The renewable energy sector has reacted with dismay to the Federal Government’s recent directive, which bans the Clean Energy Finance Corporation (CEFC) from investing in wind and small-scale solar, the latter of which includes rooftop panels.
Treasurer Joe Hockey and Finance Minister Mathias Cormann issued the CEFC with a new investment mandate, which will redirect finance to larger solar developments and “new and emerging technologies”.
However, a report in Guardian Australia has stated that the CEFC is seeing legal advice on whether the directive falls within its investment mandate. It is understood that existing investment in wind and small-scale solar projects will not be affected even if the directive goes through; it will apply to future investments.
In response to a question posed on why the government wants to stop the CEFC from investing in wind farm projects when they pour hundreds of millions of dollars into the economy and create jobs, Prime Minister Tony Abbott said:
“Well, you know it is our policy to abolish the Clean Energy Finance Corporation because we think that if the projects stack up economically, there’s no reason why they can’t be supported in the usual way. But while the CEFC exists, what we believe it should be doing is investing in new and emerging technologies – certainly not existing wind farms.”
National Coordinator at the Australian Wind Alliance, Andrew Bray, told EcoGeneration that the directive is further evidence that Australia is moving in the opposite direction to the rest of the world, and says the move will severely curtail CEFC’s function.
“The CEFC has a portfolio of investments; some are high-risk, high-return new technologies, whereas the mature technologies give them balance against that. The government is directing the CEFC to take on more risk,” Mr Bray said.
Mr Bray said the overarching aim of the government is to implicitly abolish the CEFC by rendering them impotent, following its reiteration to abolish the Australian Renewable Energy Agency (ARENA), even though the latter gives the most assistance to the “new and emerging technologies” the government speaks of.
Mr Bray lauded the CEFC for what they have done and continue to do for the sector.
“The CEFC has shown that it is able to invest in clean energy in a way that drives regional jobs and delivers investment into regional communities, in a way that delivers positive outcomes for Australian taxpayers.
“Australians want to see more renewable energy and the CEFC has shown that this can be delivered in a way that is good for government coffers.”
Despite threatening the existence of CEFC – which effectively makes money which is then returned to the Budget bottom line – Mr Abbott stressed that the government “supports renewable technologies”.
“We really do want to see appropriate use of renewables in our overall energy mix, and at the same time as supporting renewables, we want to ensure that power prices are as low as possible…”
Roger Price, Chairman of global wind energy developer Windlab, told EcoGeneration that the Federal Government’s comments about helping the average punter with lower electricity prices are “paradoxical”.
“We’ve now got a RET that will see significant investment in renewables, but judging by the government’s actions, they’re not prepared to advocate for the cheapest renewables that will drive down the price of electricity. I don’t understand how that’s not a breach of trust to the electorate,” Mr Price said.
Mr Price said the move is a “cynical move to really nobble the CEFC” without needing to change legislation in the Upper House, referring to how the Federal Government tried to abolish the CEFC last year, only to have the legislation blocked by Labor, the Greens and Palmer United.
Federal Shadow Minister for Environment Mark Butler echoed Mr Price’s sentiments and said the Federal Government is effectively blood-letting the CEFC since its attempts to abolish it have been fruitless.
“At the beginning of the year, the Minister requested the CEFC to increase its return rate while freezing its risk profile, contradicting the most fundamental tenet of financing that risk is directly related to rate of return.
“As that stunt failed to stem the flow of investment to the CEFC’s projects, the Minister has now banned the CEFC from investing in wind and now solar,” Mr Butler said in a statement.
Mr Price said the directive sends the wrong message to a raft of international investors who are “willing, wanting and able” to invest tens of billions of dollars in Australian renewables. This uncertainty extends to Windlab, who may prioritise other international markets in lieu of Australia.
“We are hopeful that over the medium term, this current noise will subside and we’ll see common sense and logic. However, we are now more cautious about investing in Australia – compared to the US, South Africa and even emerging markets like Kenya and Tanzania. That’s a dynamic you wouldn’t normally see.”
Conversely, the small-scale solar market may not be as badly affected as the wind market.