Environment | Renewable energy investment plans surge, ACIF forecasts show

ACIF is also predicting a further $4.3 billion in renewable electrical infrastructure next year and $4.2 billion in FY2026.

Projects added to data provider Cordell’s major project database included Victoria’s $8 billion Great Eastern Offshore Wind, Queensland’s $7.5 billion Collinsville Green Energy Hub, and NSW’s $2.2 billion Dinawan Wind Farm, said ACIF consulting economist Peter Downes.

“We’ve had a lot of commencements,” Mr Downes told the Financial Review.

“The climate change act got through the parliament and a for lot of investment committees that gave enough confidence to pull the trigger.”

The increasing renewables investment was part of a wider strengthening of Australia’s construction pipeline that prompted ACIF to boost its forecast total for FY2024 to $270 billion from $251 billion at its last estimate in May. It also increased its forecast for 2026 – the last year in the current forecasting timeline – from $260 billion to $281 billion.

The revisions reflect a pick-up from six months ago in apartments and other so-called attached housing – to the tune of $1.8 billion, $5.1 billion and $5.7 billion over this year and the two following years – reflecting the impact of measures such as national cabinet’s 1.2-million National Housing Accord and the separate $2 billion Social Housing Accelerator programs.

This is partly offset, however, by weaker private investment in detached houses as a result of deteriorating affordability, as well as less a paring back of earlier forecast investment in domestic renovations.

Despite hefty investment, the federal and state governments were likely to fall short of their housing targets, ACIF says.

“This still leaves the government far short of its 1.2 million new houses goal, with cumulative completions in the ACIF Forecasts of 880,000 in the five years to the end of 2028 – 320,000 short of the goal,” it says in its forecast report.

In non-residential construction, ACIF has increased its forecasts for industrial, transport and logistics.

“Industrial activity has surged by 40 per cent over the last two years, with very large increases in the demand for warehousing,” the report says.

“There is a substantial stock of work in the pipeline in this is projected to maintain work-done at a high level for a sustained period, albeit dropping back slightly in 2024-25.”

Educational property construction also picked up, reflecting the big increase in university investment in the education sector as international students returned after the COVID-19 pandemic.

“Mirroring this recovery, building work done has rebounded by 25 per cent over the last 12 months,” the report says. There has also been a significant build up in the pipeline of work yet to be done over the last two years as building activity slumped.”

While the expansion of renewable energy-related engineering construction reflected – theoretically, at least – enough development to meet the renewable energy target, not all of them would go ahead, warned Mr Downes, a former OECD head of macroeconomic modelling.

Commonwealth, state and local policies would all affect whether projects went ahead and funding was a consideration too, he said.

“A lot of these projects are competing for the same funding and so … it’s all going to be winnowed out,” Mr Downes said.