Tuesday, August 11, 2009

Sun and wind power struggle

Adam Morton

The Age, August 12, 2009

DOUBTS are emerging about whether the Government's renewable energy bill will do what it is supposed to do - trigger immediate investment in cleaner power plants.

Energy analysts had expected wind power to be the clear winner from the proposed legislation, which would require 20 per cent of energy to come from renewable sources by 2020.

But, an investment bank analysis warned, the scheme's design - the subject of a Senate committee report to be released today - is likely to direct most spending in the first five years to rooftop solar panels.

The target ramps up in the second half of the decade, but is less than 10 per cent by 2015.

A recent report by investment bank UBS said: ''On our estimates there is every chance of that being met by [photovoltaic] solar power''.

Critics say this is due to a design flaw: to encourage rooftop solar power, the Government proposes initially giving households that install panels credits worth five times the energy generated.

These ''phantom credits'' do not represent actual energy generation but count towards the renewable energy target when cashed in.

Environment Victoria campaigns director Mark Wakeham said less renewable energy would be generated in the early years than the target suggested.

''It means large-scale projects that have been ready to go for a number of years, but have been waiting for a higher renewable energy target and price signal to invest, will remain on the back burner,'' he said.

The bill was delayed in June due to Opposition objections. . A Government spokeswoman said it would consider amendments supported by the Opposition to pass the bill.

UBS analyst David Leitch said some wind farms would be built in the first years of the setting of the target, pointing to AGL's plan for more than 210 turbines at Oakland Hills and Macarthur in western Victoria to balance energy use of the state's desalination plant.

But, he added, ''Wind farms that come on line prior to 2016 won't earn the sort of returns in the early years you would have expected six months ago.''

Government spokeswoman Laura Anderson challenged the UBS analysis, saying there would be sufficient demand to support both roof-top solar and large-scale generation.

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