Meridian Energy has abandoned plans for a Queensland hydro power project, blaming the "destabilising revisions" in the Australian federal government's renewable energy policy.
The Wellington-based electricity generator and retailer has scrapped plans to build the 37 megawatt hydro power station at Burdekin Falls Dam, Australia's largest dam, after the federal government moved to reduce the country's renewable energy target, creating regulatory uncertainty around the project, Meridian said in a statement on Friday.
Australia's legislated RET calls for 20 per cent of the country's energy use to be sourced from renewable energy by 2020, specifying that target as 41,000 gigawatt hours.
"Meridian understands the disappointment that the people of Northern Queensland will feel on learning of this decision," Meridian Energy Australia chief executive Ben Burge said.
"However, the federal government's protracted efforts to reduce the renewable energy target have made long-term capital investments in energy assets in this country nearly impossible."
Australia's Prime Minister Tony Abbott has said the RET was having a "not insignificant" impact on power prices and if renewable energy went too far "it becomes very, very costly".
At the start of 2014, his government commissioned a controversial review by former Caltex chairman Dick Warburton, rather than using the independent Climate Change Authority, established to provide expert advice to the government about reducing climate change.
The review found the RET was a high-cost approach to reducing emissions of greenhouse gases, which "promotes activity in renewable energy ahead of alternative, lower cost options for reducing emissions that exist elsewhere in the economy".
However, it found renewable energy was not pushing up electricity prices.
"The federal government's position on the RET is puzzling, given that its own Warburton Review revealed that the policy does not increase the net costs of electricity for Australian consumers," Meridian said.
"At a time when electricity bills are significantly impacting the cost of living, the renewable energy target introduces more competition into the Australian energy market, and serves as an important policy for relieving the pressure on electricity bills."
Meridian built the 140-turbine Macarthur wind farm in Victoria in a joint venture with AGL, and sold its half-share in 2013. It remains an investor in the 64-turbine Mt Mercer wind farm, also in Victoria.
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