This report canvassed the opinions of 200 senior level investors from Asia Pacific, Europe, Middle East & Africa and the Americas. The results reveal dealmakers are particularly focused on opportunities involving large-scale projects in countries with welcoming regulatory structures to underpin investments.
So how does the global investment outlook contrast with Australia?
- Offshore wind is expected to see the biggest rise in deal activity over the next 12 months. This is driven by large scale projects in Europe and China. While some opportunities for offshore wind are currently being assessed in Victoria, the focus in Australia has been on increasing our onshore wind capacity and rapidly accelerating large scale solar.
- Investors consistently look for stable and favorable policy settings. For 60 percent of respondents, Germany’s policies are the most favourable among advanced economies. Australia ranked behind Japan with 13 percent of respondents viewing that the policy environment as being the least favourable. However, what is clear is that policy certainty matters for investors. Given the current energy debate in Australia and the need for balancing growth of renewable energy capacity with more dispatchable energy generation, our CEO Survey could not have been clearer with energy ranking #2 issue for Australia.
- 40 percent of respondents say that they expect Germany and China to see the biggest rise in deal renewable activity compared to the last 12 months. Respondents were significantly more reserved on Australia’s M&A activity. Australia’s increase over the next 12 months was reported at 5 percent. While 2017 was boom year for renewable investment in this country’s onshore wind and solar projects, the value of these transactions is lower than the deal activity deals done in other regions.
- Both corporates (utilities, power producers) and financial buyers (infrastructure funds) are expected to be active in pursuing renewable deals in the next 12 months. Australia, is likely to follow this trend and the renewable energy boom driven by the 2020 Renewable Energy Target will continue to create deal opportunities in 2018. However, investors are concerned that, in the absence of national energy policy, investment activity will decline in the following years.
- Battery storage will be big. Given Australia’s recent pioneering with integrating battery storage in the NEM, it’s noteworthy that 98 percent of respondents say that the inclusion of battery storage is important when considering future renewable energy projects. Investors recognise that costs are coming down but have varying views on when they believe renewable projects with battery storage will be able to deliver uninterrupted energy at grid parity. Only 8 percent believe that this will happen within 3 to 4 years. If Tesla’s 100MW battery project in South Australia performs well this summer, we should expect continued interest in battery technology to ramp up both globally and in Australia.
- Hydrogen is gaining attention. Nearly three quarters of respondents believe hydrogen will be a significant enabler for the advancement of renewable energy. Germany has been a mover in this area. While the trend is to hear more about hydrogen in the context of transport and heating, this is a space that will need to be followed both globally and in Australia. South Australia Government has clearly shown interest with its release in 2017 with its hydrogen roadmap.