The government’s plan to cut the Renewable Energy Target
(RET) could lead to compensation claims from the renewable energy sector,
according to a law report.
The SMH reports that, according to International law group
Baker & McKenzie, cutting the RET would probably affect current investments
and stop new ones because it would cut the value of renewable energy
certificates by between 10 and 30 per cent.
The report stated – “Existing projects might not be
able to meet the minimum financing requirements based on the revised set of
risks and parameters.”
This situation would likely lead to compensation claims.
The RET commits Australia to generating 20 per cent of its
energy from renewable sources by 2020. However, the government wants to cut the
target from from 41,000 gigawatt hours of energy to about 26,000 gigawatt hours.
It has justified the cut by saying the original estimate of
projected energy use was too high and, therefore, the 26,000 gigawatt hour
figure represents a ‘real 20 per cent’.
The Australian reports that HydroTasmania, Australia’s
largest supplier of renewable energy has cut a $2 billion wind farm project off
Tasmania’s northwest coast.
Announcing the decision, HydroTasmania CEO Steve Davy “Our
investigations eventually found that TasWind was not viable even if the RET was
maintained at the existing level.”
However, according to Greens Leader Christine Milne, the
proposed RET cut did influence the decision.
“In its recent profit statement Hydro pointed out that
uncertainty around the RET was one of the ‘challenging conditions’ which would
affect future profits, and it will. This is a Liberal state and federal
combination determined to destroy Tasmanian jobs and investment,” she
The ABC reports that some Australian companies, like Melbourne’s Ceramic Fuel Cells, see even the current arrangements as unattractive to investment in the renewables sector.
The company moved its operations from Australia to Germany because the German government subsidies proved to be very attractive.
Last year, Germany generates 24 per cent of its electricity from renewables. This figure has tripled in the last ten years.