Storage Soars While Generation Slows - Q1 25
The Clean Energy Council’s Quarterly Investment Report for Q1 2025 (1) offers a revealing snapshot of the current state of large-scale renewable generation and storage projects across Australia. The good news? Energy storage is booming. The not-so-good news? New generation investment has slowed to a crawl. For investors focused on climate solutions and the transition to a low-carbon economy, this mixed picture is as instructive as it is timely.
What the Report Covers
This quarterly update tracks large-scale renewable energy projects from financial commitment through to commissioning. The data provides a lead indicator of the future renewable energy build-out and offers insights into which technologies and states are attracting the most capital. This edition pays particular attention to financial commitments made in Q1 2025 and includes updated figures on project pipelines, commissioning timelines, and investment trends across both generation and storage.
Key Findings
The biggest story of the quarter is the record-breaking surge in battery energy storage. Six new storage projects reached financial close in Q1, totalling 1,510 MW of capacity and a staggering 5,016 MWh of output. That makes it the second-best quarter on record for new energy storage output, bolstered by flagship projects like the Wooreen Battery Energy Storage System in Victoria and the Limestone Coast North Energy Park in South Australia.
By contrast, only two new renewable generation projects reached financial close in Q1: the Bungama Solar Farm (280 MW, South Australia) and the Lancaster Solar Farm (106 MW, Victoria). These projects accounted for just 386 MW in total, the lowest quarterly result since Q3 2023. Investment for these generation assets came in at $410 million—80 per cent below the 12-month rolling average of $2 billion.
Despite the generation lull, five generation projects were commissioned during the quarter, adding 756 MW of new operational capacity to the grid. These included the Walla Walla Solar Farm in New South Wales (300 MW) and the Ryan Corner Wind Farm in Victoria (218 MW).
What This Means for Investors
There are several takeaways here for climate-focused investors.
First, the clear winner is energy storage. With $2.4 billion committed in just one quarter—83 per cent above the rolling 12-month average—storage is no longer the future; it's now. Projects are not only bigger but longer in duration, with Q1's average reaching 3.2 hours, up from 2.2 hours a year earlier. That trend toward longer-duration storage improves grid reliability and creates a range of new investment opportunities—from standalone battery developers to technology suppliers and financiers.
Second, the slow pace of generation investment is not necessarily a red flag—yet. Q1 is traditionally a quiet quarter. Over the past five years, average Q1 commitments were 427 MW, compared to 1,153 MW in Q4. However, if the slowdown persists into Q2 and Q3, it may indicate deeper structural or policy barriers to large-scale project approvals, grid connections or supply chain logistics.
Third, the pipeline remains robust. As of Q1 2025, there are 82 generation projects and 69 storage projects either financially committed or under construction, representing more than 12,500 MW each of capacity. Importantly, around 10 GW of wind and solar projects are in advanced stages and could reach investment decision within 24 months. Many are supported by government underwriting or power purchase agreements, which should encourage capital allocation.
Fourth, costs are shifting. While solar project costs have generally declined due to manufacturing scale and efficiency gains, the cost per MW for onshore wind has trended upwards since 2020. The reasons? Higher steel and equipment prices, labour shortages, and lingering supply chain disruptions from COVID and geopolitical instability. Investors should consider these factors when modelling returns on wind-heavy portfolios.
Finally, project completion timelines matter. Solar continues to beat wind on time-to-market, averaging six months faster from financial close to commissioning. That has implications for cash flow modelling and project risk assessments.
Storage Economics Improving
Another standout trend is the dramatic reduction in capital cost per MWh for battery storage projects. Since 2017, unit costs have fallen from $4.46m/MWh to just $0.73m/MWh in real terms. That trend underpins the growing viability of storage as a grid asset, especially in jurisdictions like South Australia and Victoria, which are pushing for higher renewable penetration and need reliable balancing mechanisms.
The hybrid project space also deserves attention. There are now 58 hybrid projects in various stages of development, combining technologies like solar + battery, wind + battery, and even solar + pumped hydro. These projects offer diversified revenue streams and increased resilience, attributes that many investors now view as essential.
The Policy Context
The Clean Energy Council emphasises that current investment levels—while promising for storage—remain insufficient to meet the federal target of 82 per cent renewable energy by 2030. To hit that mark, Australia needs to commit 6–7 GW of new generation capacity annually, or at least 1.5 GW per quarter. Q1 2025 delivered just 386 MW.
That’s a sobering gap and highlights the need for faster approvals, better grid integration, and more consistent policy signals. Investors should monitor government initiatives like the Capacity Investment Scheme, which is starting to bear fruit in early-stage projects but needs scale and speed to make a material impact.
The Bottom Line
Australia’s energy transition is gaining traction in storage but remains sluggish in generation. For investors, the signal is clear: storage is investable now, with declining costs, longer durations and solid policy support. Generation still holds promise, but the sector must overcome inertia if it’s to deliver the volume needed to meet 2030 targets. The long-term trajectory remains bullish, but timing and selectivity will be key.
References
Clean Energy Council Quarterly investment report: Large-scale renewable generation and storage Q1 2025 27 May 2025 https://cleanenergycouncil.org.au/news-resources/quarterly-investment-report-q1-2025
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