May 19 (Bloomberg) -- Vestas Wind Systems A/S said scaling back Australia’s renewable energy target would cut the value of more than A$10 billion ($9.4 billion) in large projects across the industry and discourage international investors.
At stake for Australia is a further A$15 billion in spending and another 18,000 jobs by 2020, the world’s biggest wind turbine maker wrote in a letter to a government panel.
Cuts to the renewable energy mandate “would result in an immediate impairment of project values, with a range of negative flow-on effects, as well as a reduction in investor confidence,” Aarhus, Denmark-based Vestas wrote in the May 16 letter. That would result in “higher risk premiums and greater barriers for Australia to attract future capital,” it said.
Australia is reviewing its policy to get at least a fifth of its electricity from clean energy by the end of the decade. The panel set up by the government is evaluating the program’s impact on electricity prices and its contribution to reducing emissions. The review is fueling concerns the 2020 target of 41,000 gigawatt hours of electricity will be reduced, according to a report last month from Bloomberg New Energy Finance.
AGL Energy Ltd., Australia’s largest developer of renewable energy projects, said today that the government needs to “rethink” what policy it will adopt to meet its targets.
“AGL has come to the unavoidable conclusion” that the 2020 goal can’t be reached with the current program in place, an oversupply in the market and energy policy uncertainty, Chief Executive Officer Michael Fraser said in an e-mailed response to questions. AGL can’t justify further investment in large-scale developments with the existing policy, he said.
Prime Minister Tony Abbott’s government said earlier this month that it plans to scrap the Australian Renewable Energy Agency to save A$1.3 billion. The government also is seeking to eliminate the A$10 billion Clean Energy Finance Corp.
The moves to end those two agencies and state government funding programs have resulted in the 2020 renewable energy target being the sole driver of new projects, according to First Solar Inc., the largest U.S. solar manufacturer.
Reducing or ditching the renewable energy mandate will threaten investment, boost emissions from fossil fuels and have a disproportionate impact on the development of utility-scale solar plants, First Solar said today in an e-mailed copy of its submission to the government panel. Those plants are expected to make an increased contribution to the target from 2017, according to the Tempe, Arizona-based company.
The review will report its findings by mid-year, according to the website.
“What the RET has done is introduce more competition into the wholesale market, and that hurts the revenue of older fossil fuel-powered generators,” Vestas wrote. “ The owners of those incumbent generators don’t like that outcome, and naturally are lobbying against it.”
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