By Lynne Blundell
After weeks of controversy over its green schemes, The Federal Government recently announced changes to the Renewable Energy Target, the most positive sign yet that it might be serious about promoting investment in the renewable energy sector.
But then last week the NSW government announced expansion of two coal-fired power stations, one at Mount Piper near Lithgow and the other at Muswellbrook in the Hunter Valley, which is expected to increase NSW’s carbon emissions by around 15 per cent.
It seems the right hand is not speaking to the left hand.
Under the RET changes, the market will be divided into two sections with power from domestic renewable energy installations such as rooftop solar panels no longer included in the 20 per cent RET target.
Energy retailers will now buy energy certificates from two separate renewable energy markets – a large scale market and another fixed price market for domestic technologies.
Previously the domestic technologies were flooding the market, bringing down the price of Renewable Energy Certificates and affecting the financial viability of large scale renewable energy generation such as wind farms. As a result several wind farm investments, as well as associated manufacturing plants, had been put on hold.
These include projects by Roaring 40s, such as the Musselroe Wind Farm, and Pacific Hydro, which had announced the temporary halting of all of its Australian wind developments. Pacific Hydro has around $2 billion of projects in its development pipeline in Australia.
The government hopes that changes to the scheme will bring the price of RECs back up, and relieve the uncertainty that is hampering the renewable energy industry.
Following the announcement Pacific Hydro said it would restart projects. General manager, Lane Crockett said in a statement: “The establishment of the large scale RET is welcomed and will unlock billions of dollars of projects across Australia and protect thousands of jobs.”
“Importantly, this proposal will unlock low-cost utility scale projects which are essential for Australia’s clean energy future while continuing the roll-out of household renewable energy options.”
Pacific Hydro said that over the past year it had become increasingly concerned about the impact that the design of the RET legislation was having on low-cost utility scale projects. Renewable Energy Certificate prices had fallen from a high of over $50 to around $30 and without intervention there would have been no investment in utility scale renewable energy projects in Australia for at least three years.
“This proposal demonstrates that the government has been listening to the industry”, said Mr Crockett.
The REC price has risen following the announcement and at the time of writing was $42.10, according to pricing agency Next Generation Energy Solutions.
New power stations threaten renewables
The RET scheme changes were dampened by the NSW government’s announcement that two new coal-fired power stations would be built, with environmental groups slamming the decision as a direct threat to the renewable energy market.
Immediately following the decision Greenpeace activists protested outside the NSW ALP Sussex Street headquarters in Sydney’s CBD.
While the government has said the plants will be either coal or gas, environmental groups say they are located near massive coal plants and as all of the infrastructure is set up for more coal, it is unlikely gas will be used. Without a price on carbon pollution, gas is also likely to the more expensive option.
“This approval paves the way for another 30 years of pollution and rising energy costs,” said Greenpeace climate campaign co-ordinator John Hepburn. “This is one of the most reckless decisions to come from the NSW Government in a decade.
“The resulting oversupply of polluting coal power from these plants would squeeze out renewables. It would destroy any hope for NSW to develop a serious clean energy industry, or to cut emissions.
Mr Hepburn said if the plants are built to run off coal, they will emit more than 22 million tonnes of greenhouse pollution every year – more than the entire transport sector in NSW – and will increase the state’s total greenhouse emissions by around 15 per cent.
A recent study by the Institute of Sustainable Futures showed that building new coal power stations is not only the most polluting option for NSW energy, but it is also the most expensive.
The study shows new baseload power stations are not needed at all if modest energy efficiency improvements are adopted.
Greens NSW MP John Kaye said the approval of the two power stations was based on the lie that they are needed to keep the lights on. He said the power plants will drive up the state’s greenhouse gas emissions and destroy jobs in the renewable energy industry.
“NSW does not need more baseload electricity generation to keep the lights on,” Dr Kaye said.
“The Owen inquiry was manufactured by the Iemma government to justify its privatisation agenda. The exaggerated claims of generation capacity shortages have been completely discredited.
“The latest data from the Australian Energy Market Operator (AEMO) shows that NSW has sufficient baseload capacity for reliable supply beyond 2016.”
lblundell@thefifthestate.com.au
The Fifh Estate – sustainable property
News and forum