Handouts lease wind power at risk

Australian
Wednesday 28/10/2009 Page: 4

THE federal government has been urged to consider a buyback of certificates issued under the Renewable Energy Target to halt a plunge in prices that threatens billion of dollars of investment in the renewable energy sector. Peter Yates, the head of utilities and climate change at Macquarie Group, said the slump in the price of renewable energy certificates to below $30 from more than $50 two months ago meant many renewable energy projects would not go ahead. "$30 means stop," Mr Yates told The Australian at the Carbon Markets Expo on the Gold Coast yesterday. "The government should be intervening in the market, buying certificates and holding them for sale later (when the price goes up). They could do that at no cost."

renewable energy certificates each represent one MW-hour of electricity and have been introduced by the Rudd government to help achieve its target of 20% renewable energy by 2020. The price of the certificates has been pushed down nearly 50% in the past six months because of a massive public take-up of solar hotwater systems, fuelled by the increase in the federal subsidy for them from $1000 to $1600. Analysts fear certificates from solar hot water and from rooftop panels will continue to flood the market for several years and make planned investments in wind and other emerging energy sources such as geothermal unviable.

Manufacturers of wind energy towers have been hit hard, with Keppel Steel, which builds about 40% of wind towers in Australia from its base at Portland in western Victoria, having to consider how it can keep employing 150 people. Keppel Steel manager Steve Garner, said the company built 140 wind towers last year, but this year it had built only 54. "The global economic crisis has had a lot to do with it. We've geared up for an expansion in this area we've spent about $12 million on new equipment but instead of that it's going backWard quickly," he said. "I've just spoken to the workforce today and told them what the situation is. And when you talk to people on the other side the guys who invest in wind farms they tell you that they'd like to invest, but at the moment it's just not worth it."

But Climate Change and Water Minister Penny Wong has indicated there will be no change in government attitudes until a review of small-scale technologies in the renewable energy sector is completed by the Council of Australian Governments in December. The Greens have called on the government to remove solar hotwater and heat pumps from the scheme, a position largely supported by the renewable energy industry. The Gas Industry Alliance also called for hotwater systems and heat pumps to be removed from the scheme because they were standing in the way of jobs creation.