How Coalition proposes to kill $20 billion renewables industry | RenewEconomy

How Coalition proposes to kill $20 billion renewables industry

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Only a handful of small solar projects have been committed this year, showing the impact of the Coalition’s war on renewables. Meanwhile, new research reveals the true impact of a “real” 20 per cent target as Coalition plays fast and loose with targets.

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Only a handful of small solar projects have been committed this year, showing the impact of the Coalition’s war on renewables. Meanwhile, new research reveals the true impact of a “real” 20 per cent target as Coalition plays fast and loose with targets.

New data has highlighted the full catastrophe of the Coalition government’s campaign against renewable energy. In a period when hundreds of megawatts should be been commissioned under the existing legislation – possibly up to 1,000MW – just 10MW of solar projects have been committed in 2014.

Most of the these projects are rooftop solar projects that are too big to be included in the small-scale target. Almost one third of them will be built by one company – IKEA – that is installing more than 3.5MW on its rooftops around the country.

And under the Coalition’s plan to slash the target from 41,000GWh to around 26,000GWh (see comment below) the outlook for coming years is little better.

The Green Energy Markets modelling shows that instead of 7,900MW of new capacity – a mixture of predominantly wind and solar that would be required under the current target agreed by all major parties just a few years ago – just 3,100MW of new capacity will be required under the Coalition’s proposed new measure of a “real” 20 per cent.

Those commitments will be acquitted in just three years (it is shown in blue as opposed to the dark green of the current target) , and then the industry will come to a halt.

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As a separate study from Baker & McKenzie, underlines, a “real” 20 per cent will have dramatic consequences on existing wind farms – because it will force the price of renewable energy certificates down by 30 per cent. Infigen Energy, for instance, says it will lead to a loss of revenue from its wind farms of $170 million, potential write downs, and may create issues for meeting loan repayments. Pacific Hydro has already announced significant write-downs.

The cut to a “real” 20 per cent will also push up the price of the new wind farms. This is because banks will apply more risk to the cost of capital, and there will be fewer companies competing for projects, because most will move to greener pastures elsewhere in the world. Indeed, Baker McKenzie said the threat of legal challenges and sovereign risk could mean that even a smaller target might not be met.

The modelling by Green Energy Markets show the different scenarios currently being entertained in Canberra. The green line is the current target, and the blue line the Coalition’s “real” 20 per cent target.

In the middle are two alternatives – one being allowing an exemption for aluminium, which would effectively reduce the target to 39,000GWh, and another that will do that and allow a two year delay to meet the target, as suggested by Climate Change Authority chairman Bernie Fraser. The reasoning behind that is that if uncertainty continues into 2015,  and there is an extended capital strike by the retailers, it would make the target difficult to meet by 2020.

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Amid all this, it is particularly galling for the clean energy industry that Industry minister Ian Macfarlane and environment minister Greg Hunt – the twiddle-dum and tweedle-dee of the Coalition’s campaign against renewables – continue to claim that a “real” 20 per cent (slashing the target to around 26,000GWh from 41,000GWh) does not amount to a cut.

“We have always been committed to 20 per cent renewables” they say, conveniently omitting the fact that the Coalition signed on quite enthusiastically for the fixed target, and reaffirmed their commitment to that target in July last year.

As one industry observer noted: “The Minister stated that the legislated 41Terrawatt-hour (TWh) LRET target in 2020 could be reduced to around 26TWh (estimated to be ~20% of electricity in 2020) and “in reality, nothing has changed…. we haven’t cut anything by 40 per cent.”

In other words, under Macfarlane’s Mathematical Theorem 41-26 doest not equal 15. In his world, 41-15 actually equals 0.

But, as our correspondent notes, Section 40 of the Renewable Energy (Electricity) Act mandates a specific amount of electricity to be generated from renewable sources in every year from 2001 to 2030.

“In 2020, the legislation specifies that 41 TWh (41 billion kWh) of electricity must come from renewable sources. Nowhere in the legislation is 20% renewable energy by 2020 mentioned—not once.

“At the time the legislation was passed in 2010, with bipartisan support, parliamentary speeches by MPs were made stating that 41TWh represented at least 20% of Australia’s electricity supply in 2020. However, this was just a catchy slogan—it does not appear anywhere in the actual legislation.

“The Minister is correct when he states that he did not sign up for a 27% renewable energy target by 2020; he signed up for 41 TWh of electricity from renewable sources in 2020. It’s there in black & white in the legislation, and he knows it.   He was there as the Coalition’s Shadow Energy Minister when the legislation was passed—with bi-partisan support.”

The Renewable Energy Alliance based in WA, said the Federal Government’s response to RET review threatens over $1 billion of wind and solar projects in that state, and thousands of jobs..

