CLIMATE SPECTATOR: Renewables vs the retailers

I caught up with a few members of the renewable energy industry yesterday for what I thought would be a few celebratory drinks in light of the findings from the Climate Change Authority to keep the renewables target largely intact. Instead it was like a wake. When I asked why they pointed at a series of press releases that had come in that day.

Firstly let's take the electricity retailer EnergyAustralia as an example. This company is one of pretty much just three (maybe four if we include Synergy in WA) for whom project developers must obtain a power purchase agreement if they are to finance their projects. In response to the findings of the Climate Change Authority, EnergyAustralia could have said, ‘We disagree with its findings but we accept the umpire's decision and will do our part in trying to ensure the policy is achieved at minimal cost to consumers'. Or it could have said nothing. Instead it put out a defiant press release containing lines like:

– "The final recommendation of the Climate Change Authority to largely retain the current Renewable Energy Target design is a missed opportunity to cut power prices for Australian households and may threaten the long-term viability of the scheme”

– "We have grave concerns about the practicality of the current RET design, which requires over 2500 wind turbines to be built in the next seven years.”

– "We encourage the federal government in its response to the report to balance the CCA's findings with the impacts on energy consumers and the sustainability of the RET policy.”

In reading that does it sound like EnergyAustralia is about to get cracking on signing up to power purchase agreements? Especially when it knows that another one of the three major retailers – Origin Energy – also feels the same way?

For the members of the renewable energy industry I spoke to, their fear was that EnergyAustralia and Origin weren't about to give-up. Instead they were adopting a risky strategy of waiting it out until the federal election. If the Coalition were to win they'd have another go at lobbying to have the RET watered down.

And why wouldn't you when on the day that the CCA says no change to the RET, the opposition shadow energy minister puts out a press release stating:

"The Coalition will move to ensure comprehensive research is completed into the possible health effects of wind farms on residents and communities.

Shadow minister for energy and resources, Ian Macfarlane, said the Coalition is broadly supportive of a private members bill from Senator Nick Xenophon and Senator John Madigan to impose national standards on noise emanating from wind turbines.”

For those of you who haven't read the article, Wind turbine delusionalitis, this bill from Senators Madigan and Xenophon makes little sense and is completely redundant. It was comprehensively pulled to pieces by a Senate committee inquiry report only just a few weeks ago, stating:

"The committee concludes that, while it is possible that the human body may detect infrasound in several ways, there is no evidence to suggest that inaudible infrasound (either from wind turbines or other sources) is creating health problems. In contrast, there is an established literature confirming the existence of psychogenic, or nocebo, effects in general, and at least one study suggesting they may be responsible for symptoms in some wind turbine cases.”

Climate Spectator spoke to Ian Macfarlane about this bill and also the Coalition's position on the RET more broadly. Macfarlane was actually relatively reassuring on the nature of the Coalition's support for the Madigan bill, explaining that at present there was no strong evidence that wind farms caused health problems. He pointed out their amendments to the bill would remove the provisions imposing new noise limits on wind farms, although they would impose significant conditions on collection and reporting of noise data.

However, when asked about the Coalition's views on the Climate Change Authority's recommendations, he was less reassuring. He stated that the Coalition was supportive of keeping the gigawatt-hour targets for the LRET as legislated, but that this would be subject to a review in 2014.

He vigorously opposed the CCA's recommendation that reviews be stretched out to every four years. He indicated that while he was comfortable with renewable energy making up 20 per cent of power supply, he was concerned that with reductions in electricity demand this might blow-out considerably, possibly to greater than 30 per cent and this was unsustainable. When asked if 26 per cent market share (as projected by the CCA) was acceptable, he refused to provide a view.

This hedging on the target by the Coalition combined with EnergyAustralia's defiant attitude, means that until renewable energy sector start seeing electricity retailer signatures on power purchase agreements they'll be keeping the champagne on ice.