The deal has been done and the Senate has officially passed legislation to cut the Federal Renewable Energy Target by 20 per cent.
However, states like NSW don't have to sit back and watch their wind and solar sectors frustrated by the Abbott government and their anti-renewable energy crusade.
Not satisfied with gutting the RET by 8,000 GWh, the federal Coalition used the bill to create a “Wind Farm Commissioner” to give a voice to the discredited health concerns fuelled by the anti-wind farm lobby.
They also lifted the exclusion of native forestry biomass which will effectively steal credits from genuine renewable energy sources like wind and solar.
It is hard to believe that an Australian government is publicly conspiring to curtail the growth of a global industry that is attracting investment, creating jobs and reducing the nation's reliance on fossil fuels.
While the commitment of the Abbott government to destroying the industry is astounding, it is essentially futile. The economics of energy production and the global uptake of renewables mean that a shift away from fossil fuels is inevitable.
Each roadblock that the Abbott government, the Labor party and the conservative crossbenchers throw up won’t stop the global shift to a clean energy economy. It will delay the development of the technologies of the future in Australia and see this nation lose out on many of the benefits, including the jobs and investment.
The Prime Minister has nailed his colours to the mast of climate scepticism and anti-wind farm hysteria. It is unlikely that positive reforms for the clean energy sector will emerge from Canberra any time soon.
Unless the states and territories move quickly, they are facing a $6 billion hit to the wind and solar power industries and the thousands of jobs that come with the additional investment.
Up until now, state leaders like NSW Premier Mike Baird have hidden behind section 7C of the federal Renewable Energy (Electricity) Act 2000 to excuse their failure to introduce ambitious clean energy legislation.
Under this provision corporations are exempt from complying with any state laws that "substantially corresponds" with the renewable energy target legislation. If the NSW parliament were to revive and pass the state-based renewable energy target bill that was first drafted in 2006, it would be unenforceable.
However there are viable options to increase investment in large-scale wind and solar and plug the hole in the federal scheme.
Since 2012, the ACT has been conducting wind and solar reverse auctions which have proven to be a cost-effective mechanism to help reach their target of 90 per cent renewable energy by 2020.
Under the scheme, large scale renewable energy developers bid their projects into an auction, with a MWh amount and a proposed feed-in price that they would need to be paid for the energy they generate in order to be viable.
Successful projects are assessed on criteria including cost effectiveness and benefits to the state such as job creation. Under the ACT model, projects are assessed by an Advisory Panel and given a weighted score against each of the evaluation criteria.
Once the project is up and running, the electricity produced is fed into the national grid.
When the national grid electricity price falls below the feed-in price, the project receives a premium payment from the government to boost the price to the feed-in price.
If the grid price is above the project's feed-in price, the government takes the amount over the feed-in price. The pricing arrangement is referred to as a Feed-in Tariff (FiT).
In effect, the state government buys the energy at the feed-in price and then sells it into the grid at the going spot price, making a profit at high price times and incurring a cost at times when the grid price is lower. Under the ACT model the feed-in price is guaranteed for 20 years.
While scheme participants would normally be able to generate federal RET certificates, they are required to surrender them to the state government's scheme authority, which then discards them without selling them to a retailer or large consumer or trading them into the market.
The state-based scheme is consequently additional to the RET scheme while participants cannot double dip by gaining the benefits of selling their RET certificates.
Under the scheme, the 20 MW Royalla Solar Farm opened in September 2014. The Zhenfa Canberra and the OneSun Capital solar farms were also granted FiT (feed-in price) entitlements for their 13 and 7 megawatt proposals. The Wind Auction started in March 2014 with three successful bidders selected to meet a 200 MW target.
The cost has been minimal. The ACT government analysis estimates that the total cost of achieving 90 per cent renewables is expected to peak in 2020 at just $4 per household per week.
The ACT has led the way in developing policies to encourage large-scale clean energy projects. Now it is time for the other states to follow suit.
The benefits reach far beyond the individual projects. Such a scheme promotes confidence in the wind and solar industry and their bankers and further cements the role of clean energy technologies in the energy market.
The negotiations over the future of the RET were protracted and ugly and poisoned the industry with uncertainty. Now that they are over and the cuts have been laid bare, states can no longer stand idly by while the federal government continues to decimate the clean energy sector.
The Baird government in NSW has repeatedly stated that it is committed to a 'secure, affordable and renewable energy future for NSW.’ But leaving renewable energy policy in the hands of a Prime Minister that calls wind turbines 'visually awful' and a health hazard is a recipe for job losses and reduced investment.
It’s time to take the power back.
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