The Renewable Energy Future of Australia in Jeopardy
In 2001, Australia’s Howard Coalition government introduced a Renewable Energy Target (RET) policy, designed to ensure that 20 percent of Australia’s electricity would come from renewable sources by 2020. The goal was to diversify the nation’s energy sources while also supporting growth and employment in the renewable energy sector. Industry leaders planned accordingly, securing investments and launching projects that would help the country reach its target.
During each stage of the RET policy, Parliament reported strong support from both of the major political parties, and the policy was expanded further in 2009. So it came as a surprise to many when the government announced in February of this year that they would be reviewing the RET policy and placed Dick Warburton—regarded by many as a climate change skeptic—at the helm of the RET Review Panel.
A Cause for Concern
The review caused panic in the industry and led a group of Australia’s leading clean energy investors to send an open letter to Parliament urging them to leave the RET unchanged. The letter also warned of the risks that changing the RET might cause—risks that could effect not only the industry and its investors, but also Australian citizens.
“If the 41,000GWh target is reduced, or moved out past 2020, existing wind farms, bagasse plants, hydropower and large-scale facilities will suffer financial distress and the potential for financial failure,” the letter, written by Clean Energy Council’s CEO Kane Thornton and co-signed by 17 major renewable energy companies said. “A significant reduction to the scheme would damage Australia’s reputation as a safe place to invest not only in clean energy, but in all forms of infrastructure.”
Supporters of the review propose to scale the RET back to 25,000GWh or 30,000GWh. Some even believe that the RET should be scrapped altogether, with incentives offered strictly to existing generators. The review, commissioned by Prime Minister Tony Abbott, was reportedly initiated due to concerns that the current policy would lead to increased power prices.
“We have to accept that in the changed circumstances of today, the renewable energy target is causing pretty significant price pressure in the system and we ought to be an affordable energy superpower… cheap energy ought to be one of our comparative advantages,” Abbott said in December.
However, those opposing the review are quick to cite modeling that challenges Abbott’s theory.
ACIL Allen Consultants, whom Abbott hired to conduct modeling for the review, found that the current target would increase the average Australian household bill by an average of $54 per year between now and 2020 but would reduce bills by a similar amount over the decade that followed when compared to what they might be if the RET were repealed. ACIL Allen’s modeling used notably bleak projections within their modeling, including working on the assumption that coal and gas prices would stagnate until 2040.
Separate modeling by Roam Consulting was also performed for the Clean Energy Council. The modeling, which employed more optimistic gas price projections, found that bills would be $50 lower per year by 2020 if the RET was left unchanged.
A Clean Energy Exodus?
Industry analysts have reported that Australia’s investment in renewable energy has plummeted over the course of the year, mainly due to the RET review. Kobad Bhanvnagri, head of Bloomberg New Energy Finance’s Australian unit, reported that between January and June of 2014, $40 million was invested in large-scale renewable energy—the lowest level since the first half of 2001. Last year’s investment totaled $2.691 billion, the second largest amount of flow to the sector in the nation’s history.
“Clean Energy investment in Australia fell sharply in the lead-up to the federal election and then fell further again after the Coalition took government with its promise to conduct a review of the RET,” Bhavnagri told Fairfax Media. “The investment environment for clean energy in Australia is currently very poor.”
Renewable energy companies throughout the country are likely to have suffered a significant drop in investment, and many are doing their part to make sure the RET remains unchanged. In addition to signing the letter to Parliament, some executives are publicly voicing their opposition to the review and warning that its repeal could have further consequences.
“Hopefully the government and the parliament more broadly would accept that you can’t leave the industry in limbo with legislative uncertainty for another two years. The industry would pretty much collapse if that happened,” Miles George, managing director of Infigen Energy told RenewEconomy. “Regulatory certainty is what we need. You can’t make a 20-year investment on the back of legislation that might change every two years.”
Upon the official announcement of the review, Australian Solar Council chief executive John Grimes launched a Save Solar campaign aimed at educating the public on the importance of upholding the RET.
“The big projects today in Australia are dead, and the only prospect of reviving them is to shift the federal government on this issue,” Grimes said in a statement.
A Future Uncertain
Abbott may face resistance in the Senate in regard to altering the RET. Clive Palmer has gone on record to say that any change in the RET would be a broken promise by Abbott, and his party will swiftly block any proposed changes. While the clean energy industry is encouraged by his support, Palmer’s words do little to buoy investments in the current market.
“Even if the Palmer United Party blocks any changes to the RET, if the government's intention is to change or remove the target, investment will be affected,” Bhavnagri said. “Investors are likely to hold off on making new investments until it is clear who will be in government next, and what their clean energy policy is.”
Until then, the industry may remain at a standstill.
FEATURE UPDATE: Since the writing of this story, the panel presented its findings on the RET and recommended it be scaled back dramatically. Click here for the most current news on the subject.
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.