Abbott’s new attack on renewables may spark another solar boom

Tony Abbott’s renewed attacked on the renewable energy industry has effectively killed the wind energy and large scale solar market in Australia – at least for the next few years.

But it could spark another “solar-coaster” as households and small businesses rush to install rooftop solar systems before the remaining incentives are closed.

The clear intention of the Abbott government to scale back the renewable energy target, or even close it to new entrants, is causing a rapid re-assessment of business plans and strategies in the country.

For large-scale developers, it means reassessing their commitment to the Australian market. Some have withdrawn, others have downsized. More can be expected to follow in coming months.

The small scale market is also going to be affected. It now seems clear, according to well placed sources, that the small-scale component of the RET will be ended, or sharply abridged.

This, say solar industry insiders, could spark a mini solar boom to rival that of Queensland in 2012, when the Newman government flagged the closure of its feed in tariff, and caused an unprecedented rush for rooftop solar.

It’s not, however, what the solar industry wants. Subsidies, in a few years, may not be needed. What the industry wants is a measured and balanced approach to wind that down. The boom-bust cycle of “solar-coasters” are not good for business, customers or the economy.

The renewable energy target on Monday grabbed headlines after the AFR reported that Abbott had rejected an initial proposal of the RET Review panel to scale the target back to a “real 20 per cent” – which would still mean a massive reduction in the amount of new renewables to be developed over the next 5 years.

The AFR report suggested that Abbott wanted the option of closing the scheme completely to new projects. That may well be true, but the timing appears to be out. The Warburton review, sources say, was delivered to the government late last week.

Either way, it is clear – whether the Abbott government recommends the end, or just the scaling back, of the large scale renewable energy target, that large scale deployment in the country is effectively dead in the water for now.

The small scale target also faces a massive haircut, if not removal. One scenario suggests a cut in the “deeming period” for small scale certificates from 15 years to 10 years, an effective cut of 33 per cent, before being phased out.

In the end, it doesn’t really matter whether the story written for the AFR is part of a softening up process or is an accurate portrayal of events. Any adjustment to the RET will not pass the Senate, and the policy uncertainty will remain. That, in itself, will cripple the industry.

The only way for policy certainty to be regained and for investment to occur is for the 41,000GWh target to be reaffirmed and locked in till 2018. That simply won’t happen.

Apart from Victorian Liberal backbencher Sarah Henderson, there are no Coalition MPs on record as supporting the RET to be maintained as is.

The rest are split between those who want it scaled back to a “real 20 per cent”, including the 25 Liberal MPs who signed a petition but did not want to attach their name to the document, and those who want it ended altogether.

The politics are so diabolical that the solar industry was even warned off a political campaign to make solar an electoral issue – it begins in the Brisbane marginal seat of Petrie this week – for fear of further alienating the hard core conservatives.

The solar industry, however, is wary of this, as the industry should have been last week when “moderate” Liberals warned the industry off pushing for a 4 year timetable for the next review. With “friends” like these, who needs enemies?

The prevailing hard-core view was perfectly summed up Queensland National Senator Matt Canavan, a former director of the Productivity Commission who penned an extraordinary rant against renewables in The Australian on Tuesday.

“Windmills have been around for centuries ….. and they are still not economically viable,” Canavan wrote, before proceeding to the hub of the problem – the RET effectively devalues billions of dollars of coal and gas assets. Canavan does not even want existing investments to be grandfathered. So much for sovereign risk.

Canavan’s intervention is instructive because it illustrates the sheer ideological hatred of renewables, and wind energy in particular, that lies within the sizeable right wing rump of this conservative government.

Of course, it’s not just the Federal Coalition that is acting against renewable energy in the most extraordinary way.

The WA government, which has previously said it hoped no new large scale renewable energy project would be built in the state, is considering importing coal from Indonesia, rather than developing cheaper renewables at home.

The Queensland government, the biggest owner of fossil fuel generators in the country, wants the RET abolished to protect the value of the coal and gas fired generators they are trying to sell.

The overcapacity and the production of solar in the middle of the day is crippling their earnings. It has also introduced a series of measures, such as $500-a-day service charges, and restrictions on solar exports, that the solar industry says is designed to curb the industry.

The clean energy industry is appalled by the reports. On Monday, Miles George, the head of Infigen Energy and chair of the Clean Energy Council, said it amounted to “economic vandalism” designed to pander to the climate skeptics in the coalition members and their advisors.

John Grimes, the head of the Australian Solar Council, said: “This is the most radical, anti renewable government that could be imagined. You couldnt’ have scripted this.”

Grimes says there are two theories floating around – either that the government wants the review to recommend abolition, so that they can be more “reasonable,” or that that this is genuinely the position of the PM and his inner circle.

Grimes suspects the latter. “He (Abbott) has personally managed the entire process. This is radical, anti-renewable government that is as out of touch on this issue as any other issue.

“We need to galvanise political support to encourage them to change their position. We cannot stand idly by and watch 18,000 solar jobs, because our PM is wedded to a coal and gas fired past, as opposed to renewables future.”

CEC acting CEO Kane Thornton said more than 24,000 submissions were received during the consultation process for the RET review, and only 56 of these called for a reduction in the target.

“The Australian public has again shown its overwhelming support for renewable energy through this review, in addition to the fact that over 4 million Australians already live or work under a solar power system,” Thornton said.

“Any proposal to slash the RET would therefore be out of touch with 99 per cent of the community, particularly when the review’s own economic modelling shows that slashing the policy would result in no savings on power bills.

“Since the RET commenced in 2001, the public support for renewable energy has remained strong, and this is clearly evident today. The Australian people know that renewable energy makes sense,” he said.