Australian energy consumers, and the local legal industry, are missing out on a global renewable energy boom as a result of the current regulatory environment. According to DLA Piper partner Stephen Webb, the Australian Government’s renewable energy targets for 2020 do not ensure a diverse and well developed renewable energy industry as there are no provisions on what types of renewable energy are used, or how much of the target can come from one form of renewable energy.
“The only way to make these [renewable energy] projects economically viable is by creating a regulatory environment where the retailers have to buy energy from certain renewable sectors,” said Webb. “We need to have regulatory intervention in the market, whereby the government directs the retailers to not only hit the 2020 targets for renewable power, but also that they must do that in a wider context including solar, wave, biomass as well as wind.” To date wind has been the preferred renewable energy option in Australia because of its lower cost.
Webb, who joined DLA Piper’s Brisbane office from overseas almost two years ago, has been working on renewable energy projects for the past four years, initially in Abu Dhabi. Since returning to Australia Webb has been inundated with work on projects across the globe, particularly in Asia, but has had little Australian-based project work. “Australia is very disappointing on a global scale and within the region,” said Webb. “There are many international solar companies looking at Australia for some time, as a result of our environment, but they have been frustrated with the lack of projects in the market. There have not been any large scale solar projects in Australia; only a medium sized one in WA.”
The ACT Government announced earlier in the year a reverse solar auction for the development of a 40 megawatts solar facility as part of its renewable energy targets. As in other markets around the world the ACT Government has had to guarantee tariffs for the solar power for 20 years in order to attract interest. “The only way to make large solar projects viable is to guarantee a large tariff for the electricity over a long period of time, as opposed to subsidising the capital costs,” said Webb.
Webb expects the cost of solar power, which has dropped substantially as production of the panels improves, to decrease in the coming years to the point where it might be economically viable without tariffs in markets where traditional energy sources are more costly. “Despite all the publicity about the increases in electricity prices, we still have relatively cheap electricity on a global scale,” he said. “It is not yet known whether electricity prices [in Australia] are likely to increase to the point where solar power becomes comparable to traditional electricity.”
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