Australia has promised to triple its renewable energy capacity.
In an earlier briefing, we found:
1. Australia's renewable energy capacity in 2022 was 49 gigawatts (GW)
2. Tripling that baseline means 147 GW in 2030 (we're awaiting confirmation on this figure and thank you to the subscriber who is helping)
3. While our current rate of building renewables capacity is impressive, it is not fast enough to hit that target
Today, we ask the next question: what do we need to believe will happen to fulfil our pledge?
Current Status
Here is Australia's renewable energy capacity to date. It reached 55 GW in 2023.
(Source and chart mechanics: Data to 2022 from the International Renewable Energy Agency (IRENA). Data for 2023 from Clean Energy Australia (CER) Report 2024).
Below is the breakdown of fuels driving that curve.
See how solar burgeoned from 2018 and has driven most of Australia's growth, especially small solar (i.e. installations <100 KW and generally a proxy for rooftop solar).
(Source and chart mechanics: Data to 2022 from IRENA, except the large/small solar breakdown, which comes Clean Energy Regulator (CER) Quarterly Carbon Market Report December Quarter 2023. 2023 data for other energy sources from CEA Report 2024).
What We Need To Believe
Australia needs to add 98 GW of capacity from renewables by 2030.
How would that break down by fuel?
As always, finding this out is trickier than you'd think.
The Australian Energy Market Operator (AEMO) published an 'optimal development path' in its draft 2024 Integrated System Plan (ISP) – a key document for Australian energy observers.
We've extracted the data from AEMO's modelling of National Electricity Market (NEM) capacity to 2050 to see what it means for the 2030 targets.
Here is the AEMO chart that shows the optimal path to 2050.
Below is the same data, zooming in on the key renewable fuels to 2030.
(Source and chart mechanics: data extracted from AEMO chart. Shows financial years, not calendar years).
Small Solar Faith
AEMO forecasts small solar capacity will double from 21.7 GW in 2023 to 38 GW in 2030.
Right now, roughly 3.7 million homes have solar installations.
With the average system size increasing to about 9.3 KW, we would need another 1.8 million homes or so to install solar panels.
That means another 257,000 homes each year until 2031.
In the 12 months to Q3 last year, the country installed 335,000.
So it doesn't take much of a leap of faith to believe that Australia can hit that small solar milestone.
Large Solar Faith
Large solar will need to rise by 1.5x from 12.6 GW in 2023 to 20 GW in 2030. That means adding just over 1 GW capacity each year. Since 2018, large solar has added about 2 GW. Sure, we can't predict the future using only the past, but the trajectory shows a required pace that is already realised.
Wind Faith
Then there's wind power. For onshore wind, we need to believe it will multiply by 3.5x from 11.5 GW in 2023 to 41.7 GW in 2030. For offshore wind, we need to believe projects will start to contribute capacity (1.7 GW) from 2029/2030. The chart below is a linear depiction of AEMO's figure, including the step change it features in 2026. Australia's wind power capacity expectations require a healthy dose of faith.
Is it reasonable for us to believe this will happen? Our next issue will look at the leading indicators and pipelines. Stay tuned.