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.
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.
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.