THE renewable energy sector has welcomed the government's commitment to an expanded national renewable energy target, saying the emissions trading scheme alone won't encourage renewable energy investment.
THE renewable energy sector has welcomed the government's commitment to an expanded national renewable energy target, saying the emissions trading scheme alone won't encourage renewable energy investment.
Last month, the Council of Australian Governments agreed on the expansion of the national Renewable Energy Target to 20 per cent renewable generation by 2020.
The RET scheme includes a legislated target of 45,000 gigawatt hours in 2020, more than four times larger than the current target.
The scheme is considered a complementary measure to the Carbon Pollution Reduction Scheme (CPRS), assisting the transition to low-emissions energy generation.
The two schemes were expected to provide investment certainty for the renewable energy sector and encourage the development of renewable energy projects, with a carbon price making renewables more economically viable compared to traditional generation.
But the industry says putting a cap of just $10 a tonne on the price at which carbon permits can be traded in the first year of the CPRS doesn't provide a strong enough incentive to encourage investment.
WA Sustainable Energy Association chief executive Ray Wills said he knew of at least 700 megawatts of wind projects and between 200-250MW of solar thermal projects in WA that were "ready to roll", and had been held up by the absence of an RET.
"The emissions trading scheme is not enough, especially at $10 a tonne; something in the range of $30-$40 a tonne is about right," he said.
The capacity for further renewable energy development in WA has attracted interest from a number of investors.
Niche investment bank Investec is looking to invest more than $500 million in WA through a $250 million financing agreement with wave power company Carnegie Corporation, and a joint venture with CSIRO spin-off Windlab Systems for the development of a wind farm near Merredin.
The $600 million, 220MW Collgar wind farm project received planning approval in February and is in the final stages of design and financing.
US-based carbon investment firm C-Quest Capital has also established a presence in WA, recently opening a Perth office to service opportunities in the Australian and Asian markets.
Set up in October last year by Australian expatriate and former head of the World Bank's carbon fund, Ken Newcombe, C-Quest Capital invests in projects that generate high-quality tradable emissions reduction units in renewable energy, energy efficiency, forestry and sustainable land-use.
Pacific Hydro is looking to boost its renewable investment in WA through its proposed $280 million, 132MW Nilgen wind farm near Lancelin.
The company is already a major player in the WA renewables sector with its Ord River hydro project.
Pacific Hydro general manager development Lane Crockett said the CPRS on its own was not enough to encourage significant development in the renewable energy sector.
He said a RET was more important in terms of fast-tracking investment in the sector.
"A renewables target comes in and works straight away and is able to bring in zero emissions projects straight away. The CPRS takes quite a while to kick in, in terms of attracting investment for zero emissions technologies," he said.
"If you're competing against baseload coal, it's traditionally been able to produce electricity at very low cost, you can't compete at $10 a tonne."
Griffin Energy also has plans for a major 130MW wind farm near Cervantes, with the company expected to make a final investment decision on the project in the second half of 2009.
About 5 per cent of WA's energy production comes from renewable sources, mostly from wind and hydroelectric power.
Also at last month's meeting, COAG agreed to transitional assistance for activities identified as emissions-intensive trade-exposed under the CPRS.
Activities that receive 90 per cent or 60 per cent EITE assistance under the CPRS will receive a 90 per cent or 60 per cent exemption respectively from liability under the RET in relation to the expanded portion of the renewable energy target.
