Value of renewable energy construction

This article presents experimental estimates for the level of investment in utility scale renewable energy generating assets from 2016 onwards.

Released
10/10/2022

Introduction

Purpose

This article presents experimental estimates for the level of renewable investment in the electricity generation, transmission and distribution sector, as well as electricity generated by renewable and non-renewable sources from the March quarter 2016 to the June quarter of 2022.

Source

Investment data has been sourced from the Engineering Construction survey, which is published in Construction Work Done, Australia, Preliminary and Engineering Construction Activity, Australia quarterly publications. Data is collected under the type of work 'Energy Generation, Transmission, and Distribution', and has been broken down by type of investment for the purpose of this article. The data presented will not be available on an ongoing quarterly basis.

The generation data presented in this article has been sourced from Rystad Energy monthly generation data, which is a third-party data set compiled using AEMO (Australian Energy Market Operator) data. This data source contains data from the NEM (National Electricity Market) and WEM (Wholesale Electricity Market). It does not include generation data for NT and regional areas not connected to either of these markets.

This is not a comprehensive account of economy wide investment in renewable energy and the following considerations should be taken into account:

  • Rooftop photovoltaic systems make up a notable portion of renewable energy generation but are out of scope of the engineering construction survey.
  • Given electricity investment includes transmission and distribution data as well as generation, the information presented should not be read as an analysis of new generation projects only.
  • While the renewable data is primarily generation and storage investment, data pertaining to other assets includes non-generation investment such as maintaining and expanding existing transmission networks.

More detail on the scope of the data presented can be found under the 'Method' section below, or by accessing the Engineering Construction Activity methodology page.

Summary

Since 2017 there has been an increase in the level of investment in renewable generation and storage technology, which has coincided with a significant increase in renewable generation over the same period. In the 2016-17 financial year the value of work done on renewable projects was $865.9m compared to $5.51b in 2021-22.  While the total power generated remained at a similar level over this period, generation from renewable sources has more than doubled. In 2016-17 energy generated from a renewable source accounted for 16.0% of all power generated, compared to 33.4% in 2021-22. 

Investment in renewable generation has been impacted by various factors over the period highlighted. These include a changing regulatory environment, access to finance, grid capacity constraints and the COVID pandemic. The impact of these factors is not discussed explicitly in the analysis presented in the article however should be kept in mind when interpreting the findings.

Electricity generation, transmission and distribution investment

Total electricity investment, Australia ($m)
 CommencementsWork Done

Financial

Year

Renewable

Investment

Other Electricity

Investment

Renewable

Investment

Other Electricity

Investment

2016-171,353.27,124.8865.97,133.2
2017-187,368.47,926.04,919.08,050.2
2018-197,997.87,352.35,412.38,412.8
2019-201,874.56,942.75,342.77,562.4
2020-215,598.26,706.73,799.27,657.4
2021-223,407.28,986.95,505.59,173.4

 

There has been a significant increase in the value of both commencements and work done in renewable projects since the 2016-17 financial year, with commencements peaking in 2018-19 and work done peaking in 2021-22.

While the estimated level of work done on other electricity related assets remained relatively constant, the annual value of renewable work done increased from $865.9m in 2016-17 to a peak of $5,505.5m in 2021-22

Commencements data followed a similar but more volatile pattern. The value of renewable commencements jumped from $1,353.2m in 2016-17 to a peak of $7,997.8m in 2018-19.

Following the surge through 2017 to 2019 commencements fell sharply to $1,874.5m in 2019-20, before rebounding through 2020-2022. The fall in commencements in 2019-20 led to a 28.9% fall in the level of work done for 2020-21, decreasing from $5,342.7m to $3,799.2m.

The estimated pipeline of 'work yet to be done' on renewable projects that have commenced sits at $8,099.6m at the end of the June quarter 2022.

The value of work done for renewables peaked at $1,741.1m in December 2018 whilst the value of work done for other electricity peaked at $2,740.1m in June 2022. The combined value of work done for renewable and other electricity peaked at a historical high of $4,305.5m in June 2022. The increase in other electricity investment in June 2022 highlights the increased investment in transmission and infrastructure following the sustained investment in renewable generation assets.

Commencements of renewable energy projects peaked at $2,905.8m in June 2019 before dropping to $319.3m in March 2020. 

The value of work done on renewable energy projects peaked at $1,741.1m in December 2018 before dropping to $774.6m in March 2021.

Electricity generation

Electricity generated, by source (GWh)
Financial Year

Renewable

Generation

Non Renewable

Generation

Total Generation

% Renewable

Generation

2016-201735,443185,737221,18016.0
2017-201839,414183,207222,62117.7
2018-201947,250176,446223,69621.1
2019-202055,218168,465223,68324.7
2020-202164,033158,516222,54928.8
2021-202275,618151,096226,71433.4

 

Total electricity generation has not changed significantly over the time period analysed, increasing only 2.5% since the 2016-17 financial year, however the mix of generation source has changed significantly over this time.

In 2016-17 the amount of power generated from renewable sources was 16.0% and has almost doubled to 33.4% of all generation for the 2021-22 financial year. The actual amount of power generated from renewables has more than doubled, increasing from 35,443 to 75,618 GWh.

 

Contribution of roof top solar

Renewable generation data includes electricity generated by roof top solar arrays, despite not being captured in the investment data. While the contribution of roof top solar is not presented in these findings it is worth nothing that since March 2016 generation from roof top solar has increased at a greater rate than utility scale generation, more than tripling its contribution. Comparing March 2016 to March 2022 to negate seasonal impacts roof top generation has increased from 1805.8 GWh to 5938.2 GWh which is 30.3% of all renewable energy produced in March 2022.

