Australia moved on Tuesday to give clean energy investors greater certainty over investment returns as part of efforts to have a revised renewable energy scheme approved by parliament.
As one of three amendments, Climate Change Minister Penny Wong said the scheme’s renewable energy target could be temporarily raised in 2012 and 2013 to absorb a boom in renewable energy certificates (REC) generated from household solar panels.
These green energy certificates are bought by carbon-producing power generators and designed to help meet the country’s 2020 target of 20 percent of energy from renewables.
The higher the REC price, the better the returns for investors in wind, solar power, geothermal and other projects, with investors saying proposed wind farm projects are only viable if the REC price is around A$65, against a current price below A$40.
Approval of the amendments, due before the Senate later on Tuesday or Wednesday, would be a rare victory for Prime Minister Kevin Rudd, whose efforts to introduce emissions trading have been shelved. Other key policies have also been stalled because of fierce opposition.
His popularity has plunged ahead of elections later this year, in part because he is perceived to have failed to follow through on a mandate to fight climate change.
Consultation
The move to raise the target, which increases in phases up to 2020, follows consultation with opposition parties, financiers and the renewable energy industry.
The plan now before parliament is to establish a small-scale renewable energy target with a fixed REC price and a large-scale renewable energy target (LRET) for big green power projects.
Existing RECs will be transferred to the LRET scheme where prices will be determined by market forces.
Market reaction to the proposal to temporarily raise the annual target was muted, with REC prices moving to A$38.50 from A$38.25. AUELEC286 “The market is waiting for certainty that the revised legislation will be passed,” said a Melbourne-based energy trader.
