Electricity retailer 'strike' unplugs renewable sector's growth plans

A "buyer's strike" by two of Australia's biggest electricity retailers is potentially stalling growth in the renewable energy industry just two weeks after the government gave its backing for the sector, a big renewable energy supplier said.

Andrew Richards, executive manager of corporate affairs at Pacific Hydro, said EnergyAustralia and Origin Energy, which control more than half the national electricity market, had halted the signing of long-term power purchase agreements with wind and other renewable energy suppliers, in effect blocking developers from securing loans for new projects.

"For whatever reason, they're just not contracting," Mr Richards said. "Unless they start contracting, you just simply can't get the finance - particularly non-recourse project finance - to build these projects."

Last month, the government agreed to leave the renewable energy target largely unchanged after its latest biennial review.

Under the policy, large-scale generators must supply 41,000 gigawatt-hours of renewable energy annually by 2020.

Origin Energy chief executive Grant King last month said renewables would supply closer to 27 per cent of electricity - exceeding the scheme's original target of 20 per cent - by the end of the decade.

Mr Richards said Origin and EnergyAustralia appeared to be adopting a wait-and-see approach before the election in September, betting that the Coalition would weaken the target if it won office.

A spokeswoman for Origin said the company was well positioned to meet its target obligations and customer demand for cleaner energy.

Origin's most recent power purchase agreement, signed in May last year, was for the 270 MW Snowtown II wind farm, the company's largest such deal.

The company can develop its own wind farms, execute agreements with other wind developers or buy renewable energy certificates on the market to meet its targets, the spokeswoman said.

AGL, with its larger investments in renewable energy, mostly supplies its own renewable needs. EnergyAustralia did not comment.

Australia's small market left it open to domination by large retailers, Mr Richards said. Smaller players struggle to convince banks to fund projects over 10 to 15 years.

The big three "are, unfortunately, just holding the industry in the palm of their hand", he said. The Clean Energy Council estimates the renewable energy target had drawn in $18 billion in investment since its inception in 2001, a figure that could double by 2020 if policies remain unchanged.

The Coalition has backed the renewable energy target but plans to review the policy next year.

That review "is a sliver of light that [the big retailers] think they can exploit," Mr Richards said.