A proposal to cut Australia’s 2020 Renewable Energy Target to a so-called “real” 20 per cent level would “decimate” the clean energy industry, a new study has found – slashing the amount of new large-scale capacity built by almost two thirds (64 per cent) and devastating investments made under the policy.
The study, released on Thursday by the Clean Energy Council, says the move – which has been proposed as a potential compromise to dumping the target altogether – would lead to many projects and companies becoming financially stressed, billions of dollars in lost investment, and thousands of jobs wiped out.
“We are already about 40 per cent of the way to meeting the legislated 41,000 gigawatt-hours of large-scale generation. If we were to reduce this target to a ‘real’ 20 per cent, it would actually mean a cut of almost two thirds of the additional large-scale renewable energy required to be built,” acting CEC chief Kan Thornton said in a statement.
“This would have a huge effect on investor confidence, particularly among the international investment community which had taken a keen interest in the Australian market as a result of the opportunities under the Renewable Energy Target.
“While the legislated target is projected to unlock $14.5 billion in large-scale renewable energy investment, adjusting the figure to a lower target would see a 64 per cent drop in the amount of new large-scale renewable energy required, leading to billions of dollars less in investment.”
The paper, The Impact of Reducing the Renewable Energy Target on Investments, is based on modelling conducted by ACIL Allen for the panel reviewing the policy. It shows that slashing the target would also have a heavy financial impact on existing large-scale renewable energy projects.
Thornton said projects developed under the RET were based on a projected revenue stream from the scheme operating as currently legislated out to 2030.
“Cutting the target would substantially affect the supply and demand dynamics of the market and would send some of these existing projects into the red. They were investments made in good faith, in many cases by international investors, behind a policy that has enjoyed bipartisan support since it was originally legislated in 2001,” he said.
“No investor expects a government to move the goal posts halfway through the game. If Australia is open for business, we should leave the target as legislated until 2020 and get on with unlocking $14.5 billion of investment in large-scale renewable energy.”
Thornton also warns that any reduction to the small-scale part of the scheme would likewise be disastrous for the thousands of companies that had built their business on the back of solar power demand.
“If the Small-scale Renewable Energy Scheme was to be abolished, it is expected that the uptake of solar would drop instantly by 30-50 per cent, with a very significant flow on effect to businesses and jobs in the solar sector,” he said.
