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🇦🇺 Australia /Energy & Infrastructure

Flagship renewable energy scheme becalmed as wind woes deepen

From ABC Australia · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Australia is falling significantly short of its goal to build approximately 40 wind turbines per month needed for its 2030 renewable energy targets.
  • The current wind farm drought is attributed to economic factors, with the cost of building turbines being too high relative to subdued wholesale electricity prices.
  • The government's Capacity Investment Scheme (CIS), designed to incentivize renewable projects, has struggled as wind projects offered prices that were too low to be viable.

Australia faces significant challenges in meeting its ambitious renewable energy targets, particularly concerning the development of wind power. Minister for Climate Change and Energy, Chris Bowen, stated in mid-2023 that the nation needed to construct around 40 wind turbines monthly to achieve the goal of sourcing 82% of electricity from renewables by 2030.

Despite a long pipeline of potential projects and a recent improvement in the Australian Energy Market Operator's outlook, the reality on the ground is a "wind farm drought." This shortage threatens the government's flagship renewable energy ambitions, primarily due to economic headwinds.

We need to build around 40 wind turbines a month to get this job done.

— Chris BowenThe Minister for Climate Change and Energy's statement in mid-2023 on the scale of the renewable energy transition.

Analysts point to the high cost of building wind turbines, especially when wholesale electricity prices are currently subdued. "You're basically out of the money," explains David Dixon, an analyst at Rystad, highlighting the economic disincentive for developers.

The government's Capacity Investment Scheme (CIS), intended to underwrite the revenues of renewable projects through auctions, has also encountered difficulties. While the scheme aims to encourage clean energy capacity without excessive taxpayer cost, many wind projects submitted bids that were too low to be financially sustainable. This has left projects awarded CIS support struggling to secure financing for construction, undermining the scheme's effectiveness.

You're basically out of the money.

— David DixonAn analyst at Rystad explaining the economic challenges facing wind power development.
DistantNews Editorial

Originally published by ABC Australia. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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