V2U Research

Australia is increasingly focusing on transitioning to clean energy sources. This transition is being driven by both domestic policy and global market forces, especially with the global push toward sustainability and net-zero emissions targets by 2050. Why it’s promising? The Australian government has set ambitious renewable energy targets, aiming for 50% of energy from renewables by 2030. According to the Department of Climate Change, Energy, Environment, and Water, in 2023, 35% of Australia’s total electricity generation was from renewable energy sources, including solar (16%), wind (12%), and hydro (6%).  There's also a strong push for hydrogen development, battery storage, and electric vehicles (EVs).

With vast natural resources, cutting-edge innovation, and strong government support, Australia is not just embracing the renewable energy transition; it’s leading the way. In the next five years, renewable energy and clean tech are expected to be among the most promising and fastest-growing sectors in the country. A shift to renewable energy and clean tech helps Australia prepare for climate-related challenges, such as extreme heat, droughts, and rising sea levels.

The Growing Demand for Clean Energy

The global push for sustainability has spurred investment in solar, wind, hydrogen, and energy storage.

1. Solar Energy: Solar power grew 17% in 2023, with an average increase of 21% annually since 2015. Australia’s high solar radiation positions it to expand residential, commercial, and large-scale solar farms. Companies in solar panel manufacturing and installation are set for growth.
2. Wind Energy: Wind generation grew 6% in 2023 and with an average increase of 13% annually since 2015. Australia’s coastal and open lands provide strong potential for both onshore and offshore wind farms. Demand for turbine manufacturing, site development, and maintenance will rise.
3. Green Hydrogen: Green hydrogen is key to decarbonizing industries like steel and transport. Australia aims to become a global leader in hydrogen production, with investments in production facilities and export infrastructure for markets like Japan and South Korea.
4. Energy Storage: As solar and wind depend on weather, energy storage is critical. Battery systems are becoming more efficient, with large-scale projects like Hornsdale Power Reserve driving innovation for homes and businesses.
5. Electric Vehicles (EVs) and Infrastructure: The rise of EVs, supported by government incentives, will drive rapid adoption over the next five years, alongside the expansion of charging infrastructure to meet demand.
6. Carbon Capture and Storage (CCS): CCS technology, which captures CO2 from industrial processes and stores it underground, is a key part of Australia’s emission reduction strategy.

Government Support and Policy Initiatives

The Department of Climate Change, Energy, Environment, and Water is helping to create a favorable investment environment, including renewable energy targets, subsidies, tax incentives, and clean energy research funding. Additionally, Australia's National Hydrogen Strategy aims to position the country as a leader in the global hydrogen market, Key policy measures, such as the Renewable Energy Target (RET) and the Clean Energy Finance Corporation (CEFC), support large-scale investment in renewable energy infrastructure and technology. The National Electric Vehicle Strategy aims to make EVs more accessible to consumers and boost infrastructure development. The Bin Trim Equipment Rebates Program assists eligible NSW businesses with rebates of between $1000 and $50,000 to purchase recycling equipment. The Community Clubs Program provides rebates of up to $100,000 per club to upgrade to more energy-efficient appliances and energy systems.

The Economic Potential

The renewable energy and clean tech sectors not only offer environmental benefits but also significant economic potential. Australia’s transition to clean energy is expected to create thousands of jobs in construction, manufacturing, research, and development. According to the Clean Energy Council, Australia’s clean energy sector could generate over 30,000 jobs and attract billions of dollars in investment in the coming years.

Opportunities for Businesses in Australia’s Renewable Energy and Clean Tech Sectors

Australia’s renewable energy and clean tech sectors offer significant opportunities for businesses to innovate and grow. Key areas include hydropower, hydrogen fuel cells for transport, and advanced energy storage systems, such as lithium-ion batteries. As demand for home solar and storage solutions rises, businesses offering installation and maintenance services will see growth. With government incentives, EV adoption is increasing, creating demand for electric vehicle charging infrastructure, including co-funding up to 50% of installation costs for eligible entities in Western Australia until June 2025. Companies offering fleet electrification, fleet management services, and charging infrastructure will be critical in supporting the EV transition. Businesses focused on carbon capture technologies, CO2 storage, sustainable construction materials, and innovative recycling solutions will also be in high demand. Furthermore, the growing focus on green bonds, ESG investments, and carbon offset projects presents opportunities in finance.

