October 17, 2011
Australia

Wind farms to need new budgetary draft of $30bn by 2020

Annabel Hepworth and Sid Maher, From: The Australian, October 18, 2011 12:00AM, www.theaustralian.com.au 18 October 2011

Australia will need to spend a further $30 billion on wind farms by 2020 – about four times the capital investment in power stations in the national energy market during the past decade – to comply with the government’s enforceable targets for renewable energy generation.

Research commissioned by the Energy Users Association of Australia and to be released today finds that to meet the federal target for 20 per cent renewable electricity, the amount of wind generation will have to increase sixfold in less than 10 years – amid likely community backlashes over fears of noise pollution and loss of amenity.

It finds the $30bn in new spending will have to come on top of $12.1bn worth of federal and state subsidies for renewable power sources – including rooftop solar panels – that were installed between 2001 and last year and which industry and households will still be paying for during the next 20 years.

Energy users will pay $10.8bn or 87 per cent of these subsidies, with governments bankrolling just $1.3bn of the subsidy.

The findings underscore growing big-business frustration over the climate-change debate as the association’s members include mining giant Rio Tinto, Wesfarmers, Xstrata Copper and Simplot, the maker of well-known vegetable brands such as Edgell and Birds Eye.

Industry frustration has escalated since Tony Abbott warned companies last Friday not to buy future carbon permits under a scheme that he would seek to scrap should the Coalition win the next election.

Climate Change Department secretary Blair Comley told a Senate estimates hearing yesterday that uncertainty created by the Opposition Leader’s threat would ultimately increase the risk for electricity generators, driving up costs and consumer prices.

In other evidence to the committee, it emerged that the government’s $12 million advertising budget for the carbon tax had blown out by $4m to $16m.

Green groups – including the Climate Institute, the Australian Conservation Foundation and the Australian Youth Climate Coalition – were handed a total of $3m to promote action on climate change and support the government’s clean energy package.

The estimates hearing was also told that 4 per cent of solar panels inspected by the Climate Change Department were found to be unsafe, and up to 20 per cent were found to have a defect.

And the government’s efforts to control a glut in the renewable energy certificates created under the solar scheme were struggling.

The hearing was told the government’s clearing house had a backlog of up to eight months, with most sellers of renewable energy certificates selling them on the spot market for about $30 instead of the $40 price in the clearing house.

EUAA executive director Roman Domanski, who sent the research paper to Julia Gillard, Wayne Swan, Climate Change Minister Greg Combet, the federal opposition and state leaders late yesterday, said industries were worried about the rising cost of renewable schemes.

Mr Domanski said energy users were paying most of the subsidies to create green jobs and develop the renewables industry when this should be a government responsibility.

He also urged the $10bn Clean Energy Finance Corporation to focus on projects that could abate greenhouse gases efficiently.

“The track record of government spending initiatives, including on climate change, is not good,” Mr Domanski said.

The EUAA research finds that subsidies so far have had a “relatively muted” impact on power bills, and because the price rises had been deferred, this had “until recently provided little pressure on governments to seriously consider their renewables policies”.

But the modelling forecast that average electricity prices would be 10 per cent higher next year and there would be “significant” increases out to 2020 because the mandatory renewable energy targets were rising sharply.

To meet the federal Renewable Energy Target, energy produced by wind farms would need to rise from 1870 megawatts to 11,800MW by 2020 as the technical and economic potential of biomass, geothermal and hydro was limited until at least 2020 and probably to 2030.

“Even if the economics for renewables expansion are favourable, developing the industry at this rate will be an extraordinary achievement in a market economy with a community that has a sophisticated understanding of its civil and environmental rights,” the report says.

Not only will there be demand for blade constructors and electrical contractors, but environmental and developmental approvals will also be required. Hundreds of community consultations will be needed to deal with objections to “supposed or real loss of amenity, noise pollution and so on”.

Renewables installed between 2001 and last year were heavily skewed towards solar photovoltaics rather than more efficient technologies like wind.

About 30 per cent of subsidies have gone to solar photovoltaics that deliver less than 5 per cent of power.

The Howard government started the RET and rebates for photovoltaics and water heaters as an industry assistance measure, but the Rudd government shifted the focus to lower greenhouse emissions.