Is Private Renewable Energy Investment Faltering in Australia?

Essay by Eric Worrall

Victorian Premier Dan Andrews has resurrected the state electricity commission, to develop renewable opportunities and facilitate a phaseout of coal by 2035.

‘Shocked’: Andrews nationalises electricity

Angela Macdonald-SmithPatrick Durkin and Colin Packham
Oct 20, 2022 – 11.12am

Victorian Premier Daniel Andrews’ plan to “bring back” the government-owned State Electricity Commission to reverse the decades-long privatisation of Australia’s energy market will chill private investment and hurt ordinary investors and workers, the CEOs of Woodside Energy, Alinta Energy and Australian Energy Council warn.

The state Labor government said it would spend $1 billion to develop its own renewable energy assets, as it announced tough new emissions targets that are likely to end coal power generation in the state by 2035 – earlier than expected. The state would invest directly to control renewable energy projects, including wind and solar, with a focus expected to be on its ambitious offshore wind targets.

The premier said that the revived State Electricity Commission (SEC) would “consider all options” including becoming a state-run energy retailer and would have a controlling stake in new energy projects “with the balance of funding invested through like-minded companies such as industry super funds who are focused on an equitable future for Victorians”.

The new targets were welcomed by environmentalists and unions but Jeff Dimery, CEO of Alinta Energy which owns the Loy Yang B coal power station in Victoria’s La Trobe Valley, which was scheduled to close in 2047, said the move would force the early retirement of its coal power station and cost jobs, leaving his employees “shocked”.

Read more (paywalled): https://www.afr.com/companies/energy/victoria-to-bring-back-state-ownership-of-energy-20221020-p5brci

Dan Andrews is the premier who infamously ordered police to open fire on unarmed protestors in 2021 during a Covid lockdown protest.

The renewable energy target is absurd – Victoria is windy but doesn’t see a lot of sun. The wind isn’t that reliable – Victoria regularly enjoys periods of days or even weeks with very little wind, at all times of the year.

So the question is, why did Dan Andrews feel he had to intervene with direct state investment? Is this just a political stunt, to appease unions? Or is he having trouble attracting the level of private investment he wants?

On the surface renewable investment looks good – around $860 million spent last financial year in Victoria. But that is nowhere near enough to achieve Victoria’s ambitious renewable targets.

Dan Andrews is facing election on 26th November, so this could just be a stunt, a ploy to firm up support from union workers who miss the old days, when state government energy enterprises run by managers appointed by union supported politicians granted easy pay rises to public sector workers.

Or it could mean something else. In this period of rising interest rates, and a likely imminent recession, people get a lot more wary of putting money into new business ventures. And renewable energy tariffs are not immune to government tinkering when governments run short of money, as Spanish investors discovered in 2010. Victorians have already had a taste of arbitrary government tariff tinkering, with a significant cut to rooftop solar feedin tariffs back in July.

I guess time will tell.

Correction (EW): h/t High Treason – The election is 26th November, not 2nd November.

via Watts Up With That?

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October 20, 2022 at 08:49PM

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