Compromise on large-scale renewables in Australia increasingly likely

An end to the political deadlock that has brought the large-scale renewable sector to a virtual standstill in Australia looks likely to be coming to an end. The Labor opposition has announced a willingness to support a reduction to the Renewable Energy Target (RET) to 33,500 GWh.

The future of the large-scale renewables sector in Australia has been in doubt for some years, with the Federal Government led by Prime Minister Tony Abbott having undermined and then sought to dramatically reduce the RET. Government attempts to legislate a change to RET has been stalled with the government requiring support from minor political parties or the Labor Party to affect the change.

While negotiations between the two parties over a RET reduction have been in deadlock, Australia’s large scale renewable sector was itself effectively stalled, as uncertainty drove investors away. The RET underpins utility scale renewable developer in Australia as it mandated that electricity suppliers source 45 GWh of supply from renewable sources by 2020.

The Labor opposition has now announced a compromise position which would see the RET reduced to 33,500 GWh. If the government agrees to this then stalled renewable development Down Under could burst back to life, albeit at a reduced level.

The Labor position comes at the behest of Australia’s Clean Energy Council (CEC), which made the call for the reduced 33,500 GWh target last week.

“Labor is acting on the advice of the renewable energy industry, the CEC and the experts in reaching this decision,” said leader of the opposition Bill Shorten in a statement today. “Every day this matter drags on, more jobs are lost and every day the uncertainty continues, projects are shelved and future jobs are lost.”

Shorten noted that investment in renewables had fallen 88 per cent since the election of the conservative Abbott government.

The RET had previously enjoyed bipartisan support.

“Labor will use this target (33,500 GWh) as a floor and if elected, acting on the advice of the sector, will increase the RET out to 2020 to bolster investment, specifically in large scale solar.” Labor has committed to supporting the small-scale solar incentive program, which supports the country’s burgeoning commercial and residential rooftop market. In 2014 Australia installed over 800 MW in distributed PV.

The Government had initially flagged scrapping or vastly reducing the rooftop solar scheme, however it has since backed down from the unpopular decision.

No PV power plants

The Australian Solar Council has labeled Labor Party position as being a “forced compromise” adding that, “it will not deliver for large-scale solar.”

“The Abbott Government has blackmailed the renewable energy industry and the Opposition into accepting a massive cut in the RET,” said John Grimes, CEO of the Australian Solar Council. “The government has made no successful argument for reducing the Renewable Energy Target.  Its crusade against renewable energy is driven by ideology.”

Some within the solar industry, including brokerage and developer Solar Choice believes that a reduced RET would still offer opportunities for large scale solar. While PV power plants would have to compete with wind on price for the remaining RET quota of projects, Solar Choice argues that cost reductions and community support will result in some utility scale PV projects going ahead.

Government rejects compromise

While Labor’s offer may move things closer towards restarting large-scale renewables in Australia, the Federal Government’s first response was to reject the compromise offer.

“Our current position is our final position,” said Ian Macfarlane, the Minister for Industry and Science at a press conference today. ”We started at 26,000 GWh. The Renewable Energy Target is now as high as we can possibly put it without putting in jeopardy the stability of the scheme. We would prefer the target was closer to 30 GWh, but we, as a way of trying to resolve this issue, have taken it to the very top limit that we can have any confidence in the scheme being stable over the long term.”

Macfarlane continued that the RET program would “default” if the current legislated RET of 45 GWh was maintained. The government has based its argument to cut the RET on the fact that on-grid electricity consumption in Australia has declined since the RET was set at 45 GWh, meaning it would result in 23 per cent of total electricity coming from renewable sources by 2020, above the initial 20 per cent goal.

pv magazine has charted some 29 PV power plant projects under development that have either stalled or been cancelled due to the uncertain future of the RET. Some regional programs, such as those in the Australian Capital Territory (ACT) have supported utility scale solar. The Royalla Solar Farm was completed in the ACT last year.

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