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Is this the death of Australia’s renewable energy industry?

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The Australian government – and ministers Greg Hunt and Ian Macfarlane in particular, like to tell everyone how much they support renewable energy. But they seem to be doing their level best to trash the industry in Australia.

Key data released late last week underlines the disastrous state of the large-scale renewable sector: for all intents and purposes, it doesn’t exist.

Bloomberg New Energy Finance data shows that Australia is on track to record its lowest level of asset financing for large-scale renewables since 2002 – as just $193 million was committed in the third quarter of the year. From ranking No 11, in the world in 2013, Australia has fallen behind Algeria and even Myanmar.

bnef investment

Australia, which should be one of the world’s leaders in the industry, is seeing its industry collapse. The three biggest Australian investors in renewable energy are in deep trouble.

Industry Funds Management is being forced to write down the value of Pacific Hydro, the largest specialised investor in renewables in the country, by $685 million, according to the Australian Financial Review. This from a business that was to have been floated a year or so ago with a value of more than $2 billion.

Infigen Energy, the largest listed investor in renewables, has said it is facing massive writedowns, and potentially taking dramatic action to protect shareholder funds. It has brought Australian investments to a halt. So has Silex Systems, which has effectively abandoned the solar industry.

International investors have also made clear that their investment in Australia will end soon un less policy stability is restored. These include First Solar, Chinese wind turbine leader Goldwind, and numerous others. The US-based Recurrent Energy has already packed its bags, Spanish based FRV has said its $1.5 billion pipeline is at risk.

The reason for this? Despite the protestations of the Abbott government, it is the uncertainty they have created. Each of the private companies has cited uncertainty about the RET, a situation that Hunt and Macfarlane know only too well because they kept complaining about it in opposition when the RET legislation was delayed in 2009 and 2010.

IFM CEO Brett Hinbury said the two biggest factors affecting the company was the fall in energy demand – and the uncertainty around the current laws.

As BNEF explains:

“The severe downturn in investment – and total freeze in private investment – has been caused by the Abbott government’s review of the Renewable Energy Target,” it writes.

“Its controversial review panel recommended scrapping the target or radically diminishing it in August, but the government is yet to announce its position and faces blockage in the Senate to changes.

“Private investment is likely to remain frozen until the government’s position is clarified, which is expected in the coming months. However the hiatus in investment will continue for several years if the recommendations of the review panel are not rejected.”

Of course, it makes an absolute nonsense of the claims by Macfarlane and Hunt that the government supports the industry. They understand full well the impact of their decision to appoint a group of climate science deniers and fossil fuel lobbyists to “review” the RET under the tutelage of Dick Warburton, and of comments by Treasurer Joe Hockey that he finds wind turbines “absolutely offensive” and from Prime Minister Tony Abbott, who complains about cost impact.

This is despite the findings of  the Warburton review that the target could be met, and would deliver cost savings to consumers. Still, it recommended the RET be stopped in its tracks or halted, for fear of a “transfer of wealth” from fossil fuel generators to consumers.

The irony is that even the paltry $193 of new finance in the third quarter came from initiatives put in place by the previous Labor government, and by institutions that the Abbott government wants to shut down.

A total of 7 projects have been financed since the start of the calendar year – all are the subject of government funding through the Australian Renewable Energy Agency, Clean Energy Finance Corporation or state governments. None were backed by non-government lenders or investors.

In the first two quarters of the year, there was just $45 million of financing.

This contrasts with the continuing surge in rooftop solar – mostly for the purposes of self consumption – and the growing boom in renewables investment across the world.

Globally, clean energy investment in the first three quarters of this year was 16 per cent ahead of the same period of 2013, at $175.1billion.

The highlight of the third quarter was a leap in Chinese solar investment to a new record of $12.2 billion. China is building a large number of utility-scale photovoltaic projects linked to its main transmission grid.

In Japan, investment grew 17 per cen to $8.6 billion, with solar again the dominant renewable energy source. Other countries showing a bounce in investment in the latest quarter were Canada, France and India, while there were significant projects financed in a number of new markets, including Myanmar and Sri Lanka.

Michael Liebreich, chairman of the advisory board at BNEF said the figures were heartening, but still not enough to herald the “rapid transformation of the power systems” that is required. That would require investment of $200 billion and $300 billion a year.

The third quarter figures showed that global investment in wind farms, solar parks and geothermal plants reached $33.3 billion, a slight rise on year earlier figures, while investment in small-scale projects such as rooftop solar was $18.3 billion, up nearly a third from a year earlier.

Of course, there is a way that Hunt and Macfarlane can deliver on their claim that they really do want the best for the Australian renewable energy industry. That is to quickly reach a deal with the Labor Party and the industry on the way forward.

The Labor Party has indicated it may be prepared to defer the target to 2022, the Clean Energy Council has indicated it could accept an exemption for the aluminium industry. All the Coalition government has to do is to drop the ideological nonsense from the Warburton Review, and accept that Australia has to follow the rest of the world and put in place a rapid de-carbonisation of its electricity industry.  

