Renewable energy investment experts have revealed growing worries the Coalition’s plans to build nuclear reactors in Australia is breeding uncertainty and is already delaying decisions to back major solar and wind projects.
The Coalition’s push to build taxpayer-funded nuclear reactors at seven locations while refusing to back improved climate targets could see investors shifting huge sums of cash to other economies where the clean energy transition has bipartisan support.
The policy uncertainty is unlikely to be resolved until the result of the next general election is known, which could be as late as May 2025.
“Some of Australia’s biggest investors are putting on hold new clean energy investments in this country because of the lack of bipartisan support for the least-cost pathway to net zero emissions,” said Erwin Jackson, the policy director at the Investor Group on Climate Change (IGCC).
The Coalition’s plans include having so-called small modular reactors (SMRs) operating at sites in South Australia and Western Australia by 2035.
On Wednesday, the Australian Academy of Technological Sciences and Engineering (ATSE) released a report saying SMRs were unlikely to be available commercially until the late 2030s and a mature market might emerge “during the mid- to late-2040s”.
Since the Coalition’s plans were made public, Jackson said “more than one” major investor had said they would be holding off on making an investment decision.
He said: “Investors have a duty to deliver the best long-term savings and they’ve assessed the best way to deliver that is investing in a well-planned and fair transition to net zero. If that’s not going to be delivered in Australia they will invest in other jurisdictions with clear, stable, long-term policy.”
IGCC periodically asks its members to describe issues that are barriers to investing. Jackson said surveys, carried out before the Coalition confirmed its nuclear hopes, had shown that concerns over “policy uncertainty” had fallen in the last two years.
Jackson said: “The real risk is that we return to a situation where the lack of bipartisanship will see investments flow offshore, and Australia misses out on the jobs, training and opportunities from renewable energy.”
Marilyn Crestias is the interim chief executive at the Clean Energy Investor Group, whose members have investments in half of all clean energy assets in the country’s east. In recent months, she said the group had seen “an increase in concern and commentary [from members] around the potential for policy uncertainty and the negative impacts that would have on investments in Australia”.
“That’s important because we see other countries, such as the United States, and in Europe and Asia, being really ambitious and accelerating that ambition,” she said. “It’s important for Australia to remain competitive to attract that global capital.
“We need to think about the long-term signals [for investors]. They are putting in large amounts of capital on long-lived assets and they need to see those signals over the medium to long term and have certainty around the environment these assets will operate in.”
Crestias said steps taken by states and the Albanese government, such as raising climate targets and opening investment schemes for renewables, had created a more favourable environment to invest.
“The right building blocks are being put in place,” she said. “I would urge governments to continue setting ambitious targets.”
The ATSE report on SMRs, compiled by academy fellows, said the technology was still in its infancy and no commercial projects existed in the OECD, but it was “possible that several prototype SMRs may be licensed, commissioned and built in OECD countries by the mid-2030s”.
The report said the lowest risk and cheapest option for Australia would be to wait until a mature market exists for SMRs, which would likely be in the mid- to late-2040s.
