Investors are positive about the outlook for Australian renewables, with Australian investors leading the way. Nearly two-thirds (65%) of investors say they will increase investment in the next 12 - 24 months, with another 20% saying their current level of investment will remain unchanged, according to a new report from MinterEllison and Acuris: Australian Renewables Report 2021.
Renewable energy sources most likely to meet system reliability requirements in Australia (ranked from 1 to 11, where 1 = least likely and 11 = most likely), within the next 10 years.
“This compares favourably with sentiment prior to the onset of COVID-19, which, in 2019, was 68%,” said MinterEllison partner and Head of the firm’s Energy & Resources Group, Simon Scott.
“Our study revealed that 50% of investors said COVID-19 is having no impact on their investment strategy, while another 35% say they will renew investment within the next year,” Scott added.
Renewable energy targets are seen by investors as key factors in the development of clean energy projects in Australia.
Australia’s safe haven credentials are a key attraction to international investors. However, domestic investors, keen to move before foreign investors, remain the most enthusiastic, with 83% of Australia-based respondents planning to increase the amount they invest. Investors from Asia Pacific plan to increase their investment by 77%, a considerable increase on 49% in 2019.
“Australia ranks high among the countries offering the most supportive financing environment for renewables,” said MinterEllison Energy Partner, Joel Reid. 87% of respondents predict that Australia will have the most supportive environment in 12 months’ time versus 68% today. “This performance is comparable with the likes of major renewables markets in Europe (Germany) and North America (Canada),” he added.
One of the positive factors shaping the renewables financing environment is the growth of ESG lending and investing. 2020 was a year in which some domestic and overseas banks and financial institutions reappraised lending on fossil fuel projects – while looking to back renewable energy projects.
Combinations of solar, wind and batteries could hold the key to providing reliable and consistent generation as existing thermal generation reaches the end of its life. 81% of respondents think that hybrid solutions combining wind, solar and storage hold huge potential for Australia.
Risk-reward sentiment is shifting in favour of hydrogen. “In 2019, 47% of investors said it was an opportunity sector, although 53% said it was too risky. This study shows that 49% now see it is an opportunity sector. Notably, just 31% now say it is too risky. In short, positive momentum is building,” said Reid.
Renewables developers are expected to be the most active investor group in the coming year, according to 99% of respondents. 89% believe power producers will play a greater role in the market, up from 82% in the last study. “The confidence in Australia’s renewable energy sector is strong but continues to face challenges in accessing a grid that has been developed at an earlier time for a thermal-based generation fleet. Improving our network issues – which could be assisted by the development of renewable energy zones in various Australian jurisdictions – will remove a significant risk for investors and their financiers,” said Reid.
Funds – which include infrastructure, private equity and pension/superannuation funds – also ranked highly, with 80% of respondents expecting these to be among the most active. “Inbound infrastructure developers and investors could be an important factor here with 71% of respondents citing regional renewables funds will be increasingly active and competitive in the Australian market in the year ahead,” Scott noted.
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Energy Global's Spring 2021 issue
The Spring issue of Energy Global features a varied spectrum of in-depth technical articles detailing recent projects, future projections, and technological advancements in the renewables sector, from companies including GlobalData, Atlas Copco, Watlow, QED Naval, TRACTO, AB Energy, and more.