Labor’s victory in SA offers hope for a little energy sanity

The surprise return of the Labor government in South Australia means that the book is not entirely closed on Australia’s mainland for renewable energy.

Indeed, while the broad thrust of national renewable energy policy will be directed by the Abbott government, the return of the Jay Weatherill Labor government in Adelaide, the election of Mike Hodgman in Tasmania, and the ambition of the ACT Labor government means that there are some counters to the apparently ideologically-driven opposition to renewables in the Federal government.

As RenewEconomy has noted before, it is not by accident that the three states and territories most supportive of renewable energy in Australia are those with no, or relative weak, fossil fuel interests.

The ACT – which has no local coal or gas developments – has an ambitious 90 per cent renewable energy target by 2020. This will result in up to 550MW of wind, solar and other renewables being built over the next five years – whether the national renewable energy target stays in place.

The first 200MW of wind energy will be auctioned later this year, and another 50MW for a solar hub will follow next year. Like Victoria did a decade ago with its state-based target, the ACT is single-handedly underpinning the large-scale renewables target in Australia in the absence of a strong national policy – even if most of these developments will occur in NSW.

South Australia currently has the highest ratio of “variable” renewable energy sources in the country, and one of the highest in the world. Last year, 31 per cent of its electricity production came from wind and solar. It has installed nearly half of the country’s wind capacity, and leads the country in the penetration of rooftop solar. This has led to the sharpest fall in wholesale electricity prices in the country, and the biggest reduction in emissions.

The main local fossil fuel interests – Alinta Energy’s two coal-fired generators at Port Augusta –  are nearing the end of their life. One plant has been mothballed, the other works on a seasonal basis only. Local residents are pushing for a solar thermal and storage facility to be built, although nothing is likely to happen until Alinta is sold by its private equity investors. Even the gas generators are taking a hit.

Tasmania may now be ruled by a conservative party for the first time in more than a decade, but new leader Will Hodgman has made it clear he will fight for the RET to be maintained as is. Tasmania sources around 90 per cent of its electricity from renewables, mostly hydro, but also with some new wind farms such as the Musselroe facility.

Its state owned electricity generator would suffer if the RET was removed or castrated, and the value of renewable energy certificates fell (they are already down nearly half in recent months since the appointment of Dick Warburton to head the RET Review). The state may still have ambitions of building new wind farms and a major link to the mainland, although it is not yet clear that Hodgman will pursue this.

Renewable energy insiders were pleased with the surprise result in South Australia. “It’s good news. Very good news,” said one.

The re-election of Labor means that the state is unlikely to follow in the footpath of Victoria in imposing draconian planning restrictions. However, any new developments, and there are several billion dollars of proposals – will depend both on the RET being maintained, and on new export capacity for those electrons being constructed.

The remaining states – WA, NSW, Queensland and Victoria – remain opposed to the RET. This is particularly the case for WA, NSW, and Queensland, which still have state-owned assets whose value and revenues are being eroded by renewable energy, and WA and Queensland have the added burden of having to heavily subsidise the delivery of electricity from their predominantly coal and gas-fired generators.

In Victoria, which has privatized its industry, the dynamics may be changing. The fire at Morwell near the Hazelwood brown coal generator has brought pollution issues to a critical level, and there are signs that the Napthine government may relax its opposition to the wind farms implemented by the previous premier Ted Baillieu. A state losing manufacturing industry can hardly afford to reject some $10 billion in potential renewable energy investment.

It is still a bleak outlook for the renewable energy industry across the country. But it hasn’t quite faded to black. And a positive result in the WA Senate re-run may offer more hope yet.