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BMI View: The non-hydropower renewables sector in Australia is expected to expand in 2016 as a number
of wind and solar projects come online. Growth continues to fall far short of potential, however, as a lack of
investor incentives, cuts to government spending on renewables and ongoing uncertainty surrounding
carbon emission reductions and renewable energy targets cloud the market. Australia's power sector as a
whole is expected to see slow consumption growth, and combined with growth in thermal power (primarily
coal and natural-gas), this further limits demand for new renewables capacity.
Latest Updates And Structural Trends
? While the Australian Renewable Energy Agency (ARENA) has allocated grants worth AUD92mn
(USD68.7mn) to 12 projects totalling 482MW under its solar funding round, we note that the government
has cut ARENA's funding for the next five years by AUD500mn (USD375.5mn), in an effort to fix a
AUD6bn (USD4.51bn) budget shortfall. This could slow the realisation of projects in the pipeline.
? In July 2016 one of the leading domestic energy retailers AGL Energy announced it had set up an
AUD2bn to AUD3bn renewable energy fund, with Australia's sovereign wealth fund and a Queensland
government-owned fund. The Powering Australian Renewables Fund will reportedly developing
around 1,000MW of renewable energy which could provide a significant upside to our current forecasts
for the sector.