Uncertainty surrounding the Renewable Energy Target has left nearly $1 billion in wind and solar projects in limbo as developers await the outcome of the Coalition government’s review.
Spanish wind power firm Acciona has announced that it has placed three projects in Victoria with a collective value of $750 million on hold due to concerns over the fate of the Renewable Energy Target (RET), which is currently under review by the government.
Andrew Thomson, managing director of energy for Acciona in Australia, described the company’s developments in the country as being “pretty much at a standstill,” as a result of toa lack of stability and predictability in the policy environment.
David Green, chief of the Clean Energy Council, said worries of sovereign risk in relation to government policy is on the rise amongst foreign investors, a factor which could seriously compromise the growth of Australia’s renewable energy sector given the prominent role of overseas players.
According to members of industry, the total value of projects which have been temporarily shelved as a result of the RET review could be as high as $1 billion in total.
The RET review was announced in February, with the ostensible purpose of investigating the impact of clean energy on retail power prices.
At the time that the review was launched, however, the ABC quoted a senior member of the Liberal Party as saying it would help provide the Coalition government with the “cover” they needed to “kill the RET,” with the appointment of climate change skeptic Dick Warburton to the head the study.
RET, which was introduced under the Howard government, requires that Australia derive 20 per cent of its power from renewable energy sources by the 2020.
The establishment of RET provided a major boost to clean energy in Australia, putting it on a track to become an $18 billion industry by the end of the decade.
The uncertainty cast over the target by the government review process, however, has already hit the price of the large-scale generation certificates which renewable energy companies sell to power vendors in order to satisfy their obligations under the targets, with a decline from $26 to $10 in just the past year.
The sudden plunge in the value of demand for generation certificates further imperils renewable energy firms, many of which are heavily reliant upon their sale to electricity vendors to generate revenues.
Miles George, managing director of ASX-listed wind and solar power firm Infigen Energy, reports that 40 per cent of its domestic revenue is derived from the sale of the certificates – income which would be instantly lost should RET be annulled.