Wind power surge predicted
The Climate Change Authority on Wednesday called for the mandatory renewable energy target to be left at 41,000 gigawatt-hours per year by 2020, prompting advocates to predict a surge in clean energy investments.
Victoria earlier this year prompted the wind industry to all but stall in the state after it barred wind turbines from being built within two kilometres of a house without written consent. Now that the authority has given approval for the settings, as much as $18 billion of investment is up for grabs between now and the end of the decade, the Clean Energy Council predicts.
"Victoria has tightened up very greatly the opportunities for wind farm development," the managing director of Infigen Energy, Miles George, said.
To meet the renewable energy target, the industry will need to build 1000 megawatts of wind capacity each year until 2020, or about half of the current installed capacity.
ROAM Consulting data suggests the combination of proximity to markets and promising wind resources could see NSW's wind generating capacity soar 15-fold by 2020, leap-frogging South Australia and Victoria to be easily the biggest supplier.
The O'Farrell government is due to finalise guidelines on wind farms early next year, which may determine how much of the investment heads to NSW. It is understood the government has been considering rule changes in combination with the results of independent noise audits on two Infigen wind farms - Woodlawn and Capital - and one owned by Origin Energy that gave the suppliers a tick of approval.
"To have the audits done and have them confirm that we comply was obviously pleasing, and completely as expected," Mr George said.
While the wind energy industry celebrated the authority's recommendations, the solar sector was disappointed by the recommendations.
The authority has called for the size of solar photovoltaic panels deemed to be "small-scale" cut from 100-kilowatt capacity to as low as 10 kilowatts to prevent a blow-out in costs for the scheme.
Small-scale generators are paid their renewable certificates up-front while large-scale generators are paid over five years.
Roy Grant, chief executive of solar panel installer Mark Group, said the industry would lobby to have the government reject the change, which hammers the cash-flow benefit for the owners of small buildings and other potential installers.
"This effectively strikes out more than 90 per cent of the available commercial market," Mr Grant said. "The sweet spot for commercial installations is 50-70 kilowatts."
Mark Group had planned to triple its staff of 150 in 2013 based on the potential demand spurt from commercial users. "If this [revision] happens, there's very little chance we'll expand."
The shift is the result of fierce lobbying by fossil-fuel generators and the coal industry, he said.
"They know [the commercial sector] is the next significant growth area for solar," he said. "It's also some of their most prized customers because they use large amounts of power."
Frequently Asked Questions about this Article…
The Climate Change Authority recommended leaving the mandatory renewable energy target at 41,000 gigawatt-hours per year by 2020. For investors this matters because the unchanged RET is expected to drive a large pipeline of clean-energy projects and related investment opportunities across wind and other renewables.
Yes. The Clean Energy Council predicts as much as $18 billion of investment could be up for grabs before the end of the decade if the RET settings remain, and industry analysis says the sector will need to add about 1,000 MW of wind capacity each year to 2020 — implying significant project and supply-chain opportunities for investors.
State rules are key: Victoria introduced a 2-kilometre setback from houses that largely stalled wind development there, while NSW could see major growth — ROAM Consulting suggests NSW wind capacity could rise up to 15-fold by 2020. The O'Farrell government’s upcoming guidelines will influence how much investment goes to NSW.
Independent noise audits of two Infigen wind farms (Woodlawn and Capital) and one Origin Energy project gave those suppliers a tick of approval, which company leaders say confirms compliance and can help reassure regulators, communities and investors as states set wind-farm rules.
To meet the RET, the industry would need to build roughly 1,000 megawatts of new wind capacity each year until 2020 — which the article notes is about half of the current installed capacity — highlighting the scale of development required.
The Climate Change Authority proposed reducing the 'small-scale' solar threshold from 100 kW to as low as 10 kW. That change would shift many commercial systems from small- to large-scale treatment, cutting upfront renewable certificate payments and harming cash flow for owners and installers — a concern cited by Mark Group’s CEO.
Solar firms say lowering the small-scale threshold would remove the cash-flow advantage (upfront certificate payments) for most commercial installations, effectively eliminating more than 90% of the available commercial market according to Mark Group, and could stifle planned business expansion.
Investors should watch federal RET settings and, importantly, state rules (like Victoria’s setback and NSW’s upcoming guidelines), independent audit outcomes for major projects (which affect regulatory acceptance), and policy moves on solar classification — all of which influence where wind and solar investment and project opportunities will appear.
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