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  • moosey

    Just some housekeeping required here “The irony is that even the paltry $193 of new finance” I think that figure was in millions, but still a paltry sum all the same.
    The Coalition will regret their insistence towards their renewable policy and the lack of support for it, they are harming the economy and will end up leaving us with stranded assets that no one wants, while at the same time sending some of the worlds best practice renewable energy technology, jobs and assets overseas.
    I was once a Liberal party voter and happy to be one, because they didn’t waste money like the Labor party has done on a number of occasions, but what this present coalition mob is doing is just plain stupid and worse, I am tempted to vote informal next time, or perhaps for one of the independents?
    If Mr Turnbull were to lead the party once more and get rid of some of the idiots with these attitudes towards renewables and bring back some common sense to the party, perhaps then I may consider voting for them again?

    • John P

      Here in Victoria, we are just completing a four year administration run by the Liberal Party. Four wasted years in which the renewable energy industry was effectively shut down. Labor is promising to reboot the industry but as I understand it, the Labor Party is populated by politicians too.
      Are they any more trustworthy? Who’s to say?
      Maybe it is worth a try.

      • Alen

        Jobs will be a big issue in the coming election and it shouldn’t take a genius to figure that the new jobs now will come from the ‘green’ industry, so my guess is they’ll be pushing for more renewables from the jobs angle. More renewables should in theory therefore be an election winner.

        • Ben Courtice

          CSG and exporting brown coal briquettes could be a jobs winner too, and Labor have some form for supporting those as well as renewables, so I’m not holding out too much hope for a Victorian Labor government (yet)

    • johnnewton

      And the Greens? Who’ve stood behind renewables and investment in renewables from th very beginning? And when you say independent you mean someone reliable like Clive Palmer?

      • suthnsun

        I’ve voted green for some time, the most rational choice for most issues that matter. We are where we are though and it’s about as far from green as possible to be. A more pragmatic and internally congruent green would be good.. Labour has been dreadfully inconsistent and incongruent but still ‘should’ be able to represent fairly if they sorted themselves out. I think a public pledge list to never vote liberal again and never buy a Murdoch newspaper would probably have a ‘wake up’ effect but it might just drive them even more barmy..

        Whatever happens, panels on rooves and EV or bike for transport is displacing ff , it’s the only way to vote for us poor disenfranchised ozzies.

      • moosey

        I won’t be voting for the greens any time soon, not while they have people in there like Sarah Hanson Young and some of the greens would have us living in the dark ages if they had their way, not all of them mind you, but some of them are just plain scary.

        • johnnewton

          ‘Scary’ In what way Moosey. In that they consistently advocate for renewable energy, have unwaveringly championed action against climate change, stand up for the rights of asylum seekers and are the only party to fight for the rights of farmers over miners and CSG. Which of those policies are ‘scary’?

  • Macabre

    In Germany (I have recently moved here from Australia) the greens are split into “fundamentalists” and “realists”. There seem to be only fundamentalists in Australia. I still think back to the CPRS which, with green support, would by now be so deeply embedded that it would be impossible to repeal. The greens have burnt Labor a number of times on this issue in the last few years – with devastating impacts on environmental policy.

    • Ben Courtice

      Labor have burned the electorate. We went from climate being “the greatest moral challenge of our time” to that miserable apology for a climate policy, the CPRS. The Greens held to their policies and principles well through that.

      • Macabre

        This is exactly the kind of one-eyed fundamentalist view I am talking about. The CPRS and the Clean Energy legislation were to all intents and purposes the same apart from the long term target and the fixed price period. With hindsight the fixed price was both a folly (too high) and a poisoned chalice (opened Gillard up to the charge of lying). The long term target is meaningless now that we have the COALition in charge, So the greens torpedoed the CPRS and then torpedoed their one and only political ally. In the name of sticking to policies and principles. I voted green in the last 3 elections but I honestly wish I’d spoiled my vote instead.

        • JonathanMaddox

          It was a game. Rudd chose to ignore the Greens because he had a deal with Turnbull. The Greens were not responsible for that in any way. When Turnbull was knifed for dealing with Rudd, Rudd refused the Greens’ offer of support, did not consider calling a double-dissolution election (which would have trounced the Liberals, possibly returning the leadership to Turnbull, while increasing the representation of both Labor and the Greens in the federal Parliament), and indeed did not even enter into talks with Christine Milne.

          Any fundamentalism in the circumstance is on the part of Rudd and Abbott. The Greens and moderate members of the Liberal Party were quite deliberately sidelined by these big swinging dicks.

          Gillard played nicely with the Greens and we got the best carbon pricing regime Labor could stomach. For just one year, which was hardly Gillard’s fault nor Milne’s. I blame the fundamentalist testosterone party.

  • JohnRD

    The ACT renewable auction scheme is driving investment in utility scale renewables. The Greens and the ALP should be pushing something like this scheme for Victoria. It doesn’t depend on bipartisan support to work.

    • Warwick

      Maybe not, but just wait until the next election. East West link in Victoria is a current example of that challenge.

