Australia

Australia

Australian wind gets back on track -- Renewables mandate to 2030

The path for thousands of megawatts of new wind capacity in Australia by 2020 is all but cleared now that the Council of Australian Governments (COAG) has approved the federal government's proposal for an expanded national renewable energy target (RET). COAG's sanction of the new target "brings Australia to the brink of unleashing more than A$20 billion of new clean energy investment," says the Clean Energy Council (CEC).

The final hurdle is formal approval for the RET legislation by the federal parliament. The government expects that will come this month, enabling the law to come into force on July 1, with a view to the new target being in force from January 1, 2010.

Under RET, Australia is aiming to get 20% of its electricity from renewables by 2020, requiring around 10 GW of new capacity. Half of that is expected to be wind. RET aims to deliver 45,000 GWh from renewables -- more than four times the 9500 GWh target under the current Mandatory Renewable Energy Target (MRET).

Targets requiring utilities and electricity retailers to obtain a proportion of their electricity from renewables will increase annually to 2020 and be maintained at the 45,000 GWh level to 2030, when RET sunsets. As under MRET, renewable energy certificates (RECs) must be acquired to prove compliance with annual targets. All renewables projects, once accredited, will be eligible to create RECs. Revenue for project developers will come from both the sale of RECs and the physical electricity, separately or together. Each REC represents a megawatt hour of generation and certificates can be banked by project owners and then sold to other utilities or surrendered to compliance authorities in later years.

Banking is permitted for the lifetime of the program. For utilities failing to meet their annual RET obligations, a shortfall penalty must be paid. This has been set at A$65/MWh, up from A$40/MWh under the current MRET. "The level of the shortfall penalty will be monitored to ensure it remains effective as an incentive for investment in renewable energy," says COAG.

By 2030, the federal government's controversial carbon pollution reduction scheme (CPRS), which includes plans for an emissions trading system, is expected to drive the renewables market. The CPRS has hit a road block, however, with opposition parties united against it (Windpower Monthly, May 2009). The federal government has reluctantly put the CPRS start date back a year to 2011.

With RET out of danger, the wind industry is unfazed by the CPRS postponement. The delay "is unlikely to impact on business plans given that the proposed expanded RET legislation will provide an immediate stimulus," says Miles George of wind developer Infigen, which recently emerged from the collapse of Babcock & Brown, summing up a common industry view.

A few crumbs from coal

"The delay highlights the urgent need for complementary measures, such as the Renewable Energy Target, so we can immediately begin transitioning industry to a carbon-costed economy and help reduce Australia's greenhouse gas emissions," agrees CEC's Matthew Warren.

The lack of money for wind in the federal budget, announced on May 13, has barely raised an eyebrow. The government says it will invest A$4.5 billion in a new clean energy initiative. Only A$3.5 billion, however, is new money and A$2.4 billion of that will go to "low emissions coal technologies." This includes A$2 billion in new funding for large carbon capture and storage projects.

Renewable energy will "get a few crumbs" from the coal table, says Mark Diesendorf from the Institute of Environmental Studies at the University of New South Wales. These crumbs amount to A$1.5 billion, with A$1.4 billion allocated to the solar sector. Wind may benefit from the extra A$100 million budgeted for the Renewables Australia agency. With total funding of A$465 million, the agency is being established to support leading-edge technology research and help bring it to market.

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