Popular will finds another way out

Australian
Thursday 25/2/2010 Page: 3

EARLIER this month, the first Australian order for wind turbines for 2010 was made. It was also the first in three months and just the second since the bottom fell out of the market for renewable energy market in October.

The order was for just two wind turbines, with a capacity of 4 MWs and a likely cost of $10 million. It was made not by a commercial windfarm developer, but by a 1100-strong community group in Victoria's Hepburn Springs, who have decided to chip in anything from a few hundred dollars each to make their shire carbon neutral, at least on the energy front.

The previous order came in November, when Infigen Energy put in a request for 20 turbines. Before that was a 37-turbine order from another windfarm developer Roaring 40s the last order before the crash in renewable energy certificates (RECs). To put this into a broader global context, according to the Global Wind Energy Council, the world wind turbine market was valued at $US63 billion in 2009.

While Australia completed the installation of 406MW during the year much of it to meet mandated offsets from desalination plants, some 10,000MW was installed in the US (with 4011MW coming in the last quarter alone), and 37,000MW of capacity was installed worldwide. All that is history. What is particularly troubling supporters of a clean energy industry in Australia is that, for the moment, the outlook looks even worse.

The development of wind and any other renewable resource has been stalled by problems surrounding the government's Renewable Energy Target (RET). Wind developers simply can't get the financing or the power purchase agreements they need to fund projects. Some biomass projects are under threat because of the fall in the price of RECS. The outlook is certain in other technologies.

Geothermal industry is going through the painstakingly slow and expensive process of deep drilling, while other technologies such as large-scale solar and marine energy do not benefit from same incentives enjoyed in Europe and elsewhere, and only a handful of projects have been chosen to receive direct assistance. Many of these will not see the light of day until 2014, and, like the wind industry, have little opportunity to establish a local supply chain that could support manufacturing and jobs any time soon.

Some renewable energy developers, such as Pacific Hydro, predict it will be another three to four years before any major development gets financing approval, unless the problems with the RET can be resolved. The only projects that are going ahead are those mandated to support and offset the energy use of state government-built desalination plants. The problem is what to do about it. Here, the renewable energy industry does not speak with one voice.

There is disagreement among the different technologies and energy associations about whether "banding" of the RET essentially reserving a given percentage of the RET to a particular energy source or having multipliers is a good idea or not. The government is focusing its review on the inclusion of heat pumps and solar hot water systems, as well as coal mine waste methane. There is no doubt that RECs credited to heat pumps and solar hot water have flooded the market. Some say this is absurd, as they don't generate energy. Others respond that their use means less energy from elsewhere is used.

The geothermal industry, which wants a strong REC price to support development of direct energy sources, but also sees strong opportunities in the use of geothermal heat for air conditioning and manufacturing processes, finds itself delicately poised on the issue. Many still argue that the best incentives are those that provide some certainty such as tax incentives or loan guarantees. Instead of a sometimes hidden selection process, the market can decide which technology it likes best. So if large-scale commercial developments struggle for approval, perhaps community ownership is part of the answer as it has been in other countries.

Simon Holmes a Court, who chaired the Hepburn project, has established a group called Embark that would like to facilitate up to 100 similar projects. "While many communities are still considering their response to climate change, the residents of Hepburn Shire Council can be extremely proud of the local efforts to generate clean power for Daylesford and many of the surrounding towns," Holmes a Court says.

He says community models could be used with other energy systems as befits the local conditions, be it wind, biomass or solar. There is clearly evidence that rural communities are becoming more engaged in the issue. Groups in NSW and South Australia are looking to become wind developers in their own right, while others are pushing their case to host the installation of large-scale solar energy facilities.