Australian renewables investment damaged by Abbott policy risk

• 10 years ago (2014-08-22)
• Junior Isles

North America 1021 Renewables 776

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Australia’s renewable energy industry is already predicting project cancellations due to policy risk even before Prime Minister Tony Abbott decides whether to overhaul the 20 per cent by 2020 renewable energy target (RET), according to solar industry sources.

Abbott has placed Dick Warburton, an anthropogenic climate change sceptic, in charge of reviewing the RET, and several developers have consequently announced they are reconsidering planned wind and solar farms.

Silex Systems has pulled the plug on its $70 million, 100 MW Mildura Solar Concentrator Power Station citing the policy risk.

“The reported intentions of Mr. Abbott amount to economic vandalism, pandering to the climate sceptic minority and represents a total misread of community aspirations,” said Miles George, managing director of Sydney-based Infigen Energy, which has stakes in 24 US and Australian wind farms.

Around 1000 MW of renewable projects would be cut if the government scraps the RET, George stated, noting that investors are troubled that Abbott is even considering such a drastic change to a bipartisan policy.

“There’s a lack of appreciation at the government level of the sovereign risk and investment value implications of a dramatic cut in the target,” George said. “It’s reckless.”

Australia’s spending on large-scale renewable energy projects has fallen dramatically from A$1.3 billion in the first half of 2013 to barely A$58 million in the first six months of 2014, according to Kobad Bhavnagri, head of research at Bloomberg New Energy Finance, Sydney.

Suzlon Energy has described a potential abandonment of the RET as “catastrophic” for the industry and said it will reconsider investment in the A$1.5 billion Ceres wind farm if the policy is scrapped.

Solar Systems Pty has halted plans for a 100 MW solar PV plant in Victoria, one of the largest projects of its kind in the world.