Transmission investment boosts New South Wales' green push

The call for projects for its renewable energy zones saw 113 registrations of interest.

New South Wales’ (NSW) call for projects received an enthusiastic response for its renewable energy zones, according to the Institute for Energy Economics and Financial Analysis (IEEFA). This is a result of the investors’ recognition that the government is co-ordinating transmission investment to facilitate investment, rather than the promise of subsidies.

The NSW government in Australia is embarking on a programme of developing Renewable Energy Zones, calling for just 3GW of wind, solar and/or storage projects. The call for projects received 113 registrations of interest for projects totalling a massive 27GW valued at $38b, exceeding the project’s capacity by nine times.

“This $38b of proposed renewable energy investment suggests Australia is on the cusp of a new energy industry ready to take off if the right market and regulatory conditions are set,” IEEFA’s LNG/gas analyst in Australia said.

The report emphasises that renewables proved to be an area to which capital is attracted, with solar and wind out-competing coal and gas in terms of price, the time it takes to build, and the ongoing maintenance costs.

On the other hand, the global economic lockdown has put the gas industry in a slump that is expected to last for years, with gas companies slashing exploration budgets and withdrawing from expansion projects that would have been sanctioned 12 months ago.

The industry has also beem actively divesting from Australian gas assets, with about $11b worth of such assets currently on sale.

“A gas-fired recovery is simply not possible when the industry itself is actively divesting and gas prices are at historic lows. The hope of gas-fired manufacturing being able to pull Australia out of recession is just that, a vain hope,” the analyst said.

In response to the economic downturn and job losses caused by the pandemic, the federal government’s National COVID-19 Coordination Commission has been pushing a gas-fired recovery as a solution, with subsidies for gas projects and infrastructure.