The time for renewables has come. A recent report by the International Energy Agency (IEA) predicted that global renewable power capacity growth is set to double over the next five years, driven by continuing energy security concerns in the wake of Russia’s invasion of Ukraine. In its annual report on the outlook for renewables, the IEA said capacity worldwide is expected to grow by 2,400 gigawatts (GW) – equal to the entire power capacity of China today – to 5,640 GW by 2027.

This is no small beer: the increase is 30% higher than the amount of growth forecast a year ago, as turbulence in the energy markets has made renewable power technologies more attractive.

There can’t be many countries where the appetite for renewables is stronger at present that Australia. Spurred on by the recent election of a new government which is keen to pivot the country’s economy away from a historic fossil-fuel dependency, money is pouring into the sector. Only this past week, One of New South Wales’ major energy operators – Transgrid – announced it was to embark on an $11 billion investment plan over the next decade to ready itself for the country’s transition to a renewables-led energy future. With this in mind, in this week’s Big Question we asked Will Hiller of renewables specialist GCube, which recently opened an office in the country, to consider the extent to which Australia is witnessing a fundamental shift in attitude to renewables?

Ian Summers, Global Business Leader, AdvantageGo

“We’ve been operating for over 25 years, and have been writing business in Australia from London for close to 20 years now, and it has always been the goal that we would have someone based here,” says Hiller. “Eventually, with the growth that has been projected for the renewables sector in Australia it was felt that now was the time for that to happen. As of 1.1 this year we can write business on locally admitted paper, locally licenced policies, which is important if you want to establish yourself as a local market.”

“There are a lot of opportunities in Australia for renewables at present. We are writing onshore wind and onshore solar, which forms the majority of what we’re doing. We are also writing quite a lot of Battery Energy Storage Systems (BESS), which is growing rapidly around the world at the moment, with Australia one of the leading markets in terms of its development, We are seeing a lot of the conventional energy companies looking to expand into renewables transition, and part of their plans typically involves replacing coal assets with BESS. So we are seeing some large BESS opportunities here, rather than the small-scale systems that you typically might see in Europe, and there are also government incentives that are helping to push that along… though we are taking a more cautious approach with regard to BESS as we haven’t really seen the fire protection systems proven yet: there needs to be more data.”

Federal support

Hiller agrees that the election of a new government has been hugely important in the wider renewables conversation in the county: “Renewables has been growing quite rapidly over the last five years, which has been down to private companies and also support from state governments. Federal government support was really the last piece of the puzzle, and now we have that in place. So it’s really full-steam ahead from now on, but of course that also creates challenges. Whenever you are trying to rapidly change in any area, particularly when you are talking about emerging technology and emerging risks, there can be a lot of challenges involved. So at the moment we’re seeing lots of issues with delays to projects and contractor errors.”

There are also challenges to overcome for the market in offshore wind on two fronts, he adds. One, from a risk perspective, because the turbines can be huge, and then there are the also vessels out to sea which create further complications. Then there is the capacity side of the equation, with oil & gas markets coming in and trying to transition themselves into renewables. This, Hiller suggests, has created a lot of competition, so there is a lot of movement in the offshore space. “Australia is fairly well established, but there is a definitely a steady flow of new capacity entering the market, which is helping to make it more competitive,” he says.

He adds that it’s not only offshore that has some of the largest renewables farms, however: “Australia does have some of the largest onshore projects, with wind farms currently being built that are getting close a gigawatt, which is fairly substantial, and they are also very complicated projects.”

Mood music

Nonetheless, despite such challenges, the mood music for renewables has shifted in the country, with the impetus coming from the federal government that came into power in May last year, Hiller comments: “They are setting big targets, which are increasing all the time. At the moment they are targeting 72% renewables by the end of the decade, which is massive considering that we are now at about 33%.”

Still, he suggests, there are questions around such ambitions. Firstly, are we going to be able to do it? Also, what are the risks associated with such expansion? As Hiller points out, the market is seeing an increasing risk of nat cat and weather-related events, and this is particularly evident in Australia. And this brings further complications: “For example, hail hasn’t been much of a consideration until recently, but solar has recently been built at utility scale very rapidly in the eastern region of Australia, which is very much exposed to hail. There have been hailstorms there which have previously been falling on peoples’ tin roofs, but now we’ve got hundreds of thousands of solar panels in that area, and we’ve already seen in the market a fairly significant hail event which has hit a solar farm in SE Queensland. It’s an issue.”

The Big Question: Has there been a fundamental shift in attitude to renewables in Australia? With Will Hiller, Underwriter, GCube