.

Renewable generation increased from 8,099 GWh in March 2016 to a peak of 19,913 GWh in December 2021. Total generation peaked at 57,708 GWh in March 2022.

The percentage of renewable energy generation has increased from 14.3% in March to a peak or 36.2% in December 2021. In June 22 renewable generation made up 31.6% of electricity generated.

Renewable energy investment has increased from $97.2m in March 2016 to $1,565.4m in June 2022 with a peak of $1,741.1m in December 2018. Meanwhile, renewable energy generation has increased from 8,099 GWh in March 2016 to 17,822 GWh in June 2022 with a peak of 19,913 GWh in December 2021.

States

Renewable investment by state
State 2016-172017-182018-192019-202020-212021-22
NSW(a)Work Done ($m)401.31,301.41,094.01,294.91,392.22,266.4
 % Renewable generation10.511.313.717.422.127.3
Vic.Work Done ($m)63.2527.51,937.22,011.1750.7861.9
 % Renewable generation15.117.220.323.528.533.3
Qld.Work Done ($m)222.42,204.61,330.5495.1562.31,602.5
 % Renewable generation5.05.810.214.217.119.8
SAWork Done ($m)74.6526.3420.0115.2443.4348.7
 % Renewable generation48.547.851.956.161.969.2
WAWork Done ($m)33.6284.5235.61,113.5488.8331.9
 % Renewable generation13.715.018.420.929.533.6
Tas.Work Done ($m)61.665.1381.9244.586.351.9
 % Renewable generation92.392.595.899.199.299.6
NTWork Done ($m)9.29.713.168.575.642.3
 % Renewable generationn/an/an/an/an/an/a

(a) includes ACT

New South Wales

Victoria

Queensland

South Australia

Western Australia

Tasmania

Method

The primary source of the renewable investment data is the Engineering Construction survey. The survey collects the value of commencements and work done on a range of work types including ‘Electricity generation, transmission and distribution’. This data item includes:

  • New power stations, hydro-electric generating plants, wind farms, utility scale solar farms and pumped hydro generation
  • Associated work to support generation assets including substations, battery storage and transmission and distribution line construction and upgrades
  • Major repair and replacement of existing electricity assets
  • Excludes roof top photovoltaic solar systems which make up a notable portion of renewable energy generation

The engineering construction survey does not ask for data at a project level, as such the identification of renewable projects is reliant on businesses providing additional information. Where this information is not readily available, project identification has been carried out using multiple external sources to identify projects and the businesses involved in their construction. This has allowed the projects to be tracked through the life of construction.

While every effort has been made to identify projects and split renewable/other electricity asset investment there are cases that this is not possible. This has likely resulted in a level of under coverage of renewable investment.

Other limitations to the data include:

  • units undertaking renewable construction and not selected in the survey, selected but not responding or reporting incorrectly
  • data being reported in commodities other than electricity ie combined in a mining commodity; reported under site preparation for turbine foundations
  • renewable and other electricity investment combined in reported data where a business is undertaking work in both spaces
  • small scale utility renewable projects not identified for tracking

As a result the data presented should not be taken as a comprehensive account of all renewable investment.

The value of electricity commencements and work done includes generation, transmission and distribution data so the information presented should not be read as an analysis of new generation projects only. While the renewable data is primarily generation and storage investment, data pertaining to other electricity assets includes non-generation investment such as maintaining and expanding existing transmission networks, connecting new renewable projects to existing networks and non-renewable generation assets ie coal and gas power plants. 

The generation data presented in this article has been sourced from Rystad Energy monthly generation data, which is a third-party data set compiled using AEMO (Australian Energy Market Operator) data. This data source contains data from the NEM (National Electricity Market) and WEM (Wholesale Electricity Market). It does not include generation data for NT and regional areas not connected to either of these markets.

Generation data has been split into renewable generation and non-renewable generation based on the energy source.

Energy SourceInvestmentGeneration
Utility SolarRenewableRenewable
WindRenewableRenewable
Hydro ElectricRenewableRenewable
Pumped HydroRenewableRenewable
Dispatchable Battery StorageRenewableRenewable
Rooftop SolarOut of ScopeRenewable
BiomassRenewableRenewable
Coal (Brown and Black)Other ElectricityNon-Renewable
GasOther ElectricityNon-Renewable
DieselOther ElectricityNon-Renewable
UnknownOther ElectricityNon-Renewable

 

Glossary

AEMO

The Australian Electricity Market Operator is responsible for the management of the electricity and gas systems and markets across Australia.

Commencements (value of work commenced)

A project is regarded as having commenced when the site works begin. The commencement value reported is based on the expected project cost upon commencement and is not revised to reflect changes in the project value as the project progresses.

Gigawatt Hour (GWh)

A Gigawatt hour of electricity generated is the equivalent of 1000 Megawatt hours (MWh) or 1 million Kilowatt hours (KWh).

NEM

Operating in New South Wales, the Australian Capital Territory, Queensland, South Australia, Victoria and Tasmania, the NEM is both a wholesale electricity market and the physical power system. AEMO also operates the retail electricity markets that underpin the wholesale market.

Roof top solar

Roof top solar includes residential and commercial rooftop arrays that generate power for users connected to either the NEM or WEM. Arrays not connected to a commercial grid are not captured under generation data.

WEM

The Wholesale Energy Market supplies electricity to the south-west of Western Australia via the South West Interconnected System (SWIS).

Work done (value of work done)

The value of work done is based on the actual value of work carried out in the quarter and includes Wages, salaries and supplements to on and off-site employees; Plant hire (internal and external); Materials and all other expenses; Head office overheads with the relevant project. Values are reported exclusive of GST.

Downloads

Data files
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