Tuesday, 7 August 2012

Where did good policy go?

23 Jul 2012

Victoria's wind power sector is in a state of flux. After a strong run-up in capacity over the past few years, led by the 192 MW Waubra wind farm, plans for development have been curbed in the wake of new government guidelines-an all too familiar story for the clean energy sector. The new Baillieu government requirements, introduced last year, sees wind farms banned from many areas of the state as well as offering homeowners the right to veto any development within two km of their house.

Since the guidelines came into effect, there have been no new wind farm applications. The story is the same in New South Wales, where similarly arduous guidelines have been enforced. That's not good policy, unless you are actively looking to destroy an entire sector.

Keppel Prince, Australia's largest wind turbine maker, is a symbol of the problems. In the two months to June it reportedly cut over 10% of its workforce as demand dried up. The Portland-based company is at the heart of wind farm developments in Victoria, with four wind farms in the vicinity of its base of Portland on Victoria's western coast.

Keppel Prince, with around 450 staff at the beginning of the year, is not a big player from a global perspective, but it is indicative of the problems with clean energy policy in Australia in general. Peruse the Google News archives and you will see regular stories of job gains and job cuts as policy shifts dictate its immediate future. A major jobs announcement is practically an annual event.

The constant 'toing and froing' on policy across federal and state levels leaves the clean energy sector hopelessly exposed. Half-full rarely exists when it comes to turning Australia into a clean energy powerhouse.

Beyond wind farms coming under pressure in New South Wales and Victoria, this year we have seen solar PV face the risk of boom then bust in Queensland and the solar hot water rebate closure on a federal level. In all cases, the rules changed with little notice given. There are of course positives in clean energy policy, but even they are shrouded in doubt.

Solar Flagships Program offered great potential for the development of large-scale solar. We now sit three years after the $1.5 billion program was formed however, with just one confirmed project that will cost the government $170 million and create 159MW of capacity. At the start of the year that was going to be $770 million (which could have been reduced as solar panel prices had slumped) and around 400MW.

On the surface, the $10 billion of funding for the Clean Energy Finance Corporation is great news for the sector, but given the glacial speed of Solar Flagships Program, one must be wary of speaking too soon. Especially as the overwhelming favourite to win the next election, Tony Abbott, has promised to consign it to the scrap bin.

The carbon price is not perfect policy-with so many stakeholders in play that is not really possible-but it is a step in the right direction. It too is haunted by the Abbott shadow, however. While a repeal may be unlikely, the fact it is regularly canvassed undermines the power of the legislation to help transform the nation's energy supply.

Fortunately, we still have the bipartisan renewable energy target, but now the likes of Origin Energy's Grant King are looking to change the rules. We await with baited breath the outcome of a crucial review of the RET by the newly formed Climate Change Authority-and hopefully some much needed certainty for renewable energy policy will follow. Without it, the Keppel Prince tale will become much more than a worrying trend.