From pv magazine Australia.
What was expected to be a comfortable win for Labor in Australia at the weekend turned into an outright parliamentary majority for the incumbent Coalition, and a shock result for climate action proponents. With Scott Morrison at the helm of the federal government for another three years, solar could take a back seat.
The Coalition does not have a renewable energy policy beyond next year and will not be replacing the Renewable Energy Target (RET) “with anything“ when it expires in 2020. The race towards the RET’s 33 TWh ambition, which has effectively been met, has underpinned a renewable energy boom in Australia, and one that has been particularly pronounced in the large scale solar sector. Morrison has repeatedly dismissed the suggestion of any greater use of renewables to generate electricity.
Instead he has argued a more ambitious renewable energy target, such as Labor’s 50% RET by 2030, would damage the economy. Such claims were in stark contrast to the findings of Australia’s chief energy institutions – the Australian Energy Market Operator and national science agency CSIRO – which insist solar and wind are the lowest cost options for generating electricity in Australia, compared to alternative new-build options. Importantly, that also holds even when the cost of fossil fuel generation tech is not adjusted for climate policy risk.
Blue-collar coal jobs
Analysts have voiced concern investment in renewables will slump beyond next year as policy uncertainty surrounding the sector’s outlook undermines investor confidence. Such warnings fell on deaf ears as the Coalition continued to champion the interests of the fossil fuel industry. Having decided to play his trump card: King Coal, Morrison voiced support for Adani Power’s Carmichael coal mine in Queensland, suggesting such projects could guarantee blue-collar jobs. That message resonated with voters and ensured the Coalition picked up crucial seats in the state.
At a state level, ambitious renewable energy targets could help fill the policy void to a certain extent. For instance, Victoria and Queensland have both committed to a 50% renewables by 2030 target, a move which is expected to pave the way for more large scale renewables. However, there are also setbacks that need to be taken into account, such as grid bottlenecks in Victoria, and Queensland’s new solar installation rules, which could push up the cost of commercial and industrial systems by 20%.
Be that as it may, it is important to remember the expected fall in wholesale electricity prices ahead – which the Coalition will no doubt attempt to take credit for – should be attributed to the vast amount of renewable generation coming online.
I expect noticeable decline in wholesale electricity prices over next term of Fed Govt driven by surge of renewables supply. Going into next Fed election LNP will be able to claim they lowered power prices.
— Tristan Edis (@TristanEdis) May 18, 2019
As for sub-100 kW generation capacity solar systems, things will remain unchanged until 2030 in terms of rebates available under the Small scale Renewable Energy Scheme (SRES). As announced by Energy Minister Angus Taylor in October, there are no plans to change the SRES, despite Australian Competition and Consumer Commission (ACCC) recommendations to wind it down nine years early.
While the ACCC recommendation sent a shockwave through Australia’s solar industry, big utilities such as Origin Energy and EnergyAustralia backed the scheme. Opposition to rebates can be explained by the fact soaring rooftop solar installation figures led to a fall in residential power demand, and thus revenue loss for big electricity retailers.
Axing the SRES, suggested opponents, would reduce annual electricity bills for non-solar households by $15 a year, but would also have posed a major threat to the uptake of rooftop solar, which is picking up pace nationwide. While incentives continue to reduce every year, the SRES program has helped Australia pass the two million PV rooftop milestone.
Other policies and climate commitments
Importantly, the Coalition has no other programs to help the uptake of solar and battery technology. The notable policy it took to the election was the re-badged, Abbott-era Climate Solutions Fund, which included another $2 billion for Emissions Reduction Fund auctions, but would not bring much for the electricity sector.
The package retains the goal of reducing emissions by 26-28% of 2005 levels by 2030 which, according to the administration can be met “in a canter” without intervention. Other studies, such as the annual UN Environment Emissions Gap Report, claim Australia is among the countries either not on track to reach their 2030 target, or which are not certain to do so based on current projections.
The Coalition has often attacked Labor’s emissions reduction target of 45% by 2030 as irresponsible, although models have illustrated the impact of taking no action on climate change – for both the Australian economy and jobs – outweighs the cost of reducing emissions. Unlike Labor, the Coalition plans to carry over Kyoto credits to reach its much weaker emissions reduction target.
Pumped hydro is intended to play a prominent role in the years ahead. The Coalition has pledged $1.38 billion (US$948 million) for expansion of the Snowy 2.0 pumped hydro facility, along with $56 million for the Marinus Link project, part of Tasmania’s Battery of the Nation program. The latter would provide a second interconnector across the Bass Strait to increase the availability of the state’s hydro resources on the mainland.
Pumped hydro needs renewables
While analysis shows additional energy storage capacity makes financial sense in the light of coal retirement, experts have warned the potential of such pumped hydro projects can be fully exploited only when they operate in concert with renewables. But, as previously noted, no policy to back renewables is on the cards.
On top of that, pumped hydro also emerged as a big winner in the Coalition government’s Underwriting New Generation Investment Program. The list of 12 projects which could be eligible for taxpayers’ money includes six renewable pumped hydro projects, five gas projects and one coal upgrade in New South Wales.
In terms of electric vehicles, the Coalition did not present any policy, although it has pledged to release one some time in the middle of next year.
While the pending cabinet reshuffle could bring policy tweaks, it is difficult to imagine things could change much for solar. All things considered, it appears the strong economics of PV will need to play the key role in driving investment in the years ahead.