The Queensland Labor government says it plans to tackle the Turnbull Coalition government over plans to remove grant funding for large scale renewable energy investments, saying it threatens to hold back the nascent large scale solar sector in the state.
Energy minister Mark Bailey says premier Annastacia Palaszczuk intends to raise the issue at the COAG meeting on Friday, and says that large scale solar projects will come to a halt once the grant funding is removed.
The Coalition government last week announced that the Australian Renewable Energy Agency would cease grant funding once its current round of $100 million for large scale solar farms was complete.
ARENA will also lose $1.3 billion in unallocated funding – should the Coalition succeed in pushing such legislation through the Senate – and will be relegated to a role of assisting the Clean Energy Finance Corporation in allocating existing CEFC funds based under a newly badged “innovation fund.”
Bailey said the Queensland Labor government had held talks with the Australian Solar Council to discuss the impact on large scale solar projects in regional Queensland.
Large scale solar will provide a critical component of the Queensland Labor government’s plans to reach 50 per cent renewable energy by 2030. It has announced “solar 60” project, intending to support 60MW of large scale solar projects in conduction with ARENA.
Ten of 22 solar projects shortlisted by ARENA are based in Queensland, although it is likely that only around half will get grant funding.
Although solar costs have fallen dramatically, the absence of long term off take agreements means that financing is difficult, and the solar industry is concerned that the removal of grant funds will prevent projects going ahead.
This is despite Origin Energy announcing on Thursday that it had signed a 15-year power purchase agreement with the 56MW Moree solar farm in NSW. However, this farm has already been constructed, with the help of significant grant funds from ARENA and financing from the CEFC.
Bailey said the proposed cuts to solar grant funding was a critical issue for regional Queensland.
“The Premier will be looking to raise it at COAG on Friday,” Bailey said in a statement.
“Right across regional Queensland there are shortlisted solar projects ready to go, to help transition to a clean energy economy.
“ARENA is a key partner of the Palaszczuk Government in delivering renewable energy projects and jobs across the state. If it loses its capability for competitive grant funding then that means renewable energy projects that can deliver jobs in regional Queensland simply won’t happen once this round is complete.”
Bailey said “not one” large solar project has been financed since the election of Tony Abbott in 2013.
“Things are getting worse under Malcolm Turnbull. I call on the Prime Minister to urgently rethink these massive cuts, and get on board with us turning the Sunshine State into the Solar State.”
John Grimes, the head of the Australian Solar Council, said the $1.3 billion cut to renewables funding is “bad news” for Queensland’s economy and for regional jobs.
“The Palaszczuk Government has shown national leadership by committing to 50 per cent renewables by 2030, but Malcolm Turnbull has pulled the rug from under Queensland’s economic and environmental future,” Grimes said in the joint statement with Bailey.
ARENA noted in a statement today applauding the Origin contract with Moree that “not one” of the 22 solar projects on its shortlist would go ahead without grant funding.
Ironically, environment minister Greg Hunt said the Moree solar power purchase agreement “demonstrates that a developer can finance and build a large-scale solar plant in Australia without first securing a contract to sell the electricity generated by the plant.”
“The agreement is a clear sign that the innovative approaches to financing projects are being developed and deployed since we fixed the Renewable Energy Target after Labor’s shambles.”
But ARENA itself pointed out that the Moree solar project would not have been built without the grant funding. And clean energy groups have raised concerns that the ARENA cuts will hold back future solar plants and developments in other technologies.
They pointed out that projects such as Carnegie Wave Energy’s world-first multiple array wave energy project off Garden Island would not have proceeded without grant funding.
Hunt sought to deflect that criticism last week. When challenged on Sky News last week about the defunding of ARENA’s $1.3 billion, Hunt replied:
“The Australian Conservation Foundation, the Investors Group on Climate Change, the Climate Institute, have all welcomed it.”
Yes, they welcomed the government’s decision to drop their three-year-old plans to scrap the CEFC, but here’s what they said about the proposal to de-fund ARENA and remove its grants-making ability:
The ACF: ““While we welcome this new clean energy fund, the removal of the Australian Renewable Energy Agency’s grant-making function and the reported decision to fund the (new) body with money reserved for the CEFC is disappointing and undermines ARENA’s role.”
The Climate Institute said: “It would be a big mistake to lose ARENA’s grant making lever. In addition, the government will have to deal with the legislative fact that it should be putting $1.3 billion into that task.”
In a statement issued on Thursday in response to the Queensland-ASC statement, Hunt accused the Palaszczuk Government of being “utterly dishonest”.
“We are continuing the large scale solar grants round – in which Queensland has the lion’s share of shortlisted projects.”
A spokesman for Bailey said the Queensland government did not dispute that, but was concerned about the lack of future grant funding that may be required.
“It’s disappointing that Labor and the Australian Solar Council are misleading the Australian public,” Hunt said. “The changes we have announced will drive innovation and create the jobs of the future, while delivering a financial benefit from the investment of public money.”