Rystad Energy - Energy Knowledge House
Rystad Energy - Energy Knowledge House

press release

Covid-19 to pause up to 3GW of wind and PV projects in Australia

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Covid-19 has hit the Australian Renewables industry hard, postponing or cancelling the financial close of up to 3 gigawatts (GWac)of projects. The delays and cancellations are largely the result of the falling Australian dollar, which has plummeted 20% relative to the US dollar since the beginning of January. This has resulted in capex increases for both utility PV and wind projects, making once viable projects no longer economical. New South Wales will be the biggest loser, as 65% of solar PV and 67% of wind projects which are expected to, but have not yet reached financial close in 2020 are located in the state. Utility PV companies most impacted include UPC, Neoen, Wollar Solar and Canadian Solar, while Tilt and Goldwind will be most impacted in the utility wind segment.

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Construction slowdown in 2020 pre-Covid-19

The renewable energy industry faced a host of grid challenges in 2019, including network capacity availability, commissioning issues, Marginal Loss Factors (MLF) and system strength variability. Coupled with already challenging project economics, these issues slowed the number of projects and associated capacity to break ground at the end of 2019. This sluggish trend continued into 2020 with less than 400 megawatts (MWac) breaking ground in 1Q. With the additional challenge of Covid-19, the pace of construction has only slowed further since the end of the first quarter and developers now face a quagmire of infrastructural and economic obstacles.


Covid-19 adds cost and risk to projects

The majority of capital expenditures for utility PV and wind assets are for hardware, comprising about 60% of expenses for PV and 75% for wind. As hardware is typically priced in foreign currency, the plummeting value of the Australian dollar has had a substantial impact on project economics. Figure 2 highlights the trend in PV capex over time compared with power purchase agreement (PPA) pricing. As expected, PPA pricing has followed capex down the cost curve. However as capex has increased with rising hardware costs, developers will be challenged to profitably meet PPA pricing. Furthermore, securing debt will be an obstacle in the short term, given that cash is now a scarce commodity; financiers are unlikely to lend cheaply.



Financial close in question for up to 3 GWac of projects

At the beginning of 2020 Rystad Energy expected that 2 to 3 GWac worth of renewable projects would achieve Financial Close and begin construction this year, including 1.1 GWac of wind and 1 to 2 GWac of PV. At present, 530 MWac of PV capacity and 210 MWac of wind capacity has taken financial close and has either already begun construction or will do so in 2020. The impact of Covid-19 on project economics will likely delay or cancel the financial close of the remaining projects.



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Gero Farruggio
Senior Vice President and Product Manager for Renewables


Rystad Energy Marketing


About Rystad Energy
Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry. Our products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike. Rystad Energy’s headquarters are located in Oslo, Norway with offices in London, New York, Houston, Aberdeen, Stavanger, Moscow, Rio de Janeiro, Singapore, Bangalore, Tokyo, Sydney and Dubai.