Origin Energy has reaffirmed its plans to boost the renewable energy component of its generation portfolio to 25 per cent by 2020, up from the current level of 10 per cent, by adding enough new installed wind and solar capacity to replace Victoria’s recently closed 1600MW Hazelwood coal-fired power plant.
Speaking at the company’s full-year 2017 results presentation on Wednesday, Origin CEO Frank Calabria said the company aimed to take its share of renewables from its current level of 732MW, to around 1900MW by 2020, or one-quarter of the gen-tailer’s total generation mix.
“To put that into context, we are going to bring in a Hazelwood worth of renewables in the next three years,” Calabria told a media briefing on the company’s results.
As impressive as this sounds, this should be a lay-down misere for Origin – already Australia’s top contractor of large-scale solar. It has a total of 1200MW of committed renewable energy supply already locked in after flurry of highly successful solar and wind offtake deals this year, including the record low-price PPA secured for the output of the 530MW Stockyard Hill wind farm in May.
But Calabria was keen to convey that the Australian renewable energy market is not out of the woods yet, and that for investment to keep up its current momentum, policy stability remained at a premium, and the introduction of a Clean Energy Target was critical.
“We will continue to advocate for policy certainty, particularly the adoption of a Clean Energy Target as the critical action needed to stimulate further investment in new supply and deliver a genuine reduction in prices for Australians,” Calabria said in a statement.
“We are supporters of the full package recommended by Dr Finkel, which we believe can help bring and unlock new investment, and that will have an impact on reducing power prices over time,” he told the media briefing, later.
“At the moment energy companies have to make decisions to invest in assets that last for tens of years,” he said. “We would like to know, and our shareholders would like to know, that when we make those investments, we make them with confidence that the rules won’t change.
So why the CET? “In a context where that’s the only (federal policy solution) on the table … (we think) it’s a workable solution,” Calabria said, in answer to a RE question. “And certainly better than no solution at all.
“If you keep making (the renewable energy investment market) a very uncertain future, then the investment decisions will be sub-optimal and too late,” he said.
“We have have deliberately left our generation supply short relative to the demand from our costumers,” Calabria added, waiting for the right time and the right cost to invest.
Indeed, you don’t have to look too far back in Australia’s renewable energy annals to be be reminded of the extended capital strike the market suffered due to “policy uncertainty” during the Abbott government era.
This investor drought has been broken – and deals like Origin’s May 2016 PPA with for the output of FRV’s 100MW Clare Solar Farm in North Queensland, “the first of its kind struck in Australia between a retailer and a private developer of a solar project”, were instrumental in breaking it. But clearly there remains concern, or the shadow of a threat, that the rollout of new renewables will not be fast enough to support the break-neck shift away from Australia’s ageing fossil fuel fleet.
That shift, as Calabria reminded us today, should be being driven by Australia’s commitment to the international agreement at Paris to cut emissions at a rate that will limit global warming to an absolute maximum of 2°C, and not just falling technology prices.
“It’s very important that we have a roadmap,” Calabria said. “I think everyone would agree that we want more supply to come into the market.”