The latest Business Outlook report from Deloitte Access Economics shows renewable energy underpinning investment in Australia’s construction and engineering sectors, while also undermining the export market for thermal coal.
The Business Outlook report provides a snapshot of the Australian economy, highlighting where things are going well, and where things are starting to slow down.
The continued emergence of the global renewable energy sector looks to be having both positive and negative impacts on the Australian economy, as new projects locally has underpinned growth in construction and engineering activities, the report noted.
It also said the global shift away from fossil fuels is significantly denting the performance of the Australian resources sector, as overseas markets cool on Australian coal and gas markets.
Large-scale renewable energy projects in both South Australia and Queensland have “defied a tricky political backdrop” to prop up investment in construction and engineering, as activity in some parts of the resources sector begin to slow, according to Deloitte.
Most of the recent investment in the Australian electricity sector has been driven by new renewable energy projects, particularly large-scale solar and wind farms. Deloitte sees around three-quarters of the generation projects in the development pipeline being either solar or wind projects, amounting to more than the 6,000MW of new renewables projects being committed.
Federal Government commitment to the 2,000MW expansion of the Snowy 2.0 scheme also represents a significant portion of the development pipeline. Investment has returned to the sector after it came to a standstill following the election of the Abbott Government in 2013, but the market will still be wary of a post-RET energy market after 2020.
It has largely been private investments in new renewable energy projects that have been the driver of investments in electricity projects across Australia, defying an investment environment that offers little by way of stable or effective energy policy from the Federal Government.
Deloitte cited the completion of the $400 million Lilyvale solar farm and the $200 million Darling Downs solar farm as projects that have supported engineering construction activity in Queensland, which has been a welcome boost in a region that has been deflated due to a winding down of LNG infrastructure related construction.
Renewables have driven double-digit growth in construction activities in South Australia, as action taken to sure-up the reliability of the South Australian electricity system, primarily through investments in wind and energy storage, has attracted investment.
