According to International Energy Agency (IEA) website publication on Renewables 2022 Analysis and forecast to 2027 report:
While grid fees and system costs impair distributed solar PV growth, state-level targets and PPAs propel expansion of utility scale renewables
With nearly 40 GW of new additions expected, Australia’s renewable power capacity is forecast to increase more than 85% from 2022 to 2027 thanks to statelevel auctions, incentives for distributed solar PV and corporate PPAs. This year’s forecast has been revised over 30% upwards from last year’s to reflect the announcement of new auctions, continued corporate power purchase activity to meet private sector decarbonisation goals, and new projects associated with renewable energy zones (REZs).
With the federal large-scale renewable energy target (LRET) having been achieved in 2019, states have set additional renewable energy targets. The current government’s Climate Bill 2022 pledges to reduce carbon emissions 43% by 2030 from 2005 levels and achieve net zero emissions by 2050. This new law is expected to create an additional impetus for renewable energy growth.
Of all renewable technologies, distributed PV deployment expands the most, but annual market growth is expected to slow as new charges for exported power are proposed and higher system prices reduce its economic attractiveness. In Q4 2021, for instance, the quarterly installation pace slowed for the first time since 2015, a trend that has persisted into 2022.
Since 2017, distributed solar PV uptake has grown by over 1 GW annually thanks to net metering, solar FITs and low investment costs. However, the upsurge in self-consumption and power exports resulting from all this new capacity has put pressure on the distribution grid. New market rules were therefore introduced allowing distributors to charge for exporting electricity to the grid.
Utility-scale solar PV and onshore wind growth have both been revised upwards over 35% from last year owing to state-level auctions for new capacity, projects associated with emerging REZs and a growing number of corporate PPAs with governments, utilities and businesses. Non-price factors, such as corporate sustainability goals and emissions or renewable energy targets, are the primary stimulants of corporate PPA market growth.
Meanwhile, rising LRET generation certificate prices resulting from demand increases provide additional revenue for developers. However, higher amounts of variable renewable energy generation have led to system integration concerns. Connection delays and curtailment remain key forecast challenges. The accelerated case forecasts nearly 25% higher additions than the main case, with upside potential enabled by more state-level auctions and faster-than expected commissioning of REZs. Furthermore, additional coal-fired plant retirements could allow for the deployment of new large-scale renewable energy installations paired with battery storage. For distributed PV, the continuation of high wholesale and retail prices could encourage greater investment. In addition, renewable additions from captive wind and solar PV capacity associated with hydrogen from renewable energy could add over 6 GW of additional capacity over the forecast period.
