Australia's ambitious goal of achieving nearly 80% renewable energy generation by 2030, as set by the federal government, appears to be falling short. The pursuit of a substantial renewable energy transition is encountering obstacles, from resistance against critical power infrastructure to cost overruns on major projects. Even taking into account the volume of hiring across the renewables sector, we still haven’t seen the same progress made in terms of new projects coming online or reaching final investment decision (FID).
Current projections suggest that Australia might only reach around 60% renewables by 2030. A primary obstacle to this energy transition lies in the resistance against the construction of essential high-voltage power lines. These power lines are crucial for efficiently integrating the vast solar and wind resources into the grid. In the state of Victoria, opposition has been growing against planned transmission lines, with critics arguing that they would cause unwarranted social and environmental harm while burdening consumers with billions in additional costs. Some communities are advocating for major transmission lines to be placed underground, such as the Western Renewables Link and the VNI-West project, adding delays and inflating costs for these vital connections.
These delays are contributing to the extended operation of aging coal-fired power stations, which are being kept operational to maintain grid stability and prevent a shortfall in new green energy sources.
Despite the availability of capital, including significant private sector investments, progress on key projects is encountering roadblocks. One prominent example is the Sun Cable project, which aims to export Northern Territory solar power to Singapore via a sub-sea cable. Competition has intensified with a new deal led by Vena Energy and Shell, challenging the project's viability. Internal disagreements between major shareholders, including billionaire Mike Cannon-Brookes and Andrew Forrest, led to setbacks and restructuring. The project is now being divided into domestic and export-focused components, potentially hindering its original goal of a substantial 20GW and 42GWh capacity.
Another project facing challenges is the Marinus Link, an underwater electricity interconnector connecting Tasmania to the mainland. Escalating costs have prompted Tasmania's government to consider renegotiating the terms of the project. Initially estimated to cost between $3.1 billion and $3.8 billion, Marinus Link seeks to leverage Tasmania's hydro and renewable energy resources to provide affordable power and support economic growth.
The Marinus Link project promises benefits such as access to abundant renewable storage capacity and job creation in both Tasmania and Victoria. It aims to bolster the renewable energy market and foster new industries, with the potential to contribute over $10 billion in gross market benefits.
All of this has a major knock-on effect to hiring across the front line of the Energy Transition and Renewables sector. Several renewables investors and developers built up large teams in anticipation of several projects reaching FID and completion but with delays and projects being derailed across the board, many of these teams have either had to cut costs, reduce or delay bonuses or put some of their growth plans on ice. As a result, we’re seeing the rate of hiring dipping across renewables investing, and in some larger organisations there have even been some cuts.
In conclusion, while interest in renewables investment and development remains strong, overcoming the various challenges is crucial to realising the country's ambitious green energy goals, ensuring a sustainable energy future and putting some of the momentum back into hiring across the sector.
For more information or to discuss opportunities in the green investing space, call Rory Callow- Head of Energy Transition & Infrastructure Investment Management – on 02 9235 9430 or at firstname.lastname@example.org