Australia Must Add Nearly 4 GW of Renewables in 2016

solar and wind

Australia’s coal-friendly electric retailers are falling behind targets for renewable energy.

According to the energy markets research firm Green Energy Markets (GEM), Australian utilities will need to sign 3,800 MW of contracts for new renewable energy by the end of 2016, in order to be in compliance with the renewable energy target.

Apparently there is a shortfall with no new contracts written for new renewable capacity, even though there is now this very sizable gap.

The only projects currently going ahead are the ones that have been directly sponsored by the ACT government’s auction. In addition, small utility solar projects that were co-funded by the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) have continued to be developed.

Uncertainty over Australia’s ever-changing commitment to renewables is to blame. There has already been a concession by pro-renewables advocates to reduce the amount of renewable energy developed at utility-scale from the 41,000 GWh they wanted, to the much lower target of 33,000 GWh agreed to with the previous fossil-friendly Tony Abbott government.

Newly seated environment minister Greg Hunt of Australia’s recently elected, renewables-friendy new PM Malcolm Turnbull now setting policy for the nation’s governing body, the  Australian Capital Territory (ACT), says that there is not going to be a reduction in the renewable target, and Australia’s electric retailers should end what now amounts to a “capital strike.”

Since the ACT government has already signed 20-year fixed contracts at $81.50/MWh, a lower price for price for renewable energy certificates (LGCs) at $68.50/MWh should be more than enough to get new wind farms going. But still there are no contracts or finance.

Australia’s electricity retailers will pay a penalty of $93/MWh if they don’t meet their target.

Strangely, at least some of the retailers appear happy to play a game of chicken with these penalties. Australia’s grid is heavily coal-fired which is one reason that Australian homeowners have gone solar in record numbers.

The other reason is that their electricity is both extremely expensive and the bills come, not by the month, like in most countries, but quarterly, which drives home to Australian consumers exactly how expensive electricity is when you rent it from the retailer rather than own your own solar and make it yourself.

Not only are these Australian electric retailers not on track for meeting their 4 GW obligation of new renewables that must be signed by the end of 2016, but a cumulative total of 5.5 GW will be needed by 2020.

If there is a shortfall, obligated retailers will have to pay a penalty price of $93/MWh (after tax considerations). The recipient of this money is the federal government, although retailers will attempt to pass these costs to consumers.

Best solar and wind resources in the world!

This foot-dragging by Australian utilities is especially bizarre given its solar and wind resources. Its solar insolation is among the best in the world.

And with its location at the tip of the Roaring Fourties, a strong and constant wind that circumnavigates the South Pole up to a Lat of 50 degrees, Australian wind farms are able to operate more hours per year on average than wind farms in other regions.

Green Energy Markets said that Australian wind farms since 2013 have had an average capacity factor of 31% in 2104, and of 32% in 2015, withTasmania leading the way.

Image Credit: Mike Baird via Flikr under Creative Commons Licence

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