It appears that the Abbott government – and its hard right sympathisers that want to bring a halt to large-scale renewable energy deployment in Australia – have achieved their policy goals, without even having to release a policy.
New data shows that no new large-scale renewable energy projects – be they wind farms, solar farms or some other – have been committed in the first quarter of 2014. This follows a bleak calendar 2013 when just four large-scale projects were committed; none of them directly financed by the renewable energy target.
This is despite the fact that existing policy calls for 41,000GWh of renewable energy to be provided across Australia by 2020. However, the renewable energy industry, along with the utilities that must acquit their obligations, and the banks that would finance these projects, are convinced that the target will be severely reduced, if not dismantled.
This pessimism is reflected in the market for large-scale renewable energy certificates, which have slumped to $28.55, down 15 per cent from late December, and down nearly half from before the election of the Abbott government last September.
The pessimism has infected the industry since early 2013, when, despite the findings by the Climate Change Authority that the LRET should stay as is, the equivocation of the Coalition, and its presumed success in the September poll, brought the market to a halt.
According to data from Green Energy Trading – a major player in the market for renewable energy certificates, only four new projects have been “committed” since the start of 2013.
Of these, the 53MW Broken Hill and 102MW Nyngan solar power stations are mostly financed from the now defunct Solar Flagships project, with large grants from the federal and state governments; and the 20MW Royalla solar plant in Canberra is getting a fixed tariff as part of the local government’s reverse auction program.
The only new wind farm approved in the last year – a 47MW extension to Pacific Hydro’s Portland projects – seems to have been committed because it received financing from the Clean Energy Finance Corporation, the $10 billion green bank that the Coalition wants to dismantle, despite it making a profit for the government.
The only other new projects that are likely to be committed in the short-term are the other solar projects in the ACT, and the wind projects that will be awarded in its forthcoming auction. (It should be noted that committed projects are different to “approved” projects, which merely means they have approval to be built, but not necessarily the finance).
Those solar and wind projects, part of the ACT government’s commitment to a 90 per cent renewable energy target, do not rely on the LRET. However, the proposal for new wind farms is being vigorously opposed by conservative politicians, both state and federal, as well as the Murdoch press.
Green Energy Trading estimates that if the market for LRECS is to maintain an acceptable level of market liquidity, around 4,450 MW of new projects need to be committed in the three-year period from 2014 to 2016. That is unlikely to happen until the RET review is completed mid year, and then considered by the Abbott government.
However, if the incumbent electricity industry has its way, there will be no new projects built before 2017 at the least. This is its estimate of the impact of the LRET target being reduced to a “real” 20 per cent target, which might equate to a new fixed target of around 26,000GWh.
Numerous studies have shows that not only will this result in a sharp fall in the deployment of wind and solar, it will also mean more coal-fired generation. And a new study from French energy products giant Schneider Electric says cutting the renewables target will also mean higher prices for consumers. This came as a surprise to the large energy users that commissioned the Schneider analysis. They had anticipated the opposite finding.
Still, the renewable energy industry is finding doors closed in Canberra, with ministers and advisors promising only that projects already built will not be impacted by any changes to the RET, which will be recommended by a review headed by climate science sceptic and nuclear advocate Dick Warburton.
International groups such as First Solar and Acciona have already signalled their intention to re-assess their commitment to projects in Australia, in a likely repeat of the exodus that was caused when the current energy minister Ian Macfarlane ended the then MRET (mandatory renewable energy target) when he was last in the same job a decade ago – and that decision was taken despite an independent review recommending the MRET be expanded.