Renewables industry frets as Warburton signals change to RET | RenewEconomy

Renewables industry frets as Warburton signals change to RET

CEC open letter signed by 17 leading renewables companies calls for RET certainty, warns of sovereign risk, rising electricity prices if RET changed.

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A group of Australia’s leading clean energy investors have sent an open letter to state and federal members of parliament calling on the federal government to leave the Renewable Energy Target (RET) unchanged, and warning of the risk to billions of investment dollars – and a rise in electricity prices – if it is wound back or diluted.

The letter came as Dick Warburton, the head of the RET Review Panel, signalled that changes would be made to the target and expressed frustration that Clive Palmer would block any changes in the Senate.

The letter, written by the Clean Energy Council’s acting CEO Kane Thornton and co-signed by 17 major renewable energy companies – including First Solar, GE, HydroTasmania, Infigen Energy, Trina Solar and Vestas – was released today, ahead of the RET Review panel report, which is scheduled to be delivered sometime in the next two weeks.Screen Shot 2014-07-22 at 1.22.54 PM

“Our companies have made their investments in renewable energy projects on the basis of the 41,000GWh target continuing to operate as legislated out to 2030,” the letter says. “It is this fixed GWh target, rather than an ever-changing percentage based on a forecast, that has underpinned over $10 billion worth of investment to date.

“The 41,000GWh target, as currently legislated, will deliver the revenue necessary to recover the investments we have made. If the 41,000GWh target is reduced, or moved out past 2020, existing wind farms, bagasse plants, hydropower and large-scale facilities will suffer financial distress and the potential for financial failure.”

The Abbott government-mandated RET Review, headed up by self-proclaimed climate scepticWarburton, is widely expected to reduce the minimum amount of Australia’s electricity required to be produced from clean energy sources such as wind and solar, most likely to around 25,000GWh.

Bob Baldwin, the assistant minister for Industry, told the Clean Energy Week meeting in Sydney that Australia is “open for business”. In fact, he said it at least three times, but the industry points out that uncertainty over the RET has crippled investment for more than 18 months.

Opposition climate spokesman Mark Butler has said Australia was effectively closed for business in terms of renewables. Douglas Smith, the Australian had for Chinese solar giant Trina Solar, warned that his “bosses in China” were reassessing their aspirations for growth in Australia. “I can’t under-emphasise that point,” he said.

Warburton, who is also chairman of Westfield Retail Trust and a former Reserve Bank of Australia board member, recently said that his review panel was close to finishing its report.

He also expressed his concern that recent “crazy politics” in the Senate, such as the vetoing of major budget items by the Palmer United Party and others on the cross benches, did not augur well for changes to the RET.

“It would be disappointing, it would be frustrating, but that seems to be Clive Palmer,” Warburton told The Australian Financial Review.

Palmer, who has been shown to have a rather fickle view on climate and clean energy policy issues, has previously declared his commitment to keeping the 41,000 gigawatt hour target for renewable energy, saying the Abbott government could only lower the target if it wins a ​mandate at the next election.

Miles George, whose company Infigen Energy is Australia’s largest listed renewables group (and a signatory of the letter), has warned separately that without a long-term commitment to the RET, the sector was at risk.

“Hopefully the government and the parliament more broadly would accept that you can’t leave the industry in limbo with legislative uncertainty for another two years. The industry would pretty much collapse if that happened,” George said.

“Regulatory certainty is what we need. You can’t make a 20-year ​investment on the back of legislation that might change every two years.”

As the CEC open letter points out, Australia’s original Renewable Energy Target policy was originally introduced by the Howard government in 2001, and has since enjoyed mostly bipartisan support, having been expanded in 2009 and refined in 2010 to deliver 41,000GWh from large-scale sources by 2020 and at least 20 per cent renewable energy by that time.

According to energy market analysis, Thornton notes that the target, if left to operate as legislated, would deliver another $14.5 billion in investment in large-scale renewable energy infrastructure in Australia by 2020.

“Even better news is that Australia’s RET can actually lead to lower power prices in the long run,” the letter says. “The preliminary modelling undertaken for the RET Review panel by ACIL Allen Consulting found that household power bills will be on average more than $550 million more expensive per year beyond 2020 if the RET was removed. This is because renewable energy is playing an important role in reducing Australia’s reliance on increasingly expensive gas.”

Read the full text of the letter below.

140718 Major clean energy investors open letter

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4 Comments
  1. Chirps 6 years ago

    Looking forward to the ensuing tantrums when Dick’s little conservative agenda dressed as Hockeynomics gets the smack down it deserves. I’m sure Tragic Tones and the North Sydney Screamer will be throwing their toys all over the place.

  2. David Rossiter 6 years ago

    Setting a new numeric target for 2020 at this late time seems totally un-visionary especially as we know that previous percentage targets have been set ten or more years ahead. The original numeric target was set in 1997 for 2010 and the current one was set in 2007 for 2020.
    In view of the findings of the modelling work by ACIL Allen that a target of 30% for 2030 was the cheapest way forward for electricity consumers (voters), surely the ‘visionary’ thing to do for this RET Review report would be propose a target for 2030 and note in passing that the target for 2020 has been exceeded and produced a better economic outcome for electricity users than was expected.
    In that way, industry will again get the certainty of at least a 13 year warning of a new percentage target as has been done previously though the pressure would be on Government to then adopt Warburton’s ‘visionary’ report by 2017!

    • wideEyedPupil 6 years ago

      “that a target of 30% for 2030 was the cheapest way forward for electricity consumers (voters), ”
      What, discluding the externality of destruction to the climate you mean? Surely getting to 95-100% renewables as fast as possible is the main priority here given that there is no carbon budget left.

      • David Rossiter 6 years ago

        Yes the carbon budget is running out for 2 degrees warming. At least the RET Review modellers note that 30% by 2030 was the cheapest of the options they looked at… they weren’t even going to look at any bigger targets originally! Perhaps a bigger target might be even cheaper if climate was valued in the analysis! But if you get rid of carbon pricing I think it is clear carbon is not being priced from now on by this Government following the overt celebrations last week by fossil leaning politicians. So far as I am aware ACIL Allen were only valuing the benefits of RET that reduce the peak pricing and modify bidding behaviour and no explicit carbon price was included and even so 30% by 2030 was the winner. Add in carbon pricing and the benefits would be greater – but that approach is so last week – regrettably.

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