Negative power pricing and red tape stall renewable buildout
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The news: Investment in Australian renewable energy projects has cooled amid negative electricity prices and a tepid pace of planning and environmental approvals, according to a Bloomberg NEF half-yearly outlook.
The numbers: The Australian Market Outlook charted a 64% plunge in investment in new wind and solar farms in the first half of 2025, as average power prices across the National Electricity Market (NEM) fell everywhere except Tasmania due to an oversupply of renewable generation on days from large amounts of wind and sunshine, resulting in negative power pricing.
In 1H 2025, power prices were negative 13% of the time, up from 9% a year earlier.
But activity is expected to pick up in 2H 2025, with 9 GW of new wind and solar farms and 9.1 GW of battery storage under construction as at the end of June.
In the Australian Carbon Credit Unit Market, spot prices have shrunk by an average of 5% since December 2024.
The context: Australia has set an 82% by 2030 renewable energy target to help it reduce carbon emissions by 43% below 2005 levels by 2030, which provides a signal to invest in renewable energy projects.
However, community opposition to new developments and complex planning and environmental approvals unique to each state have slowed the pace of project delivery, according to last week's Productivity Commission report on the renewable energy sector.
Financing for new projects has been challenged by negative pricing, which occurs frequently in sunny states like Queensland and affects investment returns for both renewable assets that have their output curtailed and coal-fired generators that operate continuously.
The BNEF analysis urges Australian policymakers to ramp up investment in renewables and mirror this progress in other sectors to decarbonise the economy as quickly as possible.
What they said: "The ever-increasing penetration of renewable energy is exacerbating volatility, introducing a new dynamic that can dictate average daily power prices," the outlook said.
"A continually growing fleet of wind and solar assets (particularly rooftop solar photovoltaic) drives down spot prices when they generate in abundance around midday.
"Australia will require faster decarbonization across multiple sectors to meet its international and state level targets. While it has made notable progress in decarbonizing the electricity and agricultural sectors, it will need to reverse growing emissions in other segments such as transportation."
The sources: Bloomberg New Energy Finance Australian Market Outlook 2H 2025, Productivity Commission Net Zero report
