SA Renewables sector on edge as RET clouds future investment potential
27 March 2014
SOUTH Australia’s renewables industry is nervous about the ongoing review of the Federal Government’s Renewable Energy Target scheme amid fears it will create investor uncertainty.
The RET review with a focus on energy prices and emissions reductions was announced on February 17 – a day before aluminium producer Alcoa announced the closure of its Point Henry smelter leading to nearly 1000 job losses, widely blamed on RET cost increases.
It has also raised doubts over the future of SA’s largest wind farm investment .
The RET scheme revolves around the trade of renewable certificates to mandate 20 per cent of power from renewable sources by 2020 – green energy generators are issued certificates based on their production and liable entities (mostly electricity retailers) have to buy them and submit them to the regulator.
The cost of the certificates is passed on to consumers – households and businesses – leading to between 2 and 5 per cent increase in electricity prices.
The review led by former Reserve Bank board member Dick Warburton will be completed in June.
Business groups, including the Minerals Council of Australia, have called for dramatic changes to the scheme, including pushing out the target beyond 2020 and ending subsidies to the renewable energy producers altogether.
The MCA has described the RET as a policy mistake – “a $20 billion subsidy to the renewable energy sector to 2020; a cost that is borne by householders and industry”.
The renewables industry, through the Clean Energy Council, has warned of business uncertainty, job losses and investment freezes.
The CEC argues the RET has delivered more than $18 billion in private investment, with another $18 billion projected if the policy can be locked in.
South Australia is leading the nation in renewable energy development with the largest amount of installed wind generation capacity in Australia and accounts for 18.5 per cent of the solar energy generated nationwide from embedded rooftop photo voltaic installations.
Wind and solar make up 31 per cent of the state’s total current power generation capacity.
More than half the proposed projects in the state’s energy pipeline are wind power investments, including the $1.5 billion Ceres wind farm at Yorke Peninsula , which will be the largest wind farm in the southern hemisphere and the SA’s second-largest Snowtown II wind farm.
“Renewable resources are ample and form the largest growing component of the South Australian fuel mix,” the Australian Energy Market Operator says in its report on fuel resources and power generation technology in the state, released in January.
The state has set its own 33 per cent renewable energy target by 2020 but this needs the support of the RET.
Senvion Australia managing director Chris Judd told The Advertiser a strong RET was needed to move ahead with the Ceres project – hanging a cloud of uncertainty over the potential massive economic injection .
“We don’t want this private investment that will create 500 construction and 50 ongoing jobs in Australia to be put at risk.
“Blaming rising energy prices on the RET is wrong.
“The RET is insurance against rising fossil fuel prices.”
Mr Judd said the review was already impacting on future investment, with investment stalling right across Australia because of the continuing uncertainty.
“This is frustrating for our business, as we see enormous opportunity here.”
SA solar installer Suntrix said any changes would affect many jobs and businesses.
“We’ll be the laughing stock of the world,” managing director Jenny Paradiso said.
“I don’t think we have had any certainty in this business and Suntrix will continue to move through the changes but what does it say for future R&D efforts and innovation.”
SA-based Tindo Solar, which “makes” its solar panels in Australia, sourcing overseas parts not manufactured here, is now involved with research into energy storage systems.
Managing director Adrian Ferraretto said the review could help “tweak the RET” to sift out the bottom end of the market and boost quality.
“I am not a fan of rebates. Removing it 100 per cent is not a good idea but tweaking it to benefit the industry would be a good outcome.”
Solar systems company ZEN Energy’s chief executive Richard Turner said he was happy for the RET to be left alone.
“The RET brings industry scale, lower costs, many jobs and innovation at a relatively very small cost.”
“Constant changes are a diabolical waste of time and we are only just getting to a point where the industry is standing on its feet.”
Business SA policy director Rick Cairney said electricity prices for South Australian businesses have risen by over 80 per cent since 2008 due to a combination of factors, but largely network costs and green schemes such as the carbon tax and RET.
“At some point all forms of energy generation need to be viable in their own right.
“We don’t want existing (wind) investments jeopardised… but we need to make sure that electricity becomes more affordable for small businesses, particularly our manufacturing sector which will have significant hurdles to overcome with Holden and Toyota’s exit in 2017.”