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US solar giant quits Australia due to policy uncertainty

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Recurrent Energy, a leading US developer of solar power plants, is closing its Australian office because of the uncertainty over the renewable energy target.

Recurrent last week said it had 1,500MW of large scale solar PV projects in the pipeline in Australia, worth around $3 billion in potential investments, although it said it was only likely to be able to develop these if the renewable energy target was maintained.

However, the California-based company has since decided to cut its costs and close down the Australian office and will manage its Australian portfolio from the US. It may reopen the office once policy certainty is returned.

Recurrent is the first major international renewable energy developer to close its offices in Australia, but it may not be the last.

Numerous international developers have warned that they could quit Australia if the RET was removed or diluted, and say it is increasingly difficult to convince head offices in Europe, Asia and the US to dedicate time, effort and resources to the Australian market, particularly with other markets booming.

These include Spain’s Acciona and the US-based First Solar, who warned in April that they would reconsider their investments in Australia if the RET was diluted. Even Australian companies Infigen Energy and Pacific Hydro are spending more money on investments overseas than in their home market.

Goldwind, China’s biggest wind turbine maker, and Yingli, the world’s biggest solar PV manufacturer, have also made similar warnings. It is worth reading Goldwind’s warnings again.

The decision by Recurrent Energy comes as the RET Review Panel appointed by Tony Abbott – comprising two climate sceptics and a fossil fuel lobbyist – is reportedly asking for more time to submit its report to the Prime Minister’s department.

The Australian Financial Review quoted panel chairman Dick Warburton as saying the panel was seeking an extension of several weeks to submit the report.

It is widely expected to recommend a significant cut in the RET, at least to what it may describe as a “true” 20 per cent target.

But the fact that any such recommendation will face opposition in the Senate means that policy uncertainty could continue for another few years, putting further delays on investment decisions. And it could force the review panel back to the drawing board, possibly to reconsider a 30 per cent by 2030 target, which some speculate may be the new compromise.

carExitColin Liebmann, the project development manager for Recurrent Energy in Australia, and who established the company’s Australian presence three years ago, sent an email to industry colleagues announcing that he would “wrap up” his work with Recurrent Energy shortly.

“We have had some good successes with our pipeline of utility-scale solar opportunities during that time ,considering the challenging policy environment,” he wrote.

“Recurrent is slowing down their investment in the Australian market pending the outcome of RET and will manage it from USA.

“When the policy signals strengthen, they will ramp up again. They will continue to develop RE Oakey, the 80MW opportunity in Queensland, and pursue all available funding strategies in the meantime.”

An application for the 80MW plant in the Darling Downs region has been submitted to the Toowoomba regional council. A decision is expected in the next few months.

Liebmann confirmed that he and a colleague were leaving Recurrent Energy.

“This is what was predicted,” he told RenewEconomy. “International companies move their resources around, into the markets that are active. That’s what happens.”

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  • John P

    Apparently, Australia is NOT “open for business”.

  • Stephen Gloor

    No its open for coal business just not anything else …..

  • michael

    don’t international companies move their capital around in order to make a return? So, the implication being, absent of the RET they can’t make a return?
    If they can’t make money in a country with high solar loads and world leading home solar uptake, is it really the fault of policy uncertainty they leave?
    If their industrial solar was straight up competitive, it wouldn’t need a governement mandated leg up to be active
    Would a fair reading of this be, “due to the government not forcing people to buy our product or subsidising us to the point we are a no-brainer business case, we are taking our bat and ball and going home”?

    • Tommyk82 .

      Basically the scenario Michael is that there is currently more generation in the Australian grids than is needed due to a massive modelling failure which assumed energy demand would continue to increase despite people installing roof-top solar, getting energy efficient appliances and changing their behaviour. The fall of manufacturing in Australia will make this oversupply problem even worse. So you see without the RET, renewable generators would rely on old coal stations to voluntarily close down without replacing themselves, something which is unlikely to happen.

      Companies like Recurrent Energy can not build in Australia without a Renewable target which creates a need for supply that is separate to demand. Without the RET, their new generators would be regarded as unnecessary so they wouldn’t get permits to build and even if they did, almost no one would be interested in buying the power.

    • Pedro

      The RET is a long term policy framework agreed to by both major parties to get more large scale renewable energy generators into our energy mix, with the aim of reducing GHG pollution. Just about all FF generators were or are state government owned, built by our taxes. That is a pretty good subsidy to the FF generators, especially considering some state governments are going to sell these assets far below what they cost to build. You also have to consider that the FF generators are now getting a pretty good subsidy as they don’t have to pay for the pollutants they dump into the atmosphere, and they wont be paying for the damage they have done.

    • Chris Fraser

      I think Australia had an emerging economy before 1945. Until that time all of its industry, which would have been timber agriculture wool beef coal minerals steel, with a bit of export car manufacturing et. al. from 1948 until now, all of them need the hated subsidies. The money spent rewarded the funders several times in terms of economic growth and employment. The RET could be argued to be similar to direct payments and tax breaks for other industry, without even mention of ecological benefits.For reasonable comparison, it would be good if all other receivers or withholders of taxpayer’s money had these ‘burdens’ equal to the cost of 1MWh of clean energy per unit, attached to their regular audits so we can see what return we’re getting out of them.

      • Anthony Szatow

        Point well made Chris.

    • wideEyedPupil

      It’s your kind if thinking that is destroying the climate at a scary rate. Methane bombs now going of in Siberian tundra already. Get real mate we need negative net emissions ASAP.

  • Chris Marshalk

    Well done Tony L”Abbottomy. $3 billion – Lost, what a moronic LNP government.

    • michael

      Lost? can’t have been a very solid ‘pipeline’ of $3B for them to supposedly walk away, it’s all just spin.
      probably similar people bemoaning an international company leaving as those who are so worried about international companies mining on our shores… no hypocrisy whatsoever

    • Harry

      Not so much moronic but doing the bidding of their backers!

  • Rob G

    Time for the states to step in and sort out the bumbling federal government. And when sensible government returns in 2017 that we triple our efforts to make up the lost ground.

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