The carbon price is finally dumped and Australia’s coal-fired generators can claim a major victory, and the prospect of increased profits. The immediate and medium term outlook for the renewable energy industry is a lot less rosy.

The move by Australia to become the first country to repeal a carbon price is expected to accelerate a switch back to coal-fired generation from gas – already triggered by the soaring gas price. Analysts say this will reverse many of the gains in electricity sector emission reductions obtained over the last two years.

Coal-fired generators, with pockets still bulging from more than $2 billion in handouts (including $1 billion in cash for “industry protection”), say the carbon repeal will boost earnings and make their assets more valuable in the long term.

Large scale renewable energy projects, meanwhile, remain at a standstill, whether they be a number of 3MW solar projects scattered through the eastern states, or 600MW wind energy giants proposed for South Australia.

AGL Energy underlined this point last week when it said the carbon price repeal will have a “materially positive impact” on the long term value of its Loy Yang A brown coal generator that it bought in 2012.

Deutsche Bank, in an analysis published last week, also noted that Macquarie Generation, which AGL is also proposing to buy, would also have its value lifted by the carbon price repeal. “The removal of the carbon tax is positive for earnings at MacGen,” it said.

Its not just the carbon price repeal that is good for the coal-fired generation business. As AGL also noted, the value of Loy Yang A, and presumably also the 4.6GW of coal-fired generation acquired through MacGen, will also be boosted by “any reduction in the renewable energy target.”

This promises to be the next big policy battleground between the incumbent fossil fuel generators and those that seek to replace them in what now appears to be an abandoned transition to clean energy sources.

The Abbott government has made attitude to renewables abundantly clear. It has moved to scrap both the Clean Energy Finance Corp and the Australian Renewable Energy Agency. Both are seen as critical to unlocking the huge reserves of renewable energy in Australia.

The Abbott government is also seeking to dismantle the Climate Change Authority, which angered the Coalition – and the fossil fuel industry – because of its support for the current renewable energy target in its review in 2012, and for its more recent push for more ambitious emission reduction targets.

Right now, the Abbott government’s most potent weapon is uncertainty. The mere prospect of yet another review and the push by influential lobbyists to severely cut back or even halt the RET has had devastating consequences.

As we reported last month, no new large scale projects relying on the RET have been commissioned since late 2012, because of a lack of contracts signed by large retailers and the lack of finance.

Bloomberg New Energy Finance last week said just $40 million was invested in large scale renewables in Australia in the latest quarter – the lowest since 2001 – as investment boomed to more than $63 billion in the rest of the world.

Almost all the renewable energy investment in Australia in the last two years has come from households investing in rooftop solar –and households across the country are continuing to sign up at a rate of 15,000 a month, and are looking increasingly to battery storage in response to soaring electricity prices, unfavourable tariff arrangements, and their frustration with utilities.

In turn, the utilities are fighting back by calling for an immediate end to remaining support mechanisms, and have successfully called for the removal of any compulsory feed in tariff in some states, and even prevented any feedback into the grid from rooftop solar in Queensland.

But the debate is now taking an interesting turn, with consumer groups now pushing back against the three biggest retailers – Origin Energy, AGL Energy and EnergyAustralia – who are seen as the most antagonistic towards the RET.

(Actually, this is not quite true, as the most vocal opponents of the RET have been state-owned generators such as Stanwell Corp and CS Energy, and some smaller retailers – even those with a supposed “green” tinge” – have also called for the target to be reduced. See our story, Who is the greenest retailers in Australia).

However, the bigger retailers are an easier target than generators, because consumers have not just voice their disapproval, they have the power of choice and can change their service provider.

Get Up has launched a campaign against the “Big 3” – accusing them of doing “everything they can” to push Abbott into weakening the renewables target.

“The Big 3 power companies are using their might to wreck renewables. Only a large public outcry, especially from their customers and shareholders, will stop them,” the campaign says.

“The impact of the Big Three’s plans would be devastating for consumers, job creation and the cost of your energy bills, while they reap windfall profits as power prices soar.

“It’s selfish and short-sighted business with no care for their customers or the economy. With the Renewable Energy Target under review right now, we need to shift the game — and quickly.”

Meanwhile, the coal fired generators are laughing all the way to the bank. Under the Energy Security Act, the most polluting brown coal generators were given $1 billion cash between them in 2012, and then $1 billion worth of permits in 2013, with a cash-back facility at the Clean Energy Regulator.

If any generator still holds those permits, they can either hand them in when they finalise their 2013-14 liabilities, or exchange them for cash. It was designed as one-off compensation, handed out over five years, supposedly to help the highest-carbon generators cope with the impact of the carbon price.

As one analyst put it:

“The rationale was that the compensation would keep the companies or assets solvent and allow them to refinance debt in an orderly way while keeping the lights on. The compensation wasn’t designed to offset their annual carbon liabilities, though of course that’s how the companies used it.

“The really objectionable thing is that they got two-fifths of their lifetime compensation for the impact of the carbon price but were only subject to the carbon price for two years. Their asset values will have bounced back with repeal of the carbon price, but they get to pocket the compensation anyway.”

The coal fired generators will also be pleased by the apparent focus of Environment Minister Greg Hunt on coal-fired generators under the handouts to be considered under the Direct Action plan. The irony is that this plan will now rely heavily on assistance from the Clean Energy Finance Corp that the government was so determined to destroy.