In 2000, renewable energy supplied less than 1% of electricity in the National Electricity Market (NEM) that encompasses Australia’s east coast and southern states. By 2023, renewables had grown to supply 39% of the NEM’s electricity.

Advocates of renewable energy often attribute the growth in renewable energy to technological improvements and increased private sector investments. However, these claims are complicated by the substantial government subsidies supporting the renewables industry. Renewable energy proponents contend that initial government support would enable the renewables industry to achieve the technological improvements and economies of scale needed to become independently profitable. Yet, this profitability remains elusive, especially considering there is no foreseeable end to the subsidies for renewables.

Indeed, the current federal government has further increased subsidies in an effort to achieve its ambitious goal of having renewables supply 82% of national electricity by 2030. The 2024-25 budget allocates more than $22 billion to boost renewables in Australia. This includes $13.7 billion in production tax incentives for green hydrogen and processed critical minerals as well as the $1.7 billion Future Made in Australia Innovation Fund aimed at developing new industries like green metals and low carbon fuels.

This paper quantifies the value of subsidies from the federal government to the renewables industry over the 10 years to financial year 2022-23. It finds that over that time, Australian taxpayers and electricity customers have paid more than $29 billion in subsidies to producers of renewable electricity through federal government schemes. These subsidies include direct government transfers funded by taxpayers and transfers from private entities to renewable energy providers as mandated by government policies. The latter costs are typically recovered by electricity retailers and passed on to the Australian public in the form of increased electricity surcharges.

The analysis focuses on subsidies under federal government schemes to the renewable energy sector for several key reasons. Firstly, the rising cost of electricity is a pressing concern, making it crucial for taxpayers and consumers to understand the extent of subsidies for renewables that ultimately affect their electricity bills. Secondly, with a federal election on the horizon, this research aims to inform the ongoing debate surrounding energy policy by quantifying the scale and impact of federal subsidies to the renewable sector.