Barbaro.

A total of 14.7GW of large-scale solar and wind projects worth $14b were under construction or reached financial close last year, more than double 2017’s record, according to the Clean Energy Council.

This rush of projects, with no clear guidance on where they best fit, led to an “element of anarchy”, but that is changing, said Simon Currie, founder of advisory firm Energy Estate. The Australian Energy Market Operator (AEMO), the energy council and network companies are working out clear guidelines on where to build plants and how to connect them to the grid.

“We’re moving from what was an opportunistic-based approach ... into something that will be much more planned,” said Currie, whose company wants to develop Australia’s biggest renewable energy hub, with 4 GW of wind, solar and pumped hydro capacity in New South Wales.

Renewable projects added to the grid have grown from 22 with 1.2GW of capacity in 2013 to a record 45 projects with 2.9GW added in 2018, AEMO added. There are 114 more applications representing 15.9 GW pending, indicating plenty of potential congestion ahead.

Read the full report here.

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