Wind finance boost from Australia policy revamp

AUSTRALIA: The Australian wind sector is cautiously welcoming proposals by the government to overhaul its flagship system for financing renewable energy projects.

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Last month, the government moved to arrest the collapsing price of Australia's renewable energy certificates (RECs), the main tool for achieving the country's renewable energy target of 20% by 2020, by proposing to split the scheme between small and large projects.

The price of RECs fell last year after the government introduced a so-called solar credits multiplier, opening the scheme up to small-scale renewables, typically rooftop solar water heaters and heat pumps. This pushed a huge number of RECs onto the market, causing REC prices to fall from a high of A$50 earlier in the year to around A$30.

The government's proposed Large-scale Renewable Energy Target (LRET) aims to generate around 41,000GWh from renewables by 2020, including commercial wind projects. The Small-scale Renewable Energy Scheme (SRES) would cover the remaining 4,000GWh of the RET. The REC price for small-scale schemes has been fixed at about A$40/MW.

The proposed split brought instant results, with utility AGL, a wind developer in Australia, saying the move, if fully implemented, would give it investment security to proceed with projects recently put on ice due to the price slump. Other wind developers want to see detailed legislation before giving the plan unreserved support.

"This proposal demonstrates that the government has been listening to the industry," says Pacific Hydro's general manager for Australia, Lane Crockett. "We call on both houses of parliament to work to pass the legislation quickly and provide the certainty needed for the investment to flow."

Australian solar consultant Warwick Johnston at SunWiz says the government is unlikely to phase out the solar multiplier, as this would wipe out the small-scale renewables market. The RET split means large-scale wind should not be affected by retaining the multiplier, but this could occur if small system prices fell by 10-20%, increasing demand and pushing further RECs onto the market.

The government will soon consult on the proposals and introduce legislation mid-year.

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