Cutting renewables target would kill investment: Hydro Tas

Australia’s largest producer of renewable energy, Hydro Tasmania, has called for the Abbott government to maintain the current national Renewable Energy Target, describing it as a key driver of investment in large-scale renewables projects such as wind farms, and warning any changes to it could seriously impact the market.

In a submission to the Coalition’s review of the RET, the company described the electricity sector as central to any national action to reduce carbon emissions, and the RET as central to transitioning it to low and zero emissions fuels.

“Particularly in light of the expected repeal of the carbon price,” the submission said, “the RET is the only long-term, large-scale policy that can drive the uptake of zero-emissions energy sources and sustain the existing renewable energy base.

“If the RET was repealed or effectively ended, it would almost certainly terminate any further investment in large-scale renewable energy
projects, and put at risk the long-term viability of existing renewable energy assets.”

This is not the first time Hydro Tasmania has spoken out against any changes to the RET, the company’s chairman David Crean warning in January that its newly commissioned 168MW Musselroe wind farm could be the company’s last major wind energy development if the RET was diluted or removed.

Hydro Tasmania is owned by the state government, which is now a Liberal government. It appears to be the only conservative government, and the only state-owned entity, to argue for the retention of the RET as is. Queensland’s Stanwell Corporation, for instance, called for the RET to be scrapped entirely. Even AGL, the largest utility investor in renewables, called for the solar component to be scrapped, and said that the large scale target would be impossible to meet, ironically partially due to the policy uncertainty created by RET opponents.

“The RET is a key driver for investment in wind farms,” Hydro Tasmania’s Crean told RenewEconomy in an interview that pointed the finger at Australia’s fossil fuel generators – from the gas sector, in particular – for actively demonising renewable energy to protect their own “vested interests.”

In its RET submission last week, Hydro Tasmania said it strongly supported a long-term policy framework for the electricity sector that would drive emissions reductions over time while providing certainty to investors in low and zero emissions generation.

The company also described the RET as “fundamental” to the value of its business and future investments, which include its King Island Renewable Energy Integration Project – which achieved extended periods of 100 per cent renewables last year. It said its investments would no longer be feasible if the target was repealed or wound back.

The submission noted that $18 billion had been invested in additional renewable energy across every state and territory in Australia since RET was implemented in 2001, including more than $60 million spent with Tasmanian businesses to support the construction of the Musselroe Wind Farm, with more than 200 workers employed over the life of the project.

“The architecture and objectives of the RET are effective,” the submission says. “It is a market-based mechanism aimed at producing least-cost renewable energy.

“The RET has driven the growth of the renewable energy industry within Australia and has encouraged several major international energy companies to invest in the Australian energy market. Hydro Tasmania has direct experience of this, including through our current partnership with Shenhua Clean Energy,” it says.

“Without the RET, renewable energy skills, expertise and employment would be lost… International renewable energy companies and investors would be likely to react negatively …(and) would be difficult to attract back to the sector.”

Meanwhile, Stanwell Corp, which has blamed the influx of rooftop solar for its losses in the last financial year, said – according to The Australian – solar was causing “voltage problems on the grid”, and excess capacity was needed to back up wind. Curiously, Stanwell earlier this year announced the closure of its major gas-fired generator, the type used to respond to changes in supply and demand, citing rising gas prices and reduced demand.