Cutting RET to ‘real’ 20% would decimate renewables: CEC

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.

Kane_Thornton
Acting CEC chief Kane Thornton

“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.

Comments

7 responses to “Cutting RET to ‘real’ 20% would decimate renewables: CEC”

  1. michael Avatar
    michael

    let me get this straight, the 20% target was originally of forecast demand level for 2020 to come up with the 41,000GWh? this publication ridicules the power industry for overestimating future power demand, however if the industry had have forecast accurately, the target for renewable capacity would actually be this ‘real’ 20% in the first place, right? basically the industry which would reap the benefits of this overestimation, wants the error to stand, instead of updating the forecast and implications of the 20% target once it is widely recognised the original forecast is wrong.

    1. Peter B Avatar
      Peter B

      One shouldn’t point out hypocrisy when it is self evident; my father thought it was too self evident to waste time on. The solution is a 30% Renewables target(of projected power) by 2030. The Oz Government can join world posturing, give the renewable industry 16 years to plan and get finance and most will be happy but of course some will not be ecstatic!

    2. Gongite Avatar
      Gongite

      The more renewable energy we have by 2020 the better, we and the planet will all benefit.

      Besides, the utilities etc thought the 41,000 GWh forecast was out, it just suited them to have a fixed target at the time as they thought demand might actually grow faster and a floating target could have gone over 41k. Hard to feel sorry for them now that their lurk has come back and bitten them on the bum.

      1. Peter Campbell Avatar
        Peter Campbell

        Good point. The fossil fuel burners wanted the fixed target for the reason you state. They were the ones who wanted to be sure they would not be facing more renewables. Greener types were worried that a fixed target might turn out to be less than 20%. Having won that fixed target the FF burners now want to change it when it doesn’t suit them. Frankly, the fossil fuel industry has known for decades that governments might take effective action on climate change at some point and they accepted the risk to invest in any case.

        1. David Osmond Avatar
          David Osmond

          I can’t find a reference now, but when John Howard’s government designed the original MRET, it was for an additional 2% coming from renewables by 2010, that the industry argued be changed to a fixed amount of 9,500 GWh. If I remember correctly, that fixed amount ended up being smaller than 2%.

          If industry was happy for the fixed amount to apply for the original MRET, despite it falling short of the percentage target, it seems pretty hypocritical for them to argue the opposite this time around.

  2. Peter Campbell Avatar
    Peter Campbell

    Part of the reason that demand has fallen rather than risen is that people like me have spent money on energy efficiency. I bought more efficient lights when they were still expensive, not because I expected to get my money back in savings but because it was the right thing to do. I spent more on home insulation, including expensive double glazing, content to think that I might break even in the long run.
    I expected and was encouraged to believe, that these efforts would result in less pollution, greenhouse gas emission and so on. Now, because demand has gone down, in part because of personal efforts of people like me, the vandals in government want to move the goalposts and cancel out that effort by allowing more coal burning and less renewables.
    This is cynical betrayal and it makes me angry.

    1. David Osmond Avatar
      David Osmond

      Well said Peter, I agree completely

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