Why the clean energy sector is the real winner in the 2024-25 federal budget – pv Australia Magazine

The budget released earlier this month commendably addressed many of the challenges facing the green industry, placing significant emphasis on encouraging the production of critical resources and minerals, increasing the mobilization of both public and private capital, and supporting the development of key skills and technologies for the ecological industry energy transformation.

With Treasurer Jim Chalmers unveiling the A$22.7 billion ($15 billion) Future Made in Australia package, the focus on green energy investment is arguably more compelling than ever before and has undeniably positioned the clean energy sector as a clear winner.

Investment needs and government response

The Australian Energy Market Operator (AEMO) forecasts that to meet the federal government’s 82% renewable energy target by 2030, Australia must add at least 6GW of utility-scale generation capacity each year. With only 2.8 GW of new capacity added in 2023, rapid acceleration is crucial.

The Budget clearly placed green investment at the forefront of its financial agenda, meeting this need through the Future Made in Australia package and the expansion of the Capacity Investment Program, which aims to inject more than $65 billion in renewable capacity by 2030.

Encouragingly, of the $22.7 billion investment, $1.5 billion was earmarked for strengthening battery and solar panel supply chains through manufacturing incentives, and an additional $27.7 million for grid integration of consumer energy resources such as batteries and solar energy.

These investments are crucial to restoring investor confidence and ensuring that green projects of all scales can receive government support in an increasingly saturated market.

In 2024, the problems of 2023 still exist

The Clean Energy Council reported a significant slowdown in new financing commitments for utility-scale generation capacity, which fell sharply to $1.5 billion from $6.5 billion in 2022. This decline highlighted the complex and challenging landscape of new investment decisions , exacerbated by a limited network, slow planning and environmental impact assessment processes, higher costs and tighter markets for equipment and labor.

Although these problems will persist in 2024, it is clear that this time the budget did not provide only short-term solutions in the form of increased investments and tenders. Instead, it directly addressed persistent challenges such as transmission constraints, network stability issues and bureaucratic hurdles.

Process improvement

Effective approval processes are critical to the successful delivery of government investments. Australia’s lengthy plan approval processes, taking up to three years, pose significant challenges, resulting in project delays and increased costs.

For solar, wind and battery storage projects in Australia’s eastern jurisdictions, lead times are typically between 12 months and two years, according to Clean Energy Investor Group. As a result, investors are increasingly exploring offshore investment opportunities due to slow approval processes in Australia.

In New South Wales, home to some of the largest solar and wind projects, the average approval deadline for wind, solar and battery projects by the end of 2023 was 746 days, with Victoria seeing an average of 2023 376 days.

I welcome the $134.2 million budget allocation to speed up the approval of renewable energy projects, streamline decisions on environmental, cultural heritage and planning issues. This is a positive step forward in removing bureaucratic obstacles that could potentially result in escalating costs and investors’ willingness to commit to projects in Australia’s neighboring countries.

While state-by-state project approval processes are implemented, it is imperative to keep an eye on the national government’s investment. Each green project is unique, and it is my hope that this $134.2 million investment will unify the overarching protocol, providing a more unified approach where investors and developers can expect timely approvals.

Community involvement

High standards of public consultation are necessary. Strong relationships with landowners, especially farmers, built through thorough consultation processes and post-installation care are key.

The federal government’s $20.7 million investment in improving engagement with communities affected by the energy transition is commendable. The next key phase for both industry and government is to establish solid relationships with communities, ensuring mutual benefits through thorough consultation, transparent leasing arrangements and open knowledge sharing.

Skills and employment

While a rapid energy transition requires significant investment and skilled labour, Australia should not rely solely on foreign technology and labour.

Local skills and jobs play a key role in generating solar and clean energy. So much so that the Clean Energy Council has reported that to meet national targets, Australia will need an additional 450,000 electricians and construction jobs by 2030. This represents a third of all Australian job growth by 2030.

The federal government’s investment of $44.4 million in the Energy Jobs Plan and $134.2 million in skills and employment support in key regions is commendable.

Communities in regional areas will bear the brunt of renewable infrastructure, so providing sufficient funding and training programs to upskill local communities to build utility-scale solar and wind infrastructure will be just as important as upskilling workers in metropolitan areas, who typically focus on installing solar panels on the roof for commercial and/or personal purposes.

What’s next?

Once funding is available, the next key step is to ensure efficient processes and optimized allocation of funds within our systems. It is necessary not only to attract and engage more private and public capital, but also to effectively absorb and implement these investments. With ambitious goals set at both the state and federal levels, significantly reducing bureaucratic hurdles
and speeding up approval processes is of utmost importance not only for developers but equally for investors.

Author: Brenton Moratto, co-founder of ACLE Services