Two global industrial giants have come out in support of the government’s Renewable Energy Target, with Korean industrial group Samsung saying it was looking to invest billions of dollars in renewable energy in Australia – but only if the scheme was not tampered with.
Samsung Construction and Trading Corp general manager Chang-hyun Song said the company was looking to match its investment in Canada, where it has signed a $7 billion deal to build 2,500MW of wind and solar farms in the province of Ontario, and to establish manufacturing operations there. Samsung generated $44 billion in revenues last year, and profits of $4.6 billion.
In its submission to the Climate Change Authority’s review of the RET, Samsung says it has been working for the past year to establish a portfolio of utility-scale renewable energy project developments in Australia on a similar scale to Ontario.
It would do this through a mixture of financing, equity investment and construction services, but it was a commitment based on three key drivers: Australia’s excellent wind and solar resources, a broadly supported clean energy policy, and a relatively new market that requires significant capital investment – up to $30 billion to build up to 10,000MW of capacity.
But Song said changes to the RET – to make it a floating target rather than a fixed one – would create uncertainty, increase risk for investors and financiers, and result in higher costs for renewables, as well as environmental consequences.
“The process of deciding on and implementing any changes will also delay investment decisions, exacerbating the already very aggressive construction schedule necessary to meet the current target,” Song wrote. He said that would cause labour and equipment shortages that would lead to higher construction costs and more expensive renewable energy.
Alstom, a French group that is one of the world’s largest suppliers of power generation and transmission equipment – with customers in the coal, nuclear, gas and renewable sectors, and annual revenues of $25 billion – said any changes to the RET would have “disastrous” impacts on investment in renewables in Australia.
“For that reason alone, (changes to the target) should not be considered,” Alstom Australia CEO Chris Raine says in his company’s submission.
Australian utilities Origin Energy and TRUenergy have been pushing for a change to the RET from a fixed target of 41,000GWh from large-scale renewables such as wind, solar and biomass, to a “real” 20 per cent target that reflects the percentage of actual demand. This comes after recent downgrades to the country’s energy demand forecasts.
However, Alstom said demand forecasts are uncertain, and vary widely. “The underlying reasons for the current drop in demand are speculative and there is no guarantee that other factors will not increase demand in coming years,” Raine said.
Alstom also rejected assertions that the cost of the RET was high and would rise. It said data showed that the cost of the RET on consumers’ electricity bill was modest and a small component of rising electricity costs. The Clean Energy Council said yesterday in its submission that the cost of the RET was small, and was falling.
“The continuing high public support for renewable energy would appear to indicate that the risk of over-achieving in not a major issue for the government,” Raine said.
Alstom noted that the electricity industry had actually proposed the fixed target so the quantum of investment was known. Constant changes could reduce the attraction of the country as an investment destination. It said the RET had delivered more carbon abatement than any other scheme, and had created jobs, technology development, and lifted energy diversification and security.
Samsung said that from 2020, subsidies for both fossil fuel and renewables should be removed, to allow the market to decide how much or little generation should be added. This should also apply to mature renewable technologies such as wind and solar PV, but Song said that there should be continued support for emerging technologies.
Submissions for the RET review close on Friday. A decision is likely to be announced by the CCA before the end of December.