As speculation grows that Australia’s conservative Liberal-National government will cut back the clean energy target for 2020, solar and wind energy projects worth up to $18 billion are being paralysed.
The government is aiming to scrap Australia’s carbon price laws when the new Senate sits after July and the renewable energy industry is stalled due to uncertainty over the government’s commitment to the industry.
Fairfax Media reports Prime Minister Tony Abbott and other senior Coalition figures have increasingly set their sights on the mandated target for renewable energy, blaming it for forcing up electricity prices.
Fairfax Media reports new wind farm projects are often stalled at state level and New South Wales has also delayed new guidelines for wind farms for two years, adding to industry uncertainty.
The report says the offices of NSW Premier Barry O’Farrell and Mr Abbott denied Mr O’Farrell had told cabinet colleagues last week that the release of wind farms guidelines was not a priority because the government would cut the Renewable Energy Target (RET) “to 10 per cent”.
Fairfax Media reports clean energy sources such as wind and hydro already supply more than 10 per cent of the nation’s energy on occasion.
The Liberal-National government is likely to set the terms of the RET review and who will be running it within weeks.
”We support renewable energy but I accept that the way the system works at the moment is putting upward pressure on power prices,” Mr Abbott said last week in Brisbane.
He planned to ask the biennial review of the RET to “do what it can to bear down” on electricity prices “in ways which are consistent with the commitments that we’ve given to business”.
The existing target is an absolute amount, 41 terawatt hours of electricity from large-scale renewable energy by 2020, which may either be reduced or delayed, with big implications for the profitability of generators.
Hugh Saddler, principal consultant with energy advisers Pitt & Sherry, estimated large wind and hydro energy plants supplied 13.3 terawatt hours of electricity in 2012, about a third of the 2020 goal.
Infigen Energy managing director Miles George said the “constant threat of change to the legislation” from industry reviews had all but frozen new investment in the renewable energy sector.
Infigen had secured approval for new wind farms worth $2 billion in NSW, Victoria, South Australia and Western Australia but these were stalled by the uncertainty, he said.
Clean Energy Council chief executive David Green said any major reduction or change to the renewable energy target would have a significant impact on the $10 billion worth of investment already poured into the industry, with another $18 billion likely if the current goal remained.
“Reducing the RET means that Australia would have to rely more heavily on high-cost gas, which a report by the Australian Industry Group suggests will triple in price this decade, forcing up power prices for consumers and industry,” Mr Green said.
