The conservative Liberal-National government’s review of Australia’s Renewable Energy Target (RET) is placing almost $1 billion worth of projects at risk.
As uncertainties over whether the target will be abolished plague the industry and investors the renewable energy projects have been halted pending the outcome of the RET review.
Financial news website BRW reports the wind and solar industry is sitting on its hands throughout the six-month review process as international investors exercised caution.
At the same time companies say demand for renewable energy certificates has dried.
BRW reports Clean Energy Council chief executive David Green said perceptions of sovereign risk due to sudden policy change were growing, with many local renewable projects being run by large multinational companies.
The target mandates that 20 per cent of energy come from renewable sources by 2020 and was originally established under a former Liberal-National government of then Prime Minister John Howard.
“With any government conducting a review such as this, they need to be incredibly careful how they comment and project information as the review is under way or else foreign investors can all too quickly get the view that the country risk of investing in Australia is going up,” Mr Green said.
Spanish company Acciona, which owns and operates two wind farms in Australia and has an interest in a third, said it had three more projects worth a collective $750 million that are on hold and potentially at risk.
It estimates the projects, all in Victoria, would deliver 350 jobs in the short term.
Its Australian managing director of energy, Andrew Thomson, said head office in Spain was watching the progress of the review closely.
Infigen Energy, an Australian wind and solar company listed on the ASX, has seen its share price fall 20 per cent from 25¢ to 20¢ since the beginning of the year, despite what its managing director, Miles George, described as a “record operational performance”.
Infigen has five wind projects in the pipeline, worth about $30 million, waiting to go ahead.
“We have over 1000 megawatts of wind and large-scale solar developments which are approved and they’ve already been through the planning approval process. We’ve spent a lot of money on those already,” Mr George said.
In February, Environment Minister Greg Hunt and Industry Minister Ian Macfarlane announced the terms of reference of the RET review, which allowed for the panel to investigate whether it should be abolished.
Businessman Dick Warburton, a self-described climate sceptic, heads the review and the panel is due to report in the middle of the year.
BRW reports that on its current trajectory, the renewable energy sector is estimated to be worth $18 billion to the economy by 2020.
The value of large-scale generation certificates, which renewable energy companies sell to electricity retailers to help them meet their obligations under the RET, have dropped by $10 to $26 over the past year because of an expectation the review will significantly weaken the target.
“Forty per cent of our revenue in Australia comes from selling those certificates.
The other 60 per cent comes from the underlying electricity we generate and if you stop the scheme tomorrow, we would instantly lose 40 per cent of our revenue,” Mr George said.