WAREA chairman Richard Harris said at least ten large scale solar, biomass and wind projects, which are well advanced and could begin construction in the next two years, will not proceed unless the Government drops its planned changes to the Renewable Energy Target.

“Renewable energy is making huge advances all over the world, and countries like China and the USA are replacing dirty old coal fired power stations with clean energy, not just to reduce greenhouse emissions, but to save money,” he said in a statement.

“It is hard to believe that the Federal Government is ignoring its own modelling which says that the Renewable Energy Target has reduced wholesale power prices and that these reductions will then flow onto consumers.”
It is thought that negotiations between the Coalition and Labor will continue on Tuesday. Labor repeated its view that a real 20 per cent target is unacceptable, but it has not yet said what number would be acceptable.

As RenewEconomy pointed out last week, the Coalition has the whip hand, because unless it signs on to a target, the stagnation in the industry will simply continue, which leads to a “something” is better than nothing scenario. At which point, it comes down to how the respective parties manage the spin of justifying a cut to a renewable target that almost every other country in the world is increasing.

 

 

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26 Comments
  1. john 6 years ago

    Objective achieved no investment to be made move on nothing happening here nothing to see

  2. John P 6 years ago

    If the beef exporters believe they have a legal case against the government in respect of the blocking of exports, then the renewables firms would have a much stronger case on the basis that they were deliberately lied to in relation to the future of the RET.

  3. Ken Dyer 6 years ago

    In just over 800 days, there is an opportunity to vote in a new government. One would think that in any election campaign, delivering an increased RET (and therefore jobs, industry, lower power costs, etc) would be a powerful argument.

    • David Martin 6 years ago

      Looking at the current elected Australian government from my point of view outside the country it appears that Australians have developed their own special term well in advance of now needing a proper description of what in the U.S. we might call ‘bozos’. Hopefully these ‘flaming drongos’ will go down in flaming defeat in the next elections. I do love that idiom, which, unfortunately, seems all too applicable here.

    • wideEyedPupil 6 years ago

      860 odd days. I have an app that counts down the days, hours minutes and seconds under development. 🙂

  4. JohnRD 6 years ago

    Realistically, the RET is dead and could only be revived if there were major changes to LNP attitudes.
    Contract based systems like the ACT Renewable Energy Auction allow progress to be made despite the attitude of the LNP. Ditto for schemes based on upfront subsidies. (Rooftop solar has been helped by a combination of upfront subsidy and FIT contracts.)

    • Gus 6 years ago

      While you may be right, the task is to change LNP attitudes. We need each and every LNP parliamentary representative and candidate to know that they are on the wrong side of history, and they will be hounded until they change their position on climate change.

      Remember that Gerard Henderson has been given a weekly article in the SMH to hound people who backed the Russian communists 50-100 years ago; his basic argument is that anyone who allowed ideology to triumph over reality should not be listened to. Bizarrely, he is now a climate change denier.

      At the moment, being a climate change denier in the LNP is all upside. We have to make sure there is a very clear downside. Unstinting public ridicule!

  5. James Townsend 6 years ago

    The modelling graphs in Figure 4.7 tell another story. That is the risk that retailers are willing the bear prior to making an investment decision.
    The “Current LRET” slope is far greater than the other “Real” 20% and Alternative 1 and 2. Applying this slope(crudely on my PC) shows that commitments wont be made until 2016 for Alt 1, 2017 for Alt 2 and 2019 for the ‘real’ 20%.
    Anything other that the mandated amount will affect the industry, for many years hence.
    If we manage to keep the target, I predict a race for certificates starting straight away. My guess is that retailers have their eye on a number of projects, that can quickly be committed.

  6. Rob G 6 years ago

    Labor, the Greens and the other minor parties who support the current RET target know the destruction that a real 20% target brings. The wilful harm on a large growing industry is unforgivable, they know this and want no part of it. While Abbott is in power he will continue to hinder the renewables, but in just over two years he will be gone and a full scale doubling up will occur. He and his ideologues won’t be able to halt the onslaught.

  7. Tommyk82 . 6 years ago

    Hands up who thinks they’d be arguing to double the 41 TWh target if electricity demand had gone up in this period?

  8. Geremida 6 years ago

    All these deceptions about the number 20. After reading an article by Ben Eltham in New Matilda, I actually read the RET legislation. No where does the number 20 or the word twenty appear. It’s written as the number of GWh of RE for each year up to 2030. From 2020 to 2030 the “required GWh of renewable source electricity” is 41000.

    The 20 is a smokescreen, and I for one will be refusing to mention it.

    I think RenewEconomy should do the same

    The trouble with mentioning it, is that it legitimizes their deception.

