Australia: On the cusp of RET compromise. Of sorts

Prospects for a revival of the utility scale solar pipeline Down Under looks to have improved, with reports that the federal government is willing to accept a compromise position on its plans to drastically reduce the country’s Renewable Energy Target (RET). The 33,000 GWh compromise position offered by the opposition Labor party is likely to be accepted by the government, however with caveats that may undermine the industry.

The Australian Broadcasting Corporation has reported that a federal cabinet meeting yesterday approved the 33,000 GWh figures, a reduction from the previous 41,000 GWh target. The government had originally argued for a figure of 26,000 GWh, which would have left almost no room for PV power plant development in Australia through 2020.

"It does look that finally Tony Abbott has made some shift, after taking this industry right to the edge," Labor’s environment spokesman Mark Butler told ABC Radio National.

Labor had proposed the 33,000 GWh total, after the country’s Clean Energy Council had called for the move. Australian renewable certificate trading and analyst group Green Energy Markets has concluded that a 33,000 GWh total will see around 5.5 GWp of large scale renewables added to Australian grids out to 2020. If the original RET was retained, of 41,000 GWh, Green Energy Markets concludes that it would’ve seen close to 8 GWp of projects developed.

Small scale solar will not affected by changes to the large scale RET. Australia has some of the highest levels of residential solar penetration in the world, and the Clean Energy Council has reported robust growth in the commercial rooftop sector over the last 18 months to two years.

There is some debate as to how large scale solar will fare under the reduced RET. While some are particularly bearish, based purely on PPA competition with wind, others are more optimistic, pointing to solar’s competitive advantages in terms of load profile and superior community support. Developers Solar Choice and First Solar have both presented arguments as to why solar can compete.

Reviews and biomass

While a compromise on the RET will allow for investment into large scale renewables to begin, after more than 14 months of little to no new investment, there are nuances to the government’s position that is likely to undermine both big wind and solar PV’s prospects.

In a press conference announcing the likely compromise Industry Minister Ian Macfarlane, who has lead the RET negotiations for the government along with Environment Minister Greg Hunt, indicated that the inclusion of “wood waste” into the RET will be pursued.

"We’ve told [the Labor party’s] Mark Butler that we will be continuing to progress the issue," Macfarlane said. "We’ll move the legislation in the House of Representatives inclusive of wood waste." The term wood waste refers to biomass, produced largely from native forest logging operations. Labor has indicated that it would not support this last minute inclusion.

How much of the RET that would be consumed by “wood waste” biomass is unclear, but there have been suggestions it could be as much as one-third. This would be bad news for large scale solar, which is still not competitive with large scale wind on a pure PPA basis.

The Australian Solar Council (ASC) has previously spoken out against the 33,000 GWh target and again today it criticized aspects of the compromise position. In particular, the ASC has targeted its criticism on the government suggestion that the RET should continue to be reviewed every two years.

"The Abbott Government has today demanded the two yearly review of the Renewable Energy Target be maintained," said ASC CEO John Grimes. "That means the next RET review will start in seven months time! You’ve seen the chaos and uncertainty that has resulted from review after review after review."

Somewhat ironically the RET review is set to be carried out by the Climate Change Authority (CCA), which itself has been de-funded by the government. The CCA itself carried out a RET review earlier this year, in which it concluded that the 41,000 GWh target should be maintained.

The Clean Energy Council, which has reluctantly pushed for the 33,000 GWh compromise, expressed “serious concern” about the prospects for ongoing reviews and also raised questions about the inclusion of “waste wood” under the RET.

"The government also proposed the inclusion of native forest wood waste, something the Clean Energy Council does not support unless it can be verified as coming from sustainably managed forests," said Clean Energy Council CEO Kane Thornton. "It is important these matters are resolved quickly and that a clear bipartisan deal is landed as quickly as possible, to restore the bipartisanship necessary for the sector’s future. A messy negotiation on the floor of Parliament will not give investors the confidence to commit billions of dollars to new renewable energy investment."

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