The proposed $10 billion Clean Energy Finance Corporation is expecting that around 7.5 per cent of the loans and investments it makes may not be recovered. According to the Sydney Morning Herald, Treasury officials told a parliamentary committee on Monday that the prediction was a “high-side” estimate, but would not prevent the CEFC delivering on its projected return of around 4 per cent, or the equivalent of the government bond rate.
According to the SMH, the head of Treasury’s Clean Energy Finance Corporation secretariat, Mike Waslin, told the committee the estimated ”writeoff rate” would be reviewed when the detailed investment mandate for the corporation was finalised. The Coalition has promised to scrap the fund, but the legislation seeks to ”appropriate” the full $10 billion five-year budget upfront, meaning it could continue to lend to clean energy projects at the until a future Abbott government was able to pass a repeal through both houses of Parliament. Waslin said the CEFC would provide one third of its funding as investments, one third as commercial loans and one third as concessional loans.
Harris and Rann land key carbon roles
Anthea Harris, the chief advisor for the Department of Climate Change and Energy Efficiency, has been appointed CEO of the new Climate Change Authority. Climate Change Minister Greg Combet said Harris will bring a “wealth of knowledge on the economics of climate change from both the private and public sectors”. The independent statutory authority, which will be based in Melbourne, will be chaired by former Reserve Bank chief Bernie Fraser.
Meanwhile, former South Australian premier Mike Rann has been appointed to the board of Low Carbon Australia and will be formally elected chair at its June meeting. Low Carbon Australia assists businesses, public sector organisations and consumers improve energy efficiency, reduce emissions, and identify carbon neutral goods and services. It was formerly chaired by ex Liberal Environment Minister Robert Hill. Combet said Rann had championed wind, hot rock, and solar power as premier of South Australia.
Australia slips on clean investment
The latest survey from Ernst & Young on renewable energy attractiveness has Australia slipping down a notch from 10th place to 11th place, leapfrogged by Japan which is introducing a suite of new policies to encourage renewable development in the wake of Fukushima. Australia is ranked 15th in the world in wind energy and 8th in solar. The top placings in the overall index are taken by China, the US, Germany, India and Italy.
EY noted that developing countries are the big movers in the index, because they are introducing new incentive mechanisms and implementing national energy strategies. Global activity is being stimulated by the rapidly improving cost competitiveness of renewable technologies — the price of solar PV modules, for example, fell by 50% in 2011,” EY said. “However, the sector continues to face significant challenges: the Eurozone debt crisis and reduced policy support across core European markets, competition from Asia, decreasing carbon prices, and in the US, tax credit uncertainty and a shale gas boom. As more mature technologies move ever closer to achieving grid parity, it is increasingly likely that the renewable energy sector will flourish in the long run. However, in the face of such challenges, the short–to medium-term outlook is more bleak.”
Good and bad news in geothermal
Earth Heat Resources says it has received a letter of interest from mining giant Xstrata for the potential purchase of a 50MW offtake agreement from the company’s geothermal power project in Argentina. Earth Heat said the deal with Xstrata’s copper subsidiary for energy for Argentinian copper projects underscores the strong demand for power in Argentina. Earth Heat is hoping to construct the first geothermal plant in the country.
Meanwhile, Central Petroleum said it had decided to relinquish its three Australian geothermal exploration permits in because of the heavy expenditure obligations on the geothermal permits of $11 million over four years, including $7 million in the first two years. The company tried to find a buyer for the permits but received no interest from any party.