    • Gus 6 years ago

      Spot on! The term ‘real 20%’ is a PR trap. If you use it, they win! There are only two questions:
      1) When did you tell the Australian people that you would be reducing the 41 TWh target specified in the legislation?
      2) According to your own review, coal power generators will benefit by over $9 billion dollars by your decision to change the legislation. How much money has the Liberal Party received from the coal power generators in each of the last five years?

      • Dr George 6 years ago

        If you don’t point out there deliberate deception you lose too. Fact is that it needs to be called out, don;t shy away from the truth.

  9. Chris Fraser 6 years ago

    Looking back on famous political figures and political causes (enhanced this week because of the passing of Gough Whitlam) and of all the monumental, public and environmentally astute policies it’s possible to be remembered for, the Coalition choose the attempted destruction of the large wind and solar thermal industry ? Given the already destroyed carbon price, mining profits tax, proposal of $50K per year maternity leave for professionals when we already had a leave scheme and all the while complaining of budget emergency, I’m not the only one feeling irony.Considering the pre-election declaration of No Surprises, now wanting to raise every tax they said they wouldn’t in only 1 year of government, perhaps nothing will surprise now. A government that is idealogically driven, and scientifically, industrially and tactically inept, should never wonder what they’ll be remembered for.

  10. Shane 6 years ago

    Really john? . Bit of a stretch. . I will keep it short , the wind industry knew full well coming in that the ret would come under review . Just ask the mining industry what happened when they bunged on the sovereign risk act. It was the same scenario .
    Im a neighbor to a proposed industrial windfarm and I can tell you nobody in the district apart from the hosts want them here .. for the record its not jealously they asked to put them on my property , I told them they had less than 30s to get off the property before bad things happen.

    • JeffJL 6 years ago

      When questioned several times about the RET target Mr Hunt and Mr Abbott stated that they supported the target. The target was legislated as 41 TWh. There were no qualifications to those statements.

      The fact that you dislike wind farms does not alter the fact that the Liberals changed their position after the election.

      • Shane 6 years ago

        You may not like coal fired power but the words “there will be no carbon tax” seemed to change a little after a certain other election..

        • Catprog 6 years ago

          You mean “there will be no carbon tax but their will be a price on carbon?”

          • Shane 6 years ago

            Yep, thats what it changed to..

          • Roger Brown 6 years ago

            You only be feed 1/2 the Murdoch line , but what she actually said was “There will be no carbon tax under a govt. I lead , but I will be putting a price on Carbon”

        • wideEyedPupil 6 years ago

          forced by a hung parliament bozo. you don’t think Gillard would have acted on climate unless the greens forced her do you? Gillard was never interested in climate action.

        • JeffJL 6 years ago

          Sorry Shane. But the best argument you have got for the failure to keep to their word is that the other side did it? Not exactly a good way to show you are right.

          Also please try to not give people opinions and set up straw men as red herrings. Another poor debating technique. How did what I wrote come to be that I do not like coal fired power?

          • Shane 6 years ago

            Pointing out the hypocrisy of your comment hurt to the point you attack the man . Straight out of the play book of the left that one jeff..try not to let it get to you ..
            I never wrote that you dont like coal fired power , if you are going to judge others on their techniques you had better be accurate. Just a little poor in your ability I would suggest. . . To that I might add what was it I wrote made you decide that I dislike industrial wind turbine farms. ? Actually dont bother your not worth talking to.

    • wideEyedPupil 6 years ago

      wind power industrial scale or any other enjoys 70-80% support in areas where wind farm proposals are being made. in fact it’s so popular there are dozens of community wind projects being held back by the Victoiran Governemrnts anti-wind pro-corporate-coal policies. your nobody wants it is a load of BS and I expect your involve in the fear mongering around health issues which is responsible for the nocebo effect and the only documented health issue around wind, fear mongering leads to documented psycosmatic illnesses. it’s very easy to develop a hatred for something you don’t understand and even come to hate the sight of any representation of it. Clean energy would seem to be your pathology of choice.

      • Shane 6 years ago

        Happy to meet with you and we will go for a drive around as many residents as you wish and I will bet you as much as you are prepared to bet and I will give you odds on if you can break 20% for them . Not sure where the wind industry got there figure from but if you want propaganda bs look no further than that.. a survey was done in the yass trib and after over 5000 responses it finished at 87%against but you won’t be interested in that because it goes against everything you want to preach. . Let me know when canberra builds a wind farm within its boarder than I may take what an urban survey might suggest more seriously. .

  11. Alan Baird 6 years ago

    Yeah, I think they really mean it. They deliberately want to expunge clean energy from the place. Quite clear (but murky). Hey, I’ve heard that the suppository (of wisdom) wants a mature discussion about something or other. All you have to do is agree with everything he says and Rupert will give you a gold star. That’s what a mature discussion is apparently. As I was walking up the stair I met a man who wasn’t there. He wasn’t there again today, I wish that man would go away. It all makes sense.

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