Queensland’s transition to renewables opens opportunities for investment

Some significant targets for the State of Queensland were announced by Premier Annastacia Palaszczuk recently as part of the state government’s 10 year energy and jobs plan:80 per cent renewables by 203522 GW of new wind and solar5 GW of rooftop solar$500 million for new large scale and community batteries5 GW of new pumped hydro with 24 hours storage1 new “super grid” strengthening the CopperString transmission link from Townsville to Mt Isa1 new “hydrogen ready” gas fired power station to be built at the Kogan Creek coal fired generatorGovernment announcements regarding renewable energy targets are often met with scepticism by those in the private market and, as the most coal-dependent state in Australia, the State of Queensland has faced more headwinds than other Australian states in transitioning to wind and solar.Despite its 50 per cent renewables by 2030 target, currently only about 21 per cent of electricity in the state is generated from renewables.However, there now appears to be renewed momentum for renewables in the state. An unprecedented number of firestorms and floods there recently (amounting to a ‘climate emergency’ according to Queensland’s premier) and the fact that Queensland will host the Olympics in 2032 has put the state’s energy policy in focus and prompted action from its government.The renewable energy targets will be legislated and there is a plan to accelerate the closure dates of most of the state’s coal-fired power stations.Public ownership will play a key role in ensuring Queensland’s orderly transition to renewables. Queensland’s Energy, Renewables and Hydrogen Minister, Mick de Brenni, noted on the Energy Insiders podcast that the transmission and distribution networks and the investments required in the pumped hydro and battery storage, will remain publicly owned, and that the state government was committed to majority ownership of its generation assets.The public portion of the $62 billion of investment required to implement the plan will largely consist of both government equity and borrowings from government-owned corporations. The private sector will have the opportunity to acquire minority stakes in generation assets. Presumably, private sector expertise and service will also be required to develop and construct the assets required. Given the scale and scope of Queensland’s plan, international investment will be required.According to the modelling relied upon by the Queensland government, their plan will deliver an average wholesale electricity price of $56 per MW/hr within the state over the next 10 years (representing a considerable saving for consumers on their electricity bills).Minister de Brenni acknowledges that the current volatility in the commodities markets means that prices are likely to be “bumpy” until wind and solar generation has completely replaced coal and gas.Responses to Queensland’s plan have been encouraging, although the ambitious scale and scope of the plan has raised some initial concerns regarding funding and the extent to which costs will be passed through to consumers.However, there can be little doubt that the energy transition in Queensland is now well underway and there will be opportunities for investment from the private sector across the renewables supply chain. The size and scale of those opportunities will attract members of the international community who are invested in the energy transition.AuthorsJae Lemin | Partner | +61 3 8080 3588 | jlemin@tglaw.com.auEugene Fung | Partner | +61 7 3338 7524 | efung@tglaw.com.au