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Coalition and Labor to compromise on Renewable Energy Target: 33,000GWh by 2020

A compromise deal may finally have been reached on Australia’s Renewable Energy Target (RET), according to reporting from the ABC and other sources. The Coalition government and Labor Party have apparently reached an agreement to reduce the nation’s 2020 target from the current 41,000 gigawawatt-hours (GWh) to 33,000GWh.

Although not the outcome that renewable energy proponents had hoped for, the deal would restore certainty for Australia’s large-scale renewables industry, which has virtually ground to a halt since the Coalition called the 41,000GWh target into question after taking office.

The RET was first conceived under the Howard government in 2001 and subsequently strengthened by Labor in 2009 under Rudd, when the 20% by 2020 target was set. The 41,000GWh target was based on the assumption that demand for electricity would continue to grow in Australia and that by the year 2020 41,000GWh would be roughly equivalent to 20% of national demand.

However, demand has unexpectedly declined in recent years, meaning that 41,000GWh would have been closer to 30% of total electricity consumption. A number of politicians – including federal Environment Minister Greg Hunt – argued that the target should therefore be reduced.

Opponents of cuts to the scheme fought back, saying that tampering with the target would undermine the stability of the industry.

A 33,000GWh is anticipated to be around 23% of 2020 electricity demand.

Small-scale solar still safe

Although once believed to be under threat, incentives for residential and small-scale commercial solar power available under the RET have been seen as safe from the government axe for several months now – and will remain unchanged under a reduced overall target. RET incentives differ depending on whether the system in question is over 100 kilowatts (kW) or under. For solar power systems under 100kW in capacity, the incentive available through the RET is usually applied directly to the cost of the system, functioning as a sort of de facto ‘discount’.

By contrast, RET subsidies for large-scale renewable energy generation facilities such as solar farms and wind farms are production-based incentives, taking the form of Large-scale Generation Certificates (LGCs).

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