Australia: Stars aligning for RET compromise

It looks increasingly likely that Australia will see a compromise on its Renewable Energy Target, the mechanism that underpins large-scale renewable development in the country. Key industry groups are aligning behind a 33 GWh compromise position, with the opposition Labor party saying it would agree to such a figure.

New large scale renewable development in Australia has more-or-less come to a standstill, since a review into its Renewable Energy Target (RET) was launched in February 2014 by the conservative Abbott government. In fact, investment for new projects dried up previous to this, based on the Liberal and National Party coalition having talked down prospects for the RET being maintained.

This week, the lack of new large-scale renewable investment looks likely to finally resolving, with a number of key industry groups aligning behind a compromise position.

Today, key industry group the Australian Chamber of Commerce and Industry (ACCI) stepped in to urge the Abbott government to reach a compromise with the Labor Opposition on a 33 GWh RET. The RET sets a target for large-scale renewables out to 2020. 33 GWh is a reduction on the previous mandated position of 41 GWh that had received bipartisan support until Prime Minister Abbott and his coalition government were elected.

The ACCI was joined in calling for a 33 GWh compromise by the Australia Industry Group, the Business Council of Australia, the Aluminum Council, the Bureau of Steel Manufacturers of Australia, the Cement Industry Association, the Energy Users Association of Australia, and the Tasmanian Minerals and Energy Council. That this group of often conservative-aligned and energy intensive industries have called for compromise is telling.

Labor party and opposition leader Bill Shorten told the Australian Broadcasting Corporation that his party would support a 33 GWh compromise position.

ASC slams 33 GWh target

The Australian Solar Council (ASC), the country’s peak PV industry body, has slammed the 33 GWh compromise position, saying that large scale solar will not be developed under the reduced target.

“The slashed target will quickly be taken up by wind alone,” said ASC CEO John Grimes in a statement. “By 2017/18 when ‘Big Solar’ is competing at scale there will be little space left.” The ASC has committed to “redouble its efforts” to support utility scale PV. The ASC’s position is that large-scale wind can achieve lower costs at present, but that PV power plants are rapidly reducing their costs and will be competitive with wind in 2017 and beyond.

While the ASC is robust in its claim that PV power plants will not be developed under a 33 GWh RET, others are less pessimistic. Solar brokerage and prospective utility scale developer Solar Choice has told pv magazine that it believes utility scale PV can compete with large scale wind on the basis of a number of competitive advantages.

Solar Choice CEO Angus Gemmell set out three key advantages helping PV to compete as being the community support for solar in rural Australia; solar’s ability to produce electricity when it is required on the grid, rather that at night when wind is often the most productive; and solar’s enhanced reliability when compared with wind.

“It will be a battle of the PPAs between the two industries [solar and wind] to see which one can show the most value,” Gemmell told pv magazine. Gemmell concludes that under a 32 TWh RET, that around 5 GW of  large scale projects through 2020. “With those three advantages, we are confident that solar can be more than competitive in that respect and while we don’t feel that solar will clean up entirely the 5 GW, we expect to get certainly a very prominent share.”

Gemmell’s Solar Choice is currently attempting to develop its vast Bulli Creek 2 GW multi-stage project, which is located in cattle grazing country and close to major grid capacity.

Government position

It is unclear exactly what position the Abbott government will take with regards to the 32 GWh compromise position, however with cabinet meeting scheduled for this Thursday, it appears likely that a the government will come to a conclusion one way or another.

The Australian website Climate Spectator approached both the government and the Labor opposition as to whether the compromise position will be accepted, and while Environment Minister Greg Hunt appears likely to push for 32 GWh to be accepted, the Industry Ministry appears less willing to do so.

“The government’s door has always been open to talk to the ALP [federal opposition], but the government’s policy basis for the changes to the RET is clear and hasn’t changed,” a statement from the Industry Ministry reads. The government has previously indicated it would not accept a RET above 31 GWh.

In good news for solar, the support for rooftop solar under the small-scale renewable scheme looks unlikely to be affected by the discussions. The Abbott government has previously stated that changes to the popular program are off the table.

The full interview with Angus Gemmell from Solar Choice will be published in the May edition of pv magazine, out now.

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