Renewables boom driven by falling costs and rising demand

Falling wholesale energy costs and rapidly growing consumer demand for things like EVs, heat pumps and solar batteries were creating highly favourable economics around sustainable energy transformation, Climate Change Authority chief Matt Kean told Commonwealth Bank’s Momentum event in Sydney.

“History shows that when the economics make sense, the momentum becomes unstoppable,” Kean said.

Meanwhile, Australia was playing an influential role in the international sustainability transition, Wollemi Capital co-founder and CEO Paul Hunyer said at the event. 

“People are often looking to Australia as a postcard of the future on many of these topics and issues,” Hunter said.

Rapid growth in battery demand

Kean said that in the September quarter, wholesale electricity prices had been down by 38 per cent compared to the June quarter and “a handy” 27 per cent below the September quarter of 2024.

And consumers appetite for the energy transition was also often running ahead of official modelling, he said. Kean revealed that since the introduction of the federal government’s home battery scheme in July, more than 140,000 installations had been supported. 

During a panel discussion with Kean, Australian Retirement Trust (ART) General Manager for Sustainable Investment and Planning Nicole Bradford and Wollemi’s Hunyor, Origin Zero Executive General Manager James Magill said while residential batteries have taken off, businesses were just as interested. 

“In the last six months, the pipeline of leads for larger business batteries has tripled for us, and that's largely a result of the cost story and some of the technologies available,” he said.

On solar, businesses could reach payback in as little as two years, especially if the solar panels were used in conjunctions with batteries, Magill said.

He said sustainability-linked loans like those offered by Commonwealth Bank were making projects possible, but he said that the raw economics also stacked up.

“If they’re good projects, there’s capital there,” Magill said. 

Influence the future to predict it

ART’s Bradford said the size of Australia’s superannuation savings pool, which is on its way to being the second largest in the world, was also giving us global influence. 

Bradford said that climate was an investment risk like any other and was therefore a part of any prudent investment decision. 

“Now in terms of us as a long-term investor, we know climate change is a financial risk, and as a global investor, we can't diversify away from that,” she said.

As well as its legislated mandate to deliver for members, ART had challenged itself to use its scale and funds to invest for better social and environmental outcomes, Bradford said.

“Climate disclosures are not a strategy,” she said. “To help predict the future you need to support creating it.”

“We know there's opportunities and we think this is where we can have a real impact. We've got the scale, we've got the strategic partnerships with our external managers, and this is really where we can start creating opportunities and think about how we can be a market maker in this space.”