Renewables industry concedes ground, but government still asking for 20% RET

The Clean Energy Council has laid bare its willingness to go to 35,000GWh yet Minister Hunt has reaffirmed his 27,000GWh position. However, the government may yet be willing to move.

The main industry body for the renewable energy sector, the Clean Energy Council, as well as the Labor Party have made a last ditch bid to get an agreement on the Renewable Energy Target before Christmas.

In a somewhat risky move, the Clean Energy Council has come out of their bunker position of saying that no change to the target is acceptable, and are now laying bare their cards. They state in a letter to Prime Minister Tony Abbott and Opposition Leader Bill Shorten, “While we do not accept there is any cogent public policy case for reducing the RET, in order to restore bipartisanship on the policy we would consider proposals with a target for RET in the mid-to-high thirty thousand in 2020.’’

Essentially, this will be read by the government as a concession to cutting the large-scale component of the RET (‘LRET’) from 41,000GWh in 2020 to 35,000GWh.

In addition, the letter said the targets for LRET’s interim years of 2016 and 2017 would have to be increased. This is important for utility-scale developers because it would act to quickly remove a large oversupply of renewable energy certificates hanging over the market and boost their price. This would then create pressure on power retailers to immediately start contracting to purchase power from new projects. 

This is especially important for the sector because there is a limited window left to build sufficient projects to meet the target and earn sufficient revenue before the scheme ends in 2030. There is a concern that if retailers feel they have some time up their sleeve before they need to buy more certificates, they’ll hold out on contracting with new projects in the hope they may be able to chisel government for further reductions in the target, or hold out due to a concern one of the other retailers will succeed in such a strategy.

Labor has already put out a statement saying they would agree to such a revision to the scheme. They also make clear they would not accept any changes to the small-scale scheme, which primarily supports rooftop solar systems.

However, in a response given to Climate Spectator on Labor’s acceptance of the Clean Energy Council compromise position, the government continued to emphasise its desire to reduce the target in line with capping renewables’ market share at 20%. A spokesperson for Minister Hunt stated:

"The Government is ready to resume negotiations bearing in mind the clear stated position that the energy market has changed and that the 20 per cent target based on 2009 forecasts no longer reflects market reality. Recalibration of the RET must take this into account and better align the target with changing consumption and market forecasts."

Such a statement seems to suggest that the government is unwilling to budge far at all from 27,000GWh.

If so, the CEC’s strategy of coming out of their bunker, dropping their position of no change, and pretty much giving away their minimum position has failed.

But it may not necessarily be that bad.

Climate Spectator replied to the Minister Hunt’s office’s, stating that the response suggested that the government wasn’t remotely interested in agreeing to what had been put on the table by the CEC, to which they replied:

"The Government has always been prepared to negotiate with the Labor Party on the RET. The specific details of those negotiations would take place in-confidence and we would again encourage the ALP to return to the table."

So maybe they aren’t saying a flat-out ‘no’ to 35,000GWh, but they haven’t given up on extracting further concessions.

The government and Labor are now in the process of arranging a date to recommence negotiations on changes to the scheme.