Solar Power in the shade

Herald Sun
Saturday 8/9/2007 Page: 109

ANYONE wondering why overseas countries are clamouring for our solar power expertise while in Australia the sun is setting on this energy source's commercial potential might ask if the alliances the renewable sector has struck with large polluting companies could be a factor. In the wake of APEC 2007, where climate change has been a big issue, some solar energy experts have claimed that the renewable sector has made only half-hearted and late attempts to push their case, instead of hitting out hard with demands for concrete policy action in round one.

Expatriate Australian solar thermal scientist David Mills, whose company Ausra has major Silicon Valley investors behind it, cannot understand the ambivalence Down Under. "The studious avoidance of large-scale solar technology in Australia is incomprehensible," Dr Mills told Business Daily. An inability to find sufficient private finance to take his solar thermal technology to market drove him out of the country last year and into the incubating arms of Khosla Ventures in California.

Run by Vinod Khosla - whose other underwriting success stories include Sun Microsystems, Amazon and Google - Khosla Ventures will oversee a soon-to-be announced commercialisation of the innovation Dr Mills developed when he was at the University of New South Wales. "Silicon Valley is all about ideas and ideas are god here," Dr Mills told Business Daily. "It's easier to secure money for research and development here, there is no doubt about it. We are able to access more than six times the amount of funds offered to us in Australia. "Our Australian finance partner was running out of money and not meeting its goals. They never gave us a single penny. "We talked endlessly to banks in Australia and they wanted to give us very little for the equity they demanded. "Investors here are happy to fund innovation and they like to play a big role in sculpting a business they are not passive in the same way they are in Australia," says Dr Mills, whose company has to compete with more than a dozen other solar enterprises in Silicon Valley for deals with utilities.

Also on the board of Ausra is former Oracle president Ray Lane, whose private equity group Kleiner Perkins Caulfield & Byers is about to kickstart Dr Mills' plans for building solar farms around the world that he says will produce electricity for less than coal can. AUSRA had planned to have a solar farm up and running this year, but the utility he has signed on with has asked for a plant twice the original size and the company now has to join a lengthy queue for delivery of massive turbines.

Dr Mills, whose company is still 40 per cent owned by Australian interests, says he looks forward to the day when Australian policies more openly encourage the development and deployment of technologies such as his. "We'd love to see that happening so we can come out and be a gorilla with lots of lobbying clout," he says.

From his Palo Alto headquarters, he has been watching the climate change debate evolving in Australia and his assessment is that there is much "parish pulpit politics" going on. "You have people there who instinctively want to protect the things they dig out from the ground," he said. "They are psychologically attached to it and I don't just mean the mining companies, it is also the unions who want to protect jobs who are helping to shape the government's pro-coal position." Dr Mills says the swing away from coal in the US is gathering speed.

"Eight coal plants were recently cancelled in Texas, a 2000-megawatt plant has been shelved in Florida and three have bitten the dust in Nevada. "Coal is definitely falling off its perch here." Dr Mills is sceptical about the $15 million plus commitments Prime Minister John Howard made during APEC 2007 this week to alliances with US geosequestration and nuclear research projects. "It looks like a show between two governments that have pegged themselves to fossil fuel technologies." Although solar energy is frequently cited as one of several panaceas for a carbon constrained economy, the fact is that this embryonic technology does not have solid representation in Canberra because so far, commercial solar operations in Australia are tokenistic.

Yet in Germany, China, the US and dozens of other countries, solar companies are making electricity and punching above their weight in energy policies that acknowledge solar has a major role to play in meeting renewable energy targets that in some cases are up to six times greater than our own. When the new peak group representing renewable energies in Canberra - the Clean Energy Council - has fossil fuel titans on board, it is hard to believe that group is single-minded about promoting technologies that are emission-free.

CEC chief executive Dominique La Fontaine denies that the organisation is in bed with the high carbon emitters, yet Paul Anthony, the chairman of her board, is also the chief executive of AGL. AGL in turn is part owner of Victoria's largest coal-fired generator, the Loy Yang A power station. Author of High and Dry, Guy Pearse, a former spin-doctor for the Liberal Party turned global warming warrior, says it appears the climate change jargon being used by the pro-renewables and the pro-fossil fuel camps is almost interchangeable.

The lines used over and over by all the voices within the energy industry go like this: "There is no silver bullet solution to cutting carbon emissions","We need a suite of low-emission technologies to address climate change","Renewables, gas and clean coal should all have a part to play in the mix". "It is interesting to see how the clean energy crowd have bought into the same language that the polluting industry uses," Pearse says. "They are all being very polite to each other and if this pattern continues, one of the dangers is that we will end up with an emissions trading scheme that keeps all sides happy, but is ineffective in reducing carbon emissions."

Pearse believes that it is feasible that when carbon trading is introduced in Australia, that big polluting industries could get sufficient free carbon permits that would nullify any incentive reduce emissions. He adds that in order to appease the renewables, the carbon price would be set high, thereby making it profitable for them to be in business. CEC's Ms La Fontaine, a former forestry industry lobbyist before joining the Australian Wind Energy Association, admits that the CEC conducts its lobbying in "a businesslike fashion" rather than tackling the fossil fuel sector head-on.

"If we are to be heard, we have to approach it from a mature perspective," she says. By contrast the clean energy industry in Europe is more confrontational, one source told Business Daily. "In Germany, in particular, they turn up to meetings in a very aggressive mood and tell the coal industry that they want to shut them down," he said.

Yesterday, CEC called for clear, meaningful investment incentives to be the centrepiece of any greenhouse policy framework from APEC. "To address the climate change threat requires multi-billion dollar investments to modernise our energy infrastructure. "The cold-hearted reality is that financiers are not willing to invest money based on aspirational statements," said Ms La Fontaine. CEC wants a renewable energy target of 20 per cent of the electricity market by 2020 to stimulate investment in the sector.