Changes made to renewable energy scheme

26 Feb 2010, 4:46 pm   -   Source: AAP
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The federal government has made changes to its renewable energy target scheme, saying doing so will enable it to exceed the 20 per cent target by 2020.

The federal government has moved to quarantine large-scale renewable energy projects after demand for installing rooftop solar panels and hot water systems caused investment in the sector to crash.

Households that install technologies such as rooftop solar panels and developers that invest in renewable energy receive rebates in the form of credits which are bought by energy retailers to meet a requirement to produce a certain amount of energy from renewable sources.

But investment in large-scale renewable energy projects such as wind farms and geothermal developments collapsed after the rebates prompted a surge in demand from households, causing the value of the credits to fall dramatically.

From the beginning of next year, the Renewable Energy Target (RET) scheme, which guarantees 20 per cent of Australia's energy will come from renewable sources by 2020, will be split into the Small-Scale Renewable Energy Scheme (SRES) and the Large-Scale Renewable Energy Target (LRET).

The LRET will deliver the vast majority of the 2020 target.

The changes were immediately welcomed by the sector, while the price for renewable energy credits leapt from $36 at the close of the market on Thursday to $42.50 at 1420 (AEDT) on Friday.

Climate Institute chief John Connor said the changes would provide greater investor certainty needed for large-scale renewable energy projects.

"We don't yet have all the details of the proposed changes, but it appears many of the problems of the old RET scheme will be ironed out," Mr Connor said.

"The small-scale incentives have been acting like a cancer on confidence for those wanting to invest in large-scale technology."

Climate Change Minister Penny Wong said the changes would free the large-scale projects from uncertainties that may have been caused by strong demand for small-scale renewable technologies.

"We anticipate under these changes we will exceed our 20 per cent target by 2020," Senator Wong told reporters in Canberra on Friday.

But she was reluctant to nominate by how much the target would be exceeded, saying that depended on the take-up by households.

"What that will deliver is certainty to the large-scale market," Senator Wong said, adding the change aimed to drive investment.

The changes meant the average household would pay between $3 and $4 more a year in electricity charges, Senator Wong said.

The changes are yet to be approved by the Parliament.

Coalition environment spokesman Greg Hunt said the government was warned the original scheme would destroy investment certainty for major solar, wind and geothermal projects.

"The coalition will be consulting with the renewable energy sector, including solar hot water, regarding the adequacy of Labor's proposal and will closely scrutinise the required legislation when it is introduced," Mr Hunt said.

Australian Greens senator Christine Milne said the changes meant thousands of Australians employed in building and running renewable energy power stations could breathe a sigh of relief that their jobs were secure.

But Senator Milne said questions remained about how the scheme would operate into the future.

"Whilst the fixed price removes some uncertainty for solar investors, we need to know what long-term certainty the government will offer the industry, given that the solar multiplier will phase out over the coming few years," she said.

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