Confusion over Canberra's plans to cut the Renewable Energy Target (RET) will cost NSW at least $2.5 billion in investment by 2020 and mean the state will fall short of the Baird government's own target for clean energy, industry groups say.
Federal Industry Minister Ian Macfarlane this week signalled the Abbott government wants to secure Labor support to slash the present target of 41,000 gigawatt hours of electricity from large-scale generators a year by 2020 by about 40 per cent to cope with an oversupply in the market.
Agreeing to that lower target – 27,000 GWh a year – would place at risk some if not all of 10 new wind farms that have been approved for construction in the state, the Clean Energy Council said. Instead of $5.28 billion in new investment between now and 2020, the inflow would shrink to about $2.8 billion, the council said.
Households appear to be spared by the government's plans, with the popular upfront subsidy that reduces the cost of new solar panels or solar hot water systems by about 40 per cent likely to be retained.
"They see the smart area to support is residential solar," said Nigel Morris, director of Solar Business Services, a consultancy. "That's where the votes are."
Uncertainty over the sector has raged for the past year after the Abbott government began signalling plans to break a pre-election promise to the leave the RET alone.
Its hand-picked Warburton review, led by businessman and climate sceptic, Dick Warburton, found that the scheme transferred billions of dollars in wealth from fossil fuel companies to renewable generators, with cuts in carbon emissions more costly than the now scrapped carbon price of about $25 per tonne of carbon dioxide.
One effect of the speculation that the government would slash the RET has been a pick-up in demand for solar panels. This rose 10 per cent in the September quarter in NSW and 8 per cent nationally, according to data from Green Energy Markets.
The jump prompted Green Energy to lift its 2014 forecast for new solar PV installations by about 7.5 per cent to about 785 megawatts in 2014. It estimates about 800MW was added last year.
The outlook for large-scale renewable energy, whether for wind or solar, is much gloomier.
Projects such as the Sapphire Wind Farm, planned by CWP Renewables for a site west of Glen Innes in the state's north, is the largest of 10 wind farms approved by authorities that is unlikely to proceed if the government's planned cut to the RET goes ahead. The project includes 159 turbines with a total capacity of about 326MW.
While the government looks likely to leave the residential solar alone, it remains unclear whether the remainder of the small-scale component of the RET – covering units up to 100 kW capacity – will be retained.
The Warburton review recommended cutting the size of solar units covered by the small-scale support to 10kW capacity from 100 kW now. So far, Mr Macfarlane and Environment Minister Greg Hunt have only spoken in favour of keeping "residential" support.
"It's the growth part of the market and the part that makes the most sense," Mr Norris said, noting the share of new commercial installations has doubled to about 20 per cent over the past year.
New units can supply electricity at about 15-20 cents per kilowatt-hour compared with flat prices most small business pay of about 36 cents.
That's once a myriad of obstacles thrown up by networks – owned in NSW by the government – are cleared, Mr Norris said. "There's nowhere to complain and no competition."
The Baird government, meanwhile, has a target for sourcing 20 per cent of its power from clean energy by 2020-21.
Anthony Roberts, Minister for Resources and Energy, said this week that nothing had changed.
"We remain committed to promoting NSW as a destination for investment in the renewable energy sector, in line with the NSW Renewable Energy Action Plan," Mr Roberts said.
