Shifting Policies Are Killing Australia’s Clean Energy Industry
With so much sun and wind at its disposal, Australia should be an ideal place for renewable energy innