State-based renewable schemes “critical” – especially under NEG

Victorian Renewable Energy Advocate, Simon Corbell, has stressed the “critical importance” of state-based renewable energy targets and schemes, as Australia transitions to a low-carbon electricity market.

Corbell, who masterminded the ACT government’s highly successful 100 per cent by 2020 renewable energy target, said state-based schemes like Victoria’s VRET not only filled the void of federal energy policy, but helped to identify and seize the enormous economic opportunities that were emerging – particularly for regional Australia.

And he noted that criticism of state-based renewable energy targets – and calls, by the federal government, for them to be scrapped in favour of a national policy such as the National Energy Guarantee – ignored a rather glaring and inconvenient truth.

“When you look at the ACT’s renewable energy program over the last five years, (its) 100 per cent renewable energy target made up 40 per cent – 40 per cent – of renewable energy projects completed in Australia in 2017,” Corbell told the Smart Energy Summit in Melbourne on Tuesday.

“In 2016, ACT-supported projects, through its reverse auction program, contributed 54 per cent to total completed renewable energy capacity developed nationally.

“And even at the end of last year, projects under construction supported by the ACT’s reverse auction program amounted to 14 per cent of total renewable energy capacity supported nationally,” he said.

“So for anyone to suggest that state-based policy does not make a difference, for anyone to suggest that state-based policy does not have a measurable contribution to make, they are going to …need to reflect on those figures.”

Speaking at the Victorian summit, Corbell was particularly keen to stress the importance of Victoria’s VRET – the only legislated RET in Australia, that commits the state to 25 per cent renewables by 2020, and 40 per cent by 2025 – and the renewable energy and storage auctions that underpin it.

“Why does the VRET matter? It matters for two critical reasons,” he said.

“The first is that it provides a runway for renewable energy investment. It allows investors, it allows communities, it allows developers to know what is possible.

“Secondly, it is going to counter the NEG. It is going to counter the stifling impact that the NEG will otherwise have on renewable energy investment.”

On top of that, Corbell said that the VRET, like the ACT scheme before it, would enable solar and wind energy projects to go larger.

“Having a long-term offtake agreement from the state government is a powerful tool. It’s a level of credit-worthiness that financiers are prepared to back, and it gives confidence to renewable energy developers to go larger,” he said.

And perhaps most importantly of all, Corbell said the VRET mattered because it would drive long-term electricity price reductions.

“The state government’s long-term contract will deliver energy price savings to consumers,” he said.

“These price reductions can be very significant. Again, to look at the ACT’s experience, in the last quarter of the last year, the ACT was paying the equivalent of $1/MWh for each MW of renewable energy purchased through its large-scale renewable energy purchasing schemes. (That’s) 1c per kilowatt-hour.

“This is because risk allocation was shared between the purchasing government and the renewable energy developer.

“These long-term price reductions are similarly anticipated to occur here in the Victorian market, and it will be very interesting to see the outcomes of (the state’s) first renewable energy auction.”

As we reported here on Tuesday, the winners of that very same auction – for 650MW of large-scale generation – is on track to be announced next month, according to Victoria’s energy minister Lily D’Ambrosio.

It wound up attracting more than 15 proposals totalling over 3,500MW of new wind and solar capacity – roughly six times more than the government was after.

“These are firm proposals, with approvals in place, ready to go. And they’re proof that when you provide the market with policy certainty – the market is ready and willing to respond,” D’Ambrosio said in April.

Meanwhile, according to Corbell, there is currently more than 5000MW of connection inquiries in the Victorian NEM region.

“State-based schemes like the VRET are critically important for economic development opportunities,” he told the Summit.

“Without them, developers will, of course, simply seek the lowest-cost opportunities to develop their projects. And may, or may not, choose to focus on economic development outcomes for regional communities.

“But with state government purchasing in place, economic development doesn’t become optional, it becomes essential.

“Communities deserve to see some of the benefits of the billions and billions of dollars now circulating in the global economy for large-scale renewable energy.

“They deserve to get their fair share of this investment creating jobs, industry expansion and supply chain augmentation in regional communities,” he said.