The economics of renewables are “getting worse, not better”, according to Origin Energy CEO Frank Calabria:
Calabria told the Australian Energy Council conference in Sydney last week that the economics of large-scale renewable developments had deteriorated sharply over the past four years, with the cost of building wind farms rising about 50% since 2020 as developers grapple with higher financing, labour, steel and construction costs.
“Higher costs of the transition ultimately land on customer bills or are absorbed by the taxpayer”, he said.
“Our problem is not ambition”, Calabria said. “The projects exist. The intent is there. The problem is economics – and it is getting worse, not better”.
Alinta chief executive Jeff Dimery also pointed to a steep rise in renewable costs, referencing the company’s proposal to develop an offshore wind project in Victoria.
“The reality is that the cost to build offshore wind has been escalating quite dramatically over the past four or five years”, Dimery said.
“When we first started that project, we were thinking we’re looking at $2m to $3m a megawatt for installation, which isn’t cheap. But today that cost was closer to $6m to $7m per megawatt”.
Australia’s largest electricity generator, AGL Energy, also warned that the cost of wind power has soared, deepening the challenge of developing new renewable supplies into the nation’s power grid.
“One of the challenges we see at the moment is the economics of wind can, in some instances, be challenging”, AGL chief financial officer Gary Brown told the Morgan Stanley Australia summit. “The procurement cost to produce wind turbines is going up. Several years ago, you’re probably looking at $1.8m to $2m a megawatt. Today, you’re looking at over $3m a megawatt to produce those wind turbines”.
Virtually every large-scale renewable project undertaken in Australia over the past decade has been heavily subsidised by taxpayers.
Still, Climate Change Authority chairman Matt Kean has called for even more public funding for Australia’s energy transition:
“Risk is real. Regulatory environments can be uncertain, and for too many private investors, the returns simply don’t justify the complexity”, Kean told the Morgan Stanley Australia summit. “If we want to change that, we need to be more honest about what it takes and more willing to put public capital to work in ways that genuinely move the needle”.
“Australia’s emissions reduction target by 2035 on 2005 levels is not simply a policy objective, it’s an economic transformation agenda. And it will succeed or fail on one thing above all, and that’s our ability to mobilize capital at speed and at scale”.
“The deals we don’t do, the structures we don’t build, the partnerships we don’t form this year, they’re not deferrals. They are emissions that will enter the atmosphere, regardless of what we promise later”, Kean said.
Meanwhile, Asia is busy burning its own coal as well as Australia’s, accounting for more than 80% of the world’s coal consumption:
As a result, Asian nations combined have accounted for all of the increase in the world’s carbon emissions since the turn of the century and for 60.6% of total global carbon emissions in 2024:
When will Australian policymakers finally admit that the global energy transition is a myth and that wasting hundreds of billions of taxpayer dollars on the ‘net zero’ fantasy is a recipe for economic destruction?
Renewable subsidies are ginormous and growing, and we desperately need transparency and scrutiny on where the money is going.
