The Business Spectator has an article by Giles Parkinson on the government finally legislating an increase in the renewable energy target - Our renewables 'revolution' is not what it seems.
It has taken nearly three years, but the federal government finally has something to show for the climate and clean energy platform it took to the electorate in 2007.
The passage of amendments to the Renewable Energy Target after a series of last gasp negotiations with the opposition and the Greens (a sign of things to come, perhaps), means that billions of dollars of wind farm and other renewable investments should – in theory at least – now get the green light. It also means that Australia can now join the rest of the world and declare it has a renewable energy industry to call its own. It’s been a long time coming.
Having cut and run from an emissions trading scheme and blundered its way through the home insulation disaster, that would be a welcome development for the government, and paves the way for a host of photo opportunities for government ministers and wind turbines, solar panels and sugar mills.
But not so fast – one of the consequences of the government’s poorly conceived first attempt at the RET is that the market remains flooded by certificates issued firstly to solar hot water systems and then to rooftop solar panels.
The price of RECs remains below $40, way below the value necessary to support most wind farm developments, and some predict the market may remain flooded till 2014, because energy retailers have been stocking up while the price is cheap.
That means that power purchase agreements needed to finance big projects will be hard to come by, in the short time at least, and some developments will have to bide their time. Others, though, such as AGL’s $800 million Macarthur wind farm and up to $2 billion of other wind farm projects in coming years, will not be delayed, because AGL can use the RECS to satisfy its own obligations.
One of the great ironies of this piece of legislation is that it should make its way through parliament while the emissions trading scheme failed. After all, it prices saved emissions, at least on paper, at up to $65 a tonne, three times more than an ETS.
It’s the sort of maths that drives some companies, such as aspiring coal seam gas developers Origin and Santos, to the point of distraction. Both argue that they need a carbon price to make baseload power stations economically viable. There’s another $20 billion to $30 billion of investments in that pipeline.
And it seems that for every winner in a renewable energy scheme, there is a loser. Now it is the turn of the solar industry to lament the agreements that effectively restrain the growth of the industry. Austalia’s reliance on a single mechanism means its impossible to find the right balance.
Energy company AGL is happy with the news, fats tracking their proposed Macarthur wind plant - Renewable energy changes welcome: AGL.
AGL Energy Limited (AGL) plans to fast track its Macarthur wind farm project following changes to the Renewable Energy Target (RET) scheme approved by the Senate on Wednesday. The government's changes provide greater investment certainty for the renewable industry, AGL said in a statement on Thursday. ...
The government's changes have split the RET into two, effectively creating two markets - one for large-scale industry and one for small-scale consumer technology including solar photovoltaic.
AGL managing director Michael Fraser said it would give industry the certainty to make long-term investment decisions to transform the nations energy infrastructure to meet the target of sourcing 20 per cent of the nations electricity from renewable sources by 2020.