RET is met, and Frydenberg concedes more wind and solar will lower prices, improve reliability

The Clean Energy Regulator has announced that the 2020 renewable energy target is effectively met – three years ahead of schedule – with some 6,500MW of large scale wind and solar projects already built, under construction, or committed.

The announcement by the CER confirms separate analysis by private consulting firms that suggest that the much-reduced 33,000GWh target for 2020 will be easily met, well ahead of time.

That 33,000GWh target, slashed by the Abbott government from 42,000GWh under the pretext that it would cause prices to rise and the lights to go out, was still branded as “impossible” to meet by many conservative commentators.

Those predictions proved absurd, but it raises the question of what might have been, and what will follow, given the uncertainty around federal energy and emissions policy.

On one posits e note, energy minister Josh Frydenberg said in a statement that it was clear that the influx of wind and solar would push wholesale prices lower in coming years.

Frydenberg even conceded the added renewables capacity would improve reliability, a point made clear by the Australian Energy Market Operator in its reports to the government last year, but rarely acknowledged by the Coalition or conservative commentators.

Frydenberg noted that the big shift in the large scale renewables market had been the growth of large scale solar, and the emergence of Queensland with the largest share of this new build with more than 2000 megawatts of capacity.

It was followed by Victoria with around 1600MW and New South Wales with 1400MW.

“This will ensure significant additional electricity supply is available in the market well ahead of 2020,” Frydenberg said in his statement.

“Importantly, as outlined in the Australian Energy Market Commission’s 2017 Residential Electricity Price Trends Report released in December, this extra supply is expected to apply downward pressure on wholesale electricity prices over the next three years.

“This year should see around 2600 megawatts of new renewables projects commence operating which will further strengthen reliability and reduce emissions in addition to reducing electricity prices.”

In its report, the CER said that in 2017 some  1054MW in new capacity was accredited, and based on current announcements, it expects around 2600MW in 2018 and a further 2700MW in 2019.

In all this means a further 60 large scale projects, with the capacity roughly drawn equally from wind and solar.

The big question for the renewable market is what happens next. The meeting of the RET means that there is no new driver in federal policy, with the future and the make-up of the proposed National Energy Guarantee uncertain.

Modelling done to date for the NEG indicates the proponents expect little or no new capacity to be built between 2020 and 2030, which would keep not just Australia’s electricity emissions static, but also its transport emissions given the expected and potential uptake of electric vehicles.

State-based targets appear destined to carry the bulk of the policy load, with the newly re-elected Queensland government pursuing its 50 per cent renewables target by 2030, Northern Territory doing the same, and Victoria also legislating a 40 per cent target for 2025.

However, both the Victoria and South Australia governments face elections this year, which could turn the progress of large scale renewables.

But one saving factor may be the huge increase in interest from the corporate sector, driven by soaring grid prices and initiatives such as the Whyalla steelworks proposed 1GW of solar and storage, which could power not just those steelworks but other big energy users such as a possible revitalised Holden car factory that switches its focus to electric vehicles.

Data compiled by consultants SunWiz and RenewEconomy indicate there are no shortages of projects. The data shows 19GW of solar in some stage of development, awaiting signals from state and federal policies, or private buying interest. More details can be found here.

The Clean Energy Council said renewable energy is now the lowest cost type of new power generation but is competing against old and increasingly unreliable coal-fired power stations that were built by taxpayers many decades ago.

“This is why the RET has been so important,” CEO Kane Thornton said in a statement.

“This achievement reminds us of the importance of long-term policy with bipartisan political support. While the RET has delivered on its promise, there remains significant policy uncertainty beyond 2020,” he said.

“We urge the Federal Government and all political stakeholders to work quickly and constructively to establish policy and regulatory settings that will provide continued investment confidence for the coming decades.”

Meanwhile, new projects continue to be announced. ESCO Pacific and Elliott Advisers said their 98MW Susan River Solar Farm and 75MW Childers Solar Farm, both located in South East Queensland had reached financial close.

Elliott advisers will own 100 per cent of the projects and will fund the projects through to connection entirely with equity. Construction is expected to take 9 months, and will play in the spot market rather than have a fixed contractor.

“Merchant solar remains an attractive opportunity for experienced investors,” Esco CEO Steve Rademaler said in a statement. “ESCO looks forward to continue bringing jobs and growth to regional Australia through its extensive pipeline of highly advanced projects currently under development.”

Meanwhile, Hydro Tasmania announced the start of construction of the 112MW Granville Harbour wind farm, which is being built by Westcoast Wind.

“The birth of Granville is another sign that Tasmania’s national energy revolution is really taking off,” Gerard Flack, the acting CEO of Hydro Tasmania, said in a statement.

“Tasmania has huge natural advantages – including an existing hydropower system, exceptional wind resources, elite expertise, and the head-start we’re already taking,” Mr Flack said.

“Pumped hydro energy storage supports and complements wind development. Our work to identify Tasmania’s best possible pumped hydro sites under Battery of the Nation is progressing well.