This table above might have caused developers of large-scale wind and solar farms in Australia to reflect on their position.
Released by the Clean Energy Regulator on Friday, it shows that the renewable energy target, which aims for 33,000GWh of large-scale renewable energy by 2020, is nearly complete.
According to its data, the CER reckons there is room left for only about 846MW of large-scale projects, not yet committed, for the scheme to be met.
Considering that the owners of the Whyalla steelworks announced plans for 700MW of large-scale solar last Monday, and that the CER data does not include some projects others would view as well advanced, we could consider the scheme all but met.
Indeed, federal energy minister Josh Frydenberg might have been closer to the mark when he suggested, before the Whyalla announcement, that the scheme was 95 per cent achieved.
Apart from making a nonsense of the claims by the conga-line of naysayers who said it could never be done, and the deliberate misinformation echoed by the Coalition government about the supposed $60 billion cost of the scheme, it does leave the renewable energy industry pondering the future.
The Australian Energy Market Operator estimates that there are more than 20GW of wind and solar projects in the pipeline. And those are just the ones that have approached it to canvass connection approvals.
But the future is blurred. The Energy Security Board – supposedly a COAG body – is busy marketing a new policy proposal, the National Energy Guarantee, that it has yet to present to COAG, let alone get its approval.
The NEG is being presented as an “elegant” solution to the failure to get bipartisan agreement on any climate policy over the last decade. But it looks like a nightmare for renewables.
According to its own initial modelling, there will be no room for any new large-scale wind and solar projects in the decade from 2020 to 2030.
It will conduct further modelling to present to COAG later this month, but the assumptions this will be based on look absurd – it ascribes technology costs to wind and solar so ridiculous they do not match existing costs until 2030 or 2040.
Furthermore, it ascribes a crippling cost of capital to those wind and solar projects, and then somehow removes it on the basis that a NEG would eliminate policy uncertainty in one fell swoop.
Professor Ross Garnaut highlighted the failure of that thinking in an important speech last Friday. He said policy certainty would not be removed, so long as climate targets were not addressed seriously.
“It is unrealistic to get consensus on anything that does not face up to the reality of our international responsibility on reduction of carbon emissions,” he said.
Garnaut noted that even a federal Treasury analysis had pointed to the need to slash emissions in electricity by 50 per cent by 2030. It beggars belief that serious people can argue that the targets to be modelled by the ESB constitute a serious policy.
The market reaction has been decisive. As ITK analyst David Leitch notes, the share price of the incumbent utilities have jumped sharply since the NEG was first unveiled.
Share prices and valuations of listed renewable energy companies, on the other hand, have fallen dramatically. The assumed value of significant portfolios of wind and solar projects have been wiped from the board.
The remaining hope for renewable energy developments lie in two quarters: state-based targets; and the emerging corporate sector.
Queensland has a 50 per cent renewable energy target, and a 400MW tender on hold, but is now in the middle of an election campaign that Labor premier Annastacia Palaszczuk seems to be doing her level best to stuff up.
It is quite likely that One Nation will hold the balance of power, supporting a state government that appears to equate renewables to the devil and Islamic terrorists.
The NSW and WA governments are staring at renewables like rabbits in the headlights and seem incapable of taking any action of note. South Australia is already at its 2025 target of 50 per cent renewables, but has an interesting fund that could promote some pilot projects.
That leaves Victoria to take up the reigns. Its target of 40 per cent renewables by 2025 is actually legislated, and it has promised to unveil a tender for 650MW of large-scale wind and solar very soon.
The talk is that it could be unveiled in the next week or two, once they recover from the Melbourne spring racing carnival. It will be the best piece of news that Victoria project developers can expect to get for some time.
But we can never be sure. Bidders are still waiting to hear the outcome of the large-scale battery storage tender, which was supposed to be complete at the end of August. We are now told it will be “before the end of the year.”
That leaves the corporate market. UK billionaire Sanjeev Gupta is leading the way, with his plan to build 520MW of solar, pumped hydro, battery storage and demand management to power the Whyalla assets and slash costs by 40 per cent.
If the way ahead is not blocked by policies as deliberately protective of incumbents as the NEG, it will push ahead with another 480MW of large-scale solar to meet the needs of other big industrial users. And they have shows an interest in a bulk-buy deal already.
Then Gupta plans to do the same thing all over again in Melbourne and Sydney, where his company has even bigger energy demand from the electric arc furnaces in and around those cities.
Gupta is not alone. Nectar Farms will rely on wind and battery storage for a $750 million development in an old gold mine near Stawell to build the country’s biggest glasshouse.
Zinc refiner Sun Metals and Telstra are both building large-scale solar farms, and now the Department of Defence is jumping in, calling for tenders for solar farms for a WA communications base, and its barracks and RAAF base near Darwin.
For Defence, this is just the start of its plan to turn to renewables to cut costs, boost energy security and reduce emissions.
As Garnaut pointed out in his speech on Friday, it seems just about everybody in Australia – with the apparent exception of the Coalition parties and the Energy Security Board – understands that bringing in more renewable energy and encouraging more competition is the best way to reduce prices.
So, while the RET can be considered to be met, the large-scale wind and solar sector will rely on the Labor states and the corporate sector to keep development going, and keep wholesale prices and the power of the big incumbent utilities a little bit in check.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.