  • Ben Courtice

    investor confidence is a fickle thing. The target has yet to be changed, and all indications are that under the current senate, it won’t be. Yet they are leaving in droves. If I had any choice in the matter, I wouldn’t base something so crucial as climate action on something so flappable as the stock market.

    • JonathanMaddox

      Right! So we base it in the public sector? Bwahahaha.

      Or the charitable? I’m funding https://corenafund.org.au . You?

  • Sean

    The current average price for wholesale power in australia is 2c/kwh. wind is cheap, but not that cheap. The best thing that could be done is to open up the distribution system to a spot market (much like the state based system currently in place) to encourage more electricity use.

    This would increase prices that are currently depressed due to lack of demand. (and you would have thought a Liberal Party ideological fit)

  • George Papadopoulos

    Renewables would not have suffered such a political backlash had they not become synonymous with wind turbines. But many chose to ignore the early warnings that wind turbines and their low frequency noise/infrasound was a problem and now we see the renewables baby tossed out with the water. Any surprise? Who shall we blame?

    • Alen

      Wind turbines are like the CC debate, the science tells us one thing and is supportive, so if you can’t win on the truth basis instead fight it with ideological nonsense and lies

      • George Papadopoulos

        Yep, one keeps lying that wind turbines don’t cause intrusive noise and infrasound, then when wind turbines are shown to cause problems one blames the victims and call them NIMBYS…

        • Alen T

          I’m not debating that they produce noise, but as all the research into wind turbine health impacts conclude, there is no link between the two. Undoubtedly there are individuals that may be suffering some ailments, but they do not derive due to wind turbines and as has been suggested in many papers now, the big hype and negativity of turbines may lead to perceived but real health consequences.

          Look, the matter can be settled fairly easily in my opinion, instead of continuing the funding for anti-wind turbine propaganda, direct it towards undertaking a study, publish it and once and for all show there is a real link between wind turbines and health.
          Money won’t be an issue for both the CC deniers and anti-turbine organisations and this would go a long way in convincing the scientific community and the public that has faith in their papers. Unfortunately it is not this group that is being targeted but rather the uninformed public that reacts to this fear mongering , half truths and often plain lies.

          As Upton Sinclair said, ‘‘It is difficult to get a man to understand something when his salary depends upon his not understanding it.’’

          • George Papadopoulos

            Round and around in circles we shall go? Is it so difficult to assess the endless reports of noise nuisance, sleep deprivation, and ill health around wind turbines? Shall we wait till someone bothers to do a high quality cohort study to prove the obvious???

    • Guest

      Who shall we blame? You want a roll call, for who will be up against the wall when the revolution comes? Starting with Sarah Laurie, Michael Wooldridge, and George Papadopoulos? No, we don’t stoop to that.

      • George Papadopoulos

        Yes, Jonathan we shall blame all those who went around deluding rural residents that wind turbines are “green” machines, “quiet” and a “benign” 150m towering addition to the landscape.

        As a consequence solar PV and investment in other renewables has suffered. Shall we add your name to that roll call?

        • JonathanMaddox

          No other renewable electricity generation technology save hydroelectricity is yet as cost-effective as wind power. Solar PV has actually had a far larger subsidy than wind per unit energy delivered for at least a decade, and is to blame for most of the criticism that renewable energy subsidies are not cost-effective.

          Wind power is highly effective, and yes, it’s by far the greenest renewable power source we have. It costs relatively little to build, it doesn’t flood anything, people and animals and crops can grow around it, and best of all, it produces no greenhouse pollution in operation.

          Nobody hosting large wind turbines in rural areas has ever been under any illusion that they’re small or entirely silent.

          • George Papadopoulos

            Jonathan, are you deliberately missing the point? After distracting me with your threats you now rant on about “green” wind turbines and costs etc. If we introduced a noise, shadow flicker, lifestyle intrusion and landscape taxes, wind turbines would be the most bankrupt industry ever in human history…

          • JonathanMaddox

            No threat. We don’t stoop to that. This is what we call a thought experiment, and it should never have been made public. I have sinned — not by my thoughts, but by publicising them. My apologies.

          • George Papadopoulos

            No threat eh? Just some scheming to execute those who get in the way of your ideology?

          • JonathanMaddox

            I have deleted my comment. Please accept my apologies.

          • JonathanMaddox

            Turns out deleting my comment doesn’t delete it, just makes it belong to “Guest” instead of to me. So I’m owning my shame, lest someone think the comment was the work of an anonymous coward, and repeating my apology.

            What happened is that I snapped at “Who shall we blame?”, and applied reductio ad absurdum. It was immature and uncalled for.

  • Chris Fraser

    Yeah, if the renewables industry is not convinced of these slogans supposedly supporting renewables, then I’m not convinced

  • AUSTRALIA

    as renewable energy is not yet economically viable for the australian government to invest in(if government invests money it loses we all lose )then we shouldn,t invest in it as wasting tax payers money is not what governments are supposed to do their supposed to invest our money for profit and investing in renewable energy is not profitable so i aplaud them for this …..maybe one day when it is profitable and they can profit from it then they will good on the AUSTRALIAN GOVERNMENT their trying hard to make AUSTRALIA the great place it is ut it,s difficult