Some financially strong listed companies that deal in the Renewable Energy industry in Australia are:

AGL Energy Limited (ASX: AGL): AGL Energy Ltd is a renewable energy company, founded in 1837 and is headquartered in Sydney, Australia. AGL engages in the provision of natural gas distribution services. It operates through the following segments: the retail of electricity, gas, solar, and energy efficiency products, coal, gas and renewable generation facilities, natural gas storage and production facilities, and development projects. The Investment segment focuses its interests in the ActewAGL Retail Partnership, Tilt Renewables, Energy Impact Partners Europe, Ovo Energy Australia Pty Ltd, and other investments. Currently, the stock is trading at $11.65 with market capitalisation of $7.95 Bn and dividend yield of 5.23% as of 21 January 2025.

Tasmea Limited (ASX: TEA): Tasmea Ltd. is a skilled services company. It engages in the provision of essential maintenance, engineering, and specialized project services and solutions across the following four service streams to the mining and resources; oil and gas; waste and water; power and renewable energy; and defense and infrastructure industries. The company was founded by Stephen Elliot Young and Mark Gabriel Vartuli in 1999 and is headquartered in Jandakot, Australia. Currently, the stock is trading at $3.03 with market capitalisation of $705.61 Mn and dividend yield of 2.14% as of 21 January 2025.

LGI Limited (ASX: LGI): LGI Ltd engages in designing and installing bio gas extraction systems. Its recovery of biogas from landfill, and the subsequent conversion into renewable electricity and saleable environmental products. The company was founded by Adam Bloomer in 2009 and is headquartered in Eagle Farm, Australia. Currently, the stock is trading at $2.93 with market capitalisation of $263.76 Mn and dividend yield of 0.85% as of 21 January 2025.

Impact of Renewable Energy and Clean Tech on Australian Consumers

As Australia transitions to renewable energy and clean technologies, consumers will enjoy both immediate and long-term benefits, including lower energy costs, cleaner alternatives, and more product choices. Lower energy costs and protection against price fluctuations will have a significant impact, especially for rural and remote areas. Solar and wind power, already among the cheapest in Australia, will continue to fall in price, and consumers with solar panels or access to cleaner energy grids may see reduced electricity bills. Advances in energy storage will offer more reliable, cost-efficient energy supplies.

The shift to clean energy will also improve air quality, leading to better public health by reducing harmful emissions linked to respiratory and cardiovascular diseases. Clean tech innovations like electric vehicles (EVs) will further reduce air pollution, particularly in urban areas. Consumers will have greater access to environmentally friendly products with lower carbon footprints, such as sustainable packaging, eco-friendly clothing, and low-emission appliances.

The growing adoption of electric vehicles will lead to lower prices and better options as production scales up, with improved charging infrastructure making EVs more convenient. Moreover, as clean tech expands, green jobs and skills development will create new employment opportunities, benefitting consumers by offering a skilled workforce ready for emerging green economy roles.

Risks and Negative Impact of Renewable Energy and Clean Tech on Australian Consumers

While the shift to renewable energy and clean tech offers benefits, it also poses challenges for Australian consumers. High upfront costs, such as the installation of solar panels and battery storage, can be prohibitive, despite lower operational costs. Electric vehicles (EVs) remain expensive, and limited driving range and insufficient charging infrastructure, especially in rural areas, present significant hurdles. Government incentives like rebates are helpful but may not be accessible to all, particularly lower-income or rural consumers. Renewable energy sources like solar and wind are intermittent, and without affordable storage solutions, consumers could face power shortages. The transition may also lead to job displacement in fossil fuel industries, with retraining programs necessary to avoid a skills mismatch. Additionally, the disposal of renewable energy technologies, like solar panels and batteries, could present environmental challenges due to the lack of cost-effective recycling options.

Conclusion: Balancing the Transition

Opportunities in solar, wind, green hydrogen, and energy storage are driving the rapid growth of Australia's renewable energy and clean tech sectors. Leveraging natural resources, innovation, and government support, businesses can drive sustainability while securing long-term success. Consumers will benefit from lower energy bills, enhanced security, and green job opportunities. However, the transition may lead to short-term higher costs for consumers, highlighting the need for an equitable approach to ensure the benefits of a sustainable energy future are accessible to all Australians.