2030 and beyond: The demand for renewable energy in Australia

Renewable energy uptake in Australia continues to grow, driven by corporate and government targets.

In Australia, the number of businesses making voluntary renewable energy commitments and joining initiatives such as RE100, and Climate Active continues to increase, further driving voluntary demand for Large Scale Renewable Energy Certificates (LGCs), which represent 1 megawatt-hour of renewable generation.

According to the Clean Energy Regulator, voluntary LGC cancellations have reached 5.8 million in 2021, up 43% from 2020, and voluntary cancellations have already effectively increased the mandatory renewable energy target by 18%.[1]

This voluntary demand is expected to grow, with commitments from major energy users to switch to renewable energy between 2025 and 2030. Household names such as Coles, Telstra and Woolworths have already committed to 100% renewable energy by 2025, further demonstrating an increase in enduring voluntary demand for LGCs.

This voluntary demand is expected to underpin the value of LGCs (or their replacement units) following the end of the Renewable Energy Target in 2030, when mandatory requirements fall away.

Power Purchase Agreements

As the supply and demand balance changes over time, many large businesses are entering into longer term Power Purchase Agreements (PPA) to help manage price risk for LGCs. A PPA typically involves one or more corporate customers, the owner of a project or its offtake, and optionally an energy retailer. The agreed structures vary and may be for the LGCs only, the LGC and energy output or be integrated into a retail agreement.

As of October 2021, The Business Renewables Centre Australia reported a total of 110 Renewable Energy PPA deals done by large Australian corporates[2]. Notable agreements in the 2021 included those executed by BHP (159 MW), Sunmetals (277 MW), Telstra (56MW) and Woolworths (65MW).

Want to learn more?

Get in touch with our expert advisors today.

[1] Clean Energy Regulator Quarterly Carbon Market Report December Quarter 2021

[2] Business Renewables Centre-Australia (2021) Corporate Renewable Power Purchase Agreements: State of the Market 2021

Sign Up

Give us a call or fill in the form below and we will contact you. We endeavor to answer all inquiries within 24 hours on business days.