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Undoubtedly, the recent increase in popularity of campaigns to decarbonize the globe proves renewable energy to be a current and future trend globally. For this reason, many countries worldwide are gradually investing in growing their onshore and offshore wind projects to serve subsistent and large-scale markets in the future. For instance, Australia is recently taking advantage of location and excellent weather conditions that encourage wind energy harvesting to expand their onshore and offshore wind energy. Although both onshore and offshore Australian wind energy projects are economically feasible in the long run, their future profitability in the various energy market depends on numerous factors.
Profitability of Australian Wind Energy from 2016 to 2021
From 2016 to date, the Australian renewable energy industry has shown remarkable continuous growth wind energy industry, which has registered a 25.3% growth in revenues and scale over the past five years (cleanenergycouncil.org.au, 2020). Contrary to technological development and advancement in other forms of renewable energy sources, wind energy technology portrays a competitive growth trend (Leitch, 2016). As a result, Australian capacity for installing onshore and offshore wind energy registers a five times increase in scale growth for the past ten years (Aemo.com.au., 2020). However, following increased focus on completing large-scale wind energy installation in 2021, the change in wind energy installation capacity in Australia shows growth in a decreasing trend (Soursou 2017). Arguably, increased focus on completing large wind energy projects results in reduced profitability due to increased spending on construction, which reduces Australias ability to distribute and sell wind energy in subsistent and industrial markets.
Impact of Overly Reduce Solar Energy Prices on the Profitability of Wind Energy Projects
Undeniably, an increase in offshore and onshore wind energy projects in Australia over time translates to growth in the profitability of markets dealing in wind energy equipment. Notably, offshore and onshore projects require various equipment such as blade or rotor, generator tower. Therefore, the growth in wind energy projects in Australia leads to increased demand for the equipment mentioned above, and vice versa is also true (Akarsu & Gümü_o lu, 2019). Notably, the profitability of wind energy projects in Australia in the past recent years is attributable to several factors (Wiser et al., 2019). These include cheap wind energy equipment, the competitive cost of wind energy compared to other forms of renewable energy, and increased consumer demand (Hamilton et al, 2020). However, the profitability of offshore and onshore wind energy projects portray reduced growth in profitability under various markets between 2021 and 2025 (Kuik, et al., 2019). For instance, the Australian wind energy projects face stiff competition from the solar energy industry, which has managed to cut its costs lower than the wind energy industry (Mazengarb, 2019). Therefore, the competitive prices of solar energy are likely to dilute the popularity of wind energy in Australia.
Impact of Increased Cost of Offshore Wind Energy Projects on Future Profitability
Although wind energy projects are attractive because of their lower costs than other renewable energy sources, offshore wind projects are costlier than coal energy. As a result, the market demand for offshore energy equipment and installation in Australia is likely to decline with time (De Atholia et al., 2020). Offshore wind energy projects will require a lot of coastal land space, which may lead to settlement conflicts because most Australians reside near coastal areas leading to delay in project completion (Diaz-Rainey, & Sise, 2018). Despite the challenges mentioned above, the Australian government has relentlessly invested in developing more offshore wind energy farms since 2012 to date. For instance, between 2012 and 2018, Australia had completed 94 wind energy projects contributing to 16GW of wind power generation (Deign, 2017). Since then, the Australian government is endeavoring to construct more wind farms to increase wind electricity supply for residential, industrial, and commercial purposes at reduced prices in the coming years (Menezes et al., 2020). Therefore, the successful completion of these projects promises long-term profits to Australia as market demand for wind energy will increase gradually.
COVID-19 Impacts on Profitability of Wind Energy Projects
The outbreak and spread of the COVID-19 pandemic in 2020 and its continued evolution to date impacts the profitability of the Australian onshore and offshore wind power projects adversely. The COVID-19 outbreak in Australia in 2020 led to the imposition of rules to minimize the further spread of the pandemic (Zhang & Ji, 2020). The social distancing and cessation of movements both internally and internationally imposed in 2020 had both long-term and short-term impacts on the economic performance of offshore and onshore wind energy projects in Australia (Shah, 2019). For instance, social distancing causes most businesses and industries to temporarily stop their operations, thereby reducing wind power demand in the wholesale and commercial markets in Australia(Göransson & Johnsson, 2018). Notably, in 2020, local and international travel bans became an impediment for construction experts and workers to reach wind energy sites (Mountford, 2020). In addition, the importation of wind power equipment from foreign markets has stopped due to border lockdowns (Amir, & Khan, 2021). Furthermore, the depreciation of the Australian dollar led to the increased cost of wind energy equipment from foreign markets (Turner, 2021). The impacts mentioned above prove that Australia will have to wait longer before realizing any profits from the current wind energy projects.
Judging Profitability from History
Even though the Australian wind power projects are experiencing several challenges, the Australian government can use the already completed projects to judge the viability of the wind projects currently under construction. The economic benefits realized by Australia from both onshore and offshore completed over the last ten years indicate that the current projects are economically viable in the long run (Bertsch & Di Cosmo, 2018). Furthermore, current and future demand for wind energy in residential, commercial, and industrial markets in Australia portray an upward trend following the increased global call for global decarbonization (Costa et al., 2021). As a result, recent reports show an increased investment in large-scale wind energy projects in Australia (Gatzert & Kosub, 2016). An increase in the number of investors and scale of investment in wind energy will lead to increased distribution, connection, and consumption of wind energy by Australian residents, industries, and commercial dealers over time (Madurai et al., 2020). Recent findings predict slower growth in profits of wind energy projects in various markets (Fairley, 2017). The slow growth rate is attributable to the federal government showing complacency in updating wind energy policies to fit current times.
Conclusion
In conclusion, recent research findings show continuous improvements in the growth of offshore and onshore wind energy projects in Australia over the last five years. This growth is attributable to increased market demand for clean and cheap energy, a category under which wind power falls. However, increased focus on completing large-scale wind power projects in Australia has contributed to decreased installation capacity for Australia within the last two years. In addition, both onshore and offshore projects face stiff competition from reduced solar energy prices, a factor that may reduce the demand for wind energy, especially in the residential market. Notably, the COVID-19 outbreak in 2020 poses short and long-term adverse impacts on the profitability of onshore and offshore wind energy projects by causing delays that translate to delayed viability of Australian wind power projects. However, wind energy is growing in popularity, and thus promising profitability over time as the number of and scale of consumption will continue to increase.
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