Renewables hurt by 'buyer strike'

A "buyer's strike" by two of the country'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.

"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 said last month 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, and regularly reviewed the timing of any future investments.

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 was contacted for comment.

Australia's relatively small market left it open to domination by a few large electricity retailers, Mr Richards said.

Along with AGL, Origin and EnergyAustralia control about three-quarters of the electricity retail market serving most of the ACT, NSW, Queensland, South Australia, Tasmania and Victoria.

Smaller players struggle to hold large enough customer bases to convince banks to finance projects over 10 to 15 years. The big three "are, unfortunately, just holding the industry in the palm of their hand", he said. "It's a bit unfortunate for those with [renewable] projects out there ready to go."

The Coalition has so far backed the renewable energy target although it plans to review the policy next year.

A spokesman for Climate Change Minister Greg Combet said Coalition support for renewable energy was as paper thin as their views on the science of climate change itself.