Australia needs 3000MW new renewable capacity committed in 2016 to meet RET

A report on the progress of Australia’s national Renewable Energy Target has warned that as much as 3000MW of new-build capacity – or another 30 Clare Solar Farms – will need to be committed in 2016 alone if the country is to meet its pared back 2020 goal.

The report, prepared by the Clean Energy Regulator, checks the progress of the RET scheme in meeting its 33,000GWh target, as well as the impact this might be having on household electricity bills – an issue that remains one of the Coalition’s favourite political footballs.

Overall, the report finds that progress on the RET in 2015 was adequate “under the circumstances”, with around 409MW of new renewable power station committed for the year, while a total of 296MW of renewable power stations commenced generation.

On the impact on household electricity bills, the report said that this was no more than anticipated when the target was amended.

Looking forward, the report estimates that an additional 6000MW of installed capacity will be required to meet the total cumulative demand for large-scale generation certificates through to 2020.

The good news is that, based on various sources, the CER report estimates additional capacity of around 9000MW of large-scale renewables projects already have development approval – and if built, will be more than sufficient to meet the 2020 target.

The more worrying news is that one-third of this amount needs to be committed this year.

“The total capacity of committed new build in 2016 will need to be around 3,000 megawatts for satisfactory progress towards the 2020 target,” the report says.

And it notes that financing will be “the key determinant of the pace of future construction” – an area the industry has found particularly challenging over the past three years, with investors keeping their distance from the market due to ongoing policy uncertainty.

Just this week, an Ernst & Young report found that Australia’s prolonged renewable energy policy uncertainty, and the effect this had had on the sector’s ability to secure long-term power off-take agreements, was holding back a “mountain of global cash” looking for alternative energy investments.

The EY report also noted that “with declining time before the RET ends in 2030, the case for long-term PPAs for 15 years or more appears increasingly difficult without long-term policy certainty.

“Ultimately, more far-reaching energy policy measures will be critical to take Australia’s renewable sector beyond recovery and into long-term growth,” it said.

But the CER report says there is evidence emerging from the market indicating that “procurement processes” are underway for additional supply of large-scale generation certificates and renewable electricity – and, like EY, points to the March 2016 signing of a 15-year PPA by major retailer Origin Energy as a reason for optimism.