Australia’s renewable energy investment grinds to a halt
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The industry is battling political uncertainty, a consultant says. Photo: Peter Rae
Australia’s large-scale renewable energy industry has entered an investment freeze, with just one project securing finance in the past six months amid political uncertainty, according to Bloomberg New Energy Finance.
The lone venture in the first three months of 2015 was worth just $6.6 million and following a complete drought during the December quarter, BNEF said. The project was a floating solar photovoltaic (PV) plant being developed in Jamestown, South Australia, by Infratech Industries.
For the year to March, investment totalled $206.9 million, which was 90 per cent lower than the previous 12 months, the consultancy said.
“Investment has been stifled by policy uncertainty for over 13 months since the Abbott government’s [Renewable Energy Target] review was announced on 17 February 2014,” BNEF said. “The Australian large-scale clean energy industry has become practically uninvestable due to ongoing uncertainty caused by the government’s review.”
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Grounded: Just one renewable energy project has been approved in the past six months. Photo: Supplied
Pressure remains on the Abbott government to compromise over its plans to cut the current 2020 target by more than one-fifth to 32,000 gigawatt-hours a year by decade’s end. The renewable energy industry, business groups and Labor have settled on a reduction to 33,500 gW-hours in a bid to resolve an impasse with the government.
“The government is determined to ensure the Renewable Energy Target is on a sustainable footing by recalibrating the target to a realistic and achievable level, which will ensure renewables continue to contribute to Australia’s energy mix,” a spokeswoman for Industry Minister Ian Macfarlane said.
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The 32,000 gW-hour offer “would see around 23 per cent of Australia’s energy coming from renewables by 2020, and would lead to a doubling of large-scale renewable generation”, she said.
Greens leader Christine Milne called on Prime Minister Tony Abbott “to back off his cut to the RET, the way he’s backed down on Medicare and university fees”.
“The RET was working brilliantly until Tony Abbott realised renewables were undermining the profits of the coal-fired generators and that’s why he decided to smash it,” Senator Milne said. “He’s removed all certainty from the renewable energy sector and handed it over to his mates in the fossil fuel sector.”
Labor’s Climate Change spokesman Mark Butler also levelled the blame at Mr Abbott.
“The only conclusion to draw from his refusal to accept Labor and the industry’s compromise position on the RET is that he’s happy to see this industry – and the thousands of jobs and billions in investment it attracts – leave Australia,” a spokeswoman for Mr Butler said.
The Australian large-scale clean energy industry has become practically uninvestable.
The dive in investment comes as the Australian Bureau of Statistics estimated that more than 2000 jobs had been lost in the industry over the past two years. Some 12,590 people were employed full-time in the wind, solar and other renewable energy industries last year, down from almost 15,000 two years earlier.
The chill descending over the large-scale end of the sector has so far not extended to smaller-scale investments, such as rooftop solar panels. Australia added about 195 megawatts of new solar PV capacity in the March quarter, about 7 per cent more than a year earlier, Bloomberg said.
The consultancy also noted that Banco Santander, the world’s third-largest clean energy lender, departed the Australian market in the March quarter in another sign of waning investor interest.
Globally, investment in clean energy totalled $US50.5 billion ($66.3 billion) in the first three months of 2015, down 15 per cent on a year earlier, Bloomberg reported last week. Weaker investment in China, Brazil and Europe accounted for the slowdown.
The government has said the electricity sector is already oversupplied because of a drop in power demand. Advocates of renewable energy say the government faces sovereign risk issues by unilaterally changing investment targets that affect existing projects.