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Eden Monaro speaks up for the Renewable Energy Target (RET)

On the same day as the ACT government launched Australia’s biggest solar farm to date at Royalla, 500 people crowded into a meeting room at the Queanbeyan Kangaroos Club and were urged to send a message to Eden Monaro federal representative Peter Hendy (who declined to be present, saying he didn’t go to green meetings).

Hendy would be hearing that citizens want the federal government to retain the decade-long bipartisan policy that at least 20% of electricity should be sourced from renewable supplies (the renewable energy target, RET) and to stop any rollback in the renewables industry.

The Solar Council’s campaign to take the fight for renewables into politically marginal seats comes with the message that consumers will be the losers, along with as many as 15,000 small businesses related to all aspects of the renewable industry and from 8,000 to 20,000 jobs at risk immediately or medium term.

The stage-managed Warburton review options that would allow Tony Abbott to break his firm pre-election promise not to tamper with the RET are: no new entries to the large scale renewable industry (hydro, wind, solar farms) or scaling back the RET to a lower requirement for sourcing renewables.

Under the RET, energy generators and retailers have to purchase at least 20 percent of their input from renewable sources, leading to a significant drop in greenhouse gas emissions from avoided fossil fuel burning. Major investments in renewable infrastructure, particularly wind, have been made as a result.

Also recommended under the review is an end to the ability of domestic rooftop solar and the solar hot water sectors to be part of the RET market in renewable energy certificates. Without those tradable certificates, the cost of solar panels presently would rise by 30-50 percent say analysts. If this happens an industry bust has been predicted by some.

As federal shadow environment minister Mark Butler, Greens Leader Senator Christine Milne and ACT Minister for the Environment Simon Corbell waited their turns to speak, Solar Council CEO John Grimes explained the statistics and what is at stake.

 Eden Monaro 20% solar installations, renewable sector needs to grow to be self-sustaining

Two million Australians have invested in rooftop solar panels in recent years and four million in either panels or solar hot water or both. Twenty percent of Eden Monaro residents now have solar installations. Australia’s domestic and business solar uptake has been spectacular. This sector has been painted as ‘too successful’ by advocates of ditching the RET, taking money from the traditional fossil fuel industries and their growth projections.

The barrier that the RET was overcoming is that Australia still lacks economies of scale compared to Europe or North America and with fewer capital markets investing. This mean the sector needs to grow still larger to become self-sustaining.

Infigen, which operates Capital Wind Farm at Lake George, has invested $1.2 billion in this and other Australian renewable projects. Chief executive Miles George has said even a mild paring back of the RET would greatly reduce the value of the certificates.

“Investments have been made on price assumptions based on what was bipartisan policy.” Depressing that income would put existing large scale operations without long term contracts under financial stress and difficulty when they have to refinance (if they can find finance with Australian uncertainty). George called it “almost a dictionary definition of sovereign risk”.

Back at the forum, one solar hot water company owner warned that people with existing rooftop solar units also face risks: who would do the maintenance on existing systems if their installers are forced to close down?

 Senate stopgap, what the public wants

But won’t the Senate stop the attack on the RET if it proceeds? Only for two years until 2016. “As long as government looks like it has the power to destroy the industry, renewables can’t get finance,” said Grimes and there’s the rub for both old and new players.

Queanbeyan’s Dyesol corporation employs 35 local people and is ready to go into production with its revolutionary solar cells in 2017 after an investment of $120 million. Research has been supported by the Australian Renewable Energy Agency ARENA which just narrowly missed abolition, thanks to the Palmer United Party and independent Senator Ricky Muir, but it lost much of its funding.

Dyesol CEO Richard Caldwell said that businesses like his will have to move abroad, to the UK for example, where his technology has been welcomed with great excitement and support.

The Warburton review admitted that the RET is creating jobs and has drawn billions in investment, while reducing carbon emissions. Recent polling by Crosby Textor showed 80% support for the RET amongst Australians and 70% amongst Coalition voters. (One vocal RET critic, Hume representative Angus Taylor, claims that the public doesn’t understand the RET and what people actually want is the lowest cost option for emission reduction).

Why is the government pushing against such poll numbers? Grimes and other speakers pointed to election donations from fossil fuel multi-nationals and also ideology. Not believing in climate change helps. There is also the $8–10 billion in income expected to flow back to fossil fuel suppliers without the 20% renewables target. That may be what Dick Warburton meant by correcting the ‘wealth transfer’.

Meanwhile scrapping the RET in favour of returning wealth to fossil fuel companies would reverse carbon emission reductions and instead grow them significantly.

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How RET Certificates work to link low carbon technology to the grid

by Ketan Joshi, Renewable Energy Professional

The RET works simply by ensuring retailers supply a certain percentage (which increases each year) of their electrical energy from clean technology like wind farms, solar or geothermal. Generators that use clean technology are issued a certificate for every megawatt hour of energy they produce. Retailers must buy a certain number of those certificates each year to prove they’ve sourced their power from clean sources.

These certificates can be traded. (they’re called ‘LGCs’, large-scale generation certificates, for big clean tech). They pass the costs of buying these certificates onto the consumer, which ends up being 3-4% of the total electricity bill. That’s one half of the story….. Clean technology costs more than fossil fuel generators to build, but it’s very cheap to run. By getting LGCs for every megawatt hour, clean tech companies pay back the costs of building the machines.

They then offer their generation into the market for very, very low prices (because their fuel is free), which means the wholesale price is, on average, lower (because the operator dispatches the cheapest generation – with the RET scheme, clean tech is almost always the cheapest generation). This results in lower-than-usual profits for those who generate electricity through the process of burning fossil fuels and increasing greenhouse gas emissions. These wholesale prices reductions also mean retailers buy electricity cheaper, so hypothetically, the aforementioned cost of the certificates is cancelled out by these lower wholesale prices.

 

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