Clean Energy Council report says while Australia is on track to deliver the 2020 renewable energy target, ‘clear policy direction and support is required beyond 2020’

This article is more than 3 years old

This article is more than 3 years old

Renewable energy comprised 17% of Australia’s electricity generation in 2016, up from 14% the year before, but the industry is warning it needs policy certainty and support beyond 2020 if the growth trend is to continue.

A new report by the Clean Energy Council says 2016 was a year of recovery for the Australian renewables sector after the sustained policy uncertainty generated by the Abbott government’s review of the federal renewable energy target (RET) cost jobs and investment.

The report, to be released in Canberra on Tuesday, says the increased market share for renewables in 2016 was delivered by a 26% increase in hydro generation, which reflects improved rainfall in Tasmania and the snowy region.

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While it says the current level of activity means Australia is well on track to deliver the 2020 RET, the industry needs policy certainty to go on delivering the transformation.

“Australia is realising the significant benefits of backing the renewable energy industry,” the new report says. “For these economic benefits to continue, clear policy direction and support is required beyond 2020.”

The report draws attention to the falling costs of renewable energy, noting one of the “signature” trends of recent years has been the falling cost of large-scale solar power.

It notes the ACT government’s reverse auction scheme also “led to the cheapest wind power ever contracted in Australia, for $73 a megawatt-hour (MWh) at Stage 3 of Neoen’s Hornsdale windfarm in South Australia”.

“AGL appears set to go one better, with electricity from the Silverton windfarm reported to be as low as $65/MWh.”

It quotes data from Bloomberg New Energy Finance, which has the levelised cost of energy at $61-$118 per MWh, combined-cycle gas generation at A$74-90/MWh, solar generation at A$78-140/MWh and ultra-supercritical coal fired generation at A$134-203/MWh.

It points out a new coal-fired power station using carbon capture and storage, by comparison, has a levelised cost of energy of approximately A$352/ MWh.

The Clean Energy Council chief executive, Kane Thornton, said large-scale solar power is now playing a major role in meeting the RET.

He said investments are scheduled to accelerate in 2017. “While total investment in large-scale renewable energy was $2.56bn last year, $5.20bn worth of projects have secured finance in just the first five months of 2017 and have either started construction or will begin this year.”

Thornton said current employment figures for the industry reflect the fact renewables is still emerging from the Abbott government-induced doldrums.

“While the latest available employment figures show an industry contraction to 11,150 direct jobs in the 2015-16 financial year, these figures cover a low point for the sector following the Abbott government’s RET review,” he said.

“Employment figures are likely to increase substantially in 2017 with over 35 large-scale projects already under construction or starting this year, adding up to more than $7.5bn in investment and more than 4,100 additional direct jobs.”

The Turnbull government has signalled its current review of the Direct Action climate policy could see an overhaul of the federal RET.

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There is also a widespread expectation among industry stakeholders that the chief scientist, Alan Finkel, will use his final report into the national electricity market on 9 June to float a new low-emissions target along the lines John Howard proposed back in 2007.

Such a scheme would work in practice as a technology-neutral renewable energy target.

The Howard proposal required that a percentage of electricity be generated annually from “low-emissions” sources, which was defined in 2007 as emitting fewer than 200kg of greenhouse gas per megawatt of electricity generated.

Separately to the Finkel process, the government has flagged changing the investment rules of the Clean Energy Finance Corporation to allow it to invest in more technologies, including high-efficiency, lower emissions (HELE) coal-fired plants.