Most obviously, to have any impact this product of a meeting of minds between the Greens and the Gillard government leadership has first to survive the next federal election, with the opinion polls showing that the ALP is in a death spiral.
Team Abbott has sworn to destroy the CEFC along with the rest of the carbon policy package negotiated between Julia Gillard and Bob Brown.
With the CEFC, which has yet to be legislated, only due to start operation on 1 July next year, it could be on its deathbed by the Christmas after next.
Other than those on the fringe of the green energy movement, what board of directors of an energy company is going to spend time and money negotiating with the CEFC on a project in the second half of 2013?
Given this fate awaiting it, I am not sure it matters where the CEFC will consider putting at risk taxpayers’ funds, initially $2 billion.
But, as an example of the difficulties any such venture faces, the report to the federal government delivered by Jillian Broadbent and her panel highlights the fact that the power grid is cited in many submissions as an inhibiting factor for investors in renewable energy and distributed generation.
What could the CEFC do to remedy this?
Well, it could cough up most of the $1 billion needed to build the CopperLink project in northern Queensland with a further leg-up of $300 million from Canberra – which is what Wayne Swan promised Bob Katter he would give the proponents before AGL Energy and the miners bowled the venture middle stump by opting for a plain Jane gas plant near Mt Isa.
The miners don’t need it now, so where will the geothermal developers and the wind farm proponents along the line sell their electricity? At what price?
And will the CopperLink developers get a regulatory tick for the project, meaning that they can charge Queensland consumers to recover the investment, or will it need to be a merchant line chasing customers?
It won’t be CEFC or the federal government that decides this but an independent regulator.
Again, looking at trigeneration, which is a love interest of Sydney Lord Mayor Clover Moore, Broadbent’s panel talks of lack of grid capacity and of appropriate feed-in tariffs inhibiting such developments.
Can you see the O'Farrell government giving a Sydney CBD trigeneration project a feed-in tariff this side of 2020?
The Broadbent panel apparently sees subsidised CEFC projects being able to participate in the Renewable Energy Target, which at least operates a market, albeit one where the retailers are forced to buy a fifth of their product from a certain area of supply.
What will allowing further subsidised green generation to compete in this market do to the viability of existing and proposed RET projects?
One sure-fire outcome of the panel report – which is a solid piece of work given the situation with which Broadbent and her colleagues were landed – is that, because it is not going to buy in to messing with power purchase agreements, the hissing and booing at the large energy retailers will continue.
Christine Milne has asked the ACCC to look at their behaviour over offering (or rather not offering) power purchase agreements to some of the fringe-dwelling large solar projects piggybacking on Gillard government subsidies, but it is hard to understand what aspect of the Trade Practices Act Origin Energy, AGL Energy and TRUenergy, who are fierce rivals in the marketplace, could have breached.
Stephen Bartholomeusz put his finger on the biggest problem renewable energy generators now face: the $10 billion Gillard proposes to throw at the CEFC exercise won’t add to green power capacity; it will displace what would otherwise be built under the RET (When clean finance is green waste, April 17).
There is something like $6 billion to $10 billion needing to be spent to build sufficient renewable capacity by 2020 to meet the RET – and now wind farmers, who realistically are the only generators who can deliver the required energy at a market price, have a new hurdle to climb.
In this respect, CEFC adds to the problems for wind power already created by the daft solar-promoting small-scale RET scheme through the introduction of phantom credits that have glutted the REC market.
As I pointed out in my last commentary (Devine's misguided Brown attack, April 16) – apparently giving offence to the Sunday Telegraph’s Miranda Devine en passant for disagreeing with her view that it is all Bob Brown’s fault – the independent NSW pricing tribunal has torn the small-scale RET to shreds in its report announcing new, higher costs for state householders and small business from 1 July.
The Gillard government may also not enjoy the report of its new Climate Change Authority late this year or early next year when it produces its first review – which will be of the state of the RET.
Keith Orchison, director of consultancy Coolibah Pty Ltd and editor of Powering Australia yearbook, was chief executive of two national energy associations from 1980 to 2003. He was made a Member of the Order of Australia for services to the energy industry in 2004.