Coalition looks to push solar instead of wind in revised RET

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Coalition ministers are looking at ways to accelerate the deployment of large scale solar farms under the revised Renewable Energy Target, at the expense of wind energy.

nyngan solar 25MW

It is understood that Industry Minister Ian Macfarlane and Environment Minister Greg Hunt are facing strong party-room resistance to the cut-down 33,000GWh target agreed with Labor.

Despite representing a cut of 8,000GWh, or around 3,000MW of new capacity, from the previously agreed target of 41,000GWh, many in the Coalition think the new target is still too much, and are against the idea of more wind farms.

That feeling extends to the front bench. Prime Minister Tony Abbott told 2GB Radio on Thursday that wind farms were not nice to look at and had health impacts.

Abbott admitted what has long been clear: that it was the intention of the Federal Government to reduce the number of wind turbines as much as possible. He would rather the RET not exist.

Treasurer Joe Hockey told the same radio station last year that wind turbines were “utterly offensive”. There are precious few supporters of wind energy in the Coalition.

Hence the push to find ways of promoting large scale solar in the revised RET. There are a range of views about whether the reduced target will squeeze out large scale solar our not.

Some say yes, others, such as Bloomberg New Energy Finance, point to the Queensland market, which is the only state likely to see increased energy demand (thanks to the needs of the LNG plants), and which has excellent solar resources and a bunch of solar projects in the pipeline.

BNEF says 2,600MW of large scale solar could be built in Australia under the RET by 2020 if the conditions are right. Origin Energy this week said it was exploring large-scale solar in Queensland.

The question is how to improve the conditions for solar. Cross-benchers such as Nick Xenophon have long proposed “banding” – reserving a certain portion of the RET to particular technologies such as solar. But this is thought to be too expensive.

Another measure being mooted is rewarding solar with higher tariffs or a higher ratio of certificates to reflect the greater “value” of its output, given that it delivers its electricity during the day.

That, however, is more of a moot point given the impact that rooftop solar now has on day time peaks (it has largely removed them), and the idea of providing additional certificates to solar output risks repeating the errors of the early days of the small scale scheme, when the market was flooded with certificates.

The most likely solution is to call on the resources of the Clean Energy Finance Corporation, using its resources to provide cheaper finance to large scale solar projects. It is already doing this with the Moree solar project, which as also got funding from ARENA.

Large scale solar PV projects are being built for as little as 6c/kWh in the Middle East, and that is due to the low cost of finance and the low cost of labour.

The cost of large scale solar PV is thought to be at least twice that in Australia, but some of those costs can be reduced if funding costs are reduced. Banks are unlikely to do that without a lead from the CEFC because there have not been enough of them built in Australia.

Jack Curtis, the Australian head of First Solar, which built the first large scale solar farm in Australia, and more recently the biggest so far at Nyngan (102MW) told RenewEconomy in an interview earlier this year that he big ticket item for cost reduction in solar projects is finance.

Curtis says the US is the key barometer for prices for large-scale solar farms. After backing out subsidies such as investment tax breaks, the US market is seeing prices in the $90-100/MWh mark.

“If we can do that here, large-scale solar will be competing against wind,” Curtis said. “But in Australia, the cost is probably around $140/MWh, and it could be another 3-4 years until the solar can hit the same numbers as the US.”

“Finance will be a big key to that,” he added. But finance costs in Australia will likely come down slowly because the deployment rate will be vastly inferior to that in the US, where innovative financing structures and corporate interest have brought down the costs.

That is where the CEFC could come in. Ironically, the Abbott government wants the CEFC to be dismantled, even though it is delivering a profit for the government and is underpinning investment in infrastructure that would not have happened otherwise.

But it may grant it a stay of execution (well, it can’t get the numbers in the Senate anyway) if it can encourage the CEFC to accelerate solar. The RET bill is due to be presented to the Senate next week.  

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  • Eran Malloch

    C’mon Giles. How about some proof reading… Sentence 1: “Coalition ministers are looking at ways to accelerate the deployment of large scale wind farms under the revised renewable energy target, at the expense of wind energy.” How can they be looking to accelerate the deployment of wind farms at the expense of wind energy???

    Also, in this sentence “Despite representing a cut of 8,000GWh, or around 3,000MW of new capacity, from the previously agreed target of 41,000GWh, many in the Coalition think it is still too much, and are against the idea of more wind farms.” – Did you mean many in the coalition think it’s not enough??? That would make more sense…?

    Plus all the usual typos we see in your posts.

    • Jonathan Prendergast

      Actually, Giles’ grammar is correct in the 2nd one. He is referring to the adjuted RET, not the cut.

  • Keith

    What a bunch of fools. Surely Labor will find some backbone to pick this apart, as it surely is a vote winner? (Unless Labor are so scared of being wedged that they will go to water).

    We are certainly getting some meat in the Coalition views about climate change and renewables. And it seems very much at odds with what the community is looking for.

    • Rob G

      I like the fact that Labor are promising a price on carbon. Considering that Abbott’s ‘Axe the Tax’ campaign swindled a lot of votes. I think it’s brave and I think it’s the right thing to do.

      • Keith

        Hi Rob,
        My point is that there is a LOT of stuff here and all of it is pretty popular (except to the rabid far right). Surely this is an opportunity for Labor to grab the centre?

        I agree about pricing carbon, but that is just one of a number of elements (including RET, which has been adopted and is being expanded by more than half of the 194 countries at Paris). It also goes to irrational hatred of wind power, that surely has most people shaking their heads.

        The really big one is for Labor to bite the bullet on fossil fuels. They need to go beyond pricing carbon and acknowledge that the age of fossil fuels has to end. The G7 have just said it (notwithstanding that their timeline is silly as it would mean building new coal plants which won’t happen).

        My hunch is that the Aussie public has a sense of the fact that we aren’t going to be able to live off coal and gas for the next 50 years, but it does mean that one of the major parties has to join the Greens on this. Like climate change, the longer Australia takes to acknowledge reality, the more painful it will be.

        • Rob G

          I share the concern that while Labor have made a lot of bold and promising statements towards climate action, such as pumping up the RET, the carbon tax, more ambitious reductions etc – they do quietly carry-on with fossil fuels. It’s a time to stand-up and say what they stand for and going half way might still win the election, but what percentage of votes will go to the Greens. After all the Greens, we all know, are real clear on this. Labor can not afford to be concealed about their true intentions. I believe they will come right.

        • wideEyedPupil

          Marn Ferguson anybody?!

  • Jacob

    How about these blade-less wind farms Joe?

    * silent
    * 50% cheaper to build
    * shaped like Joe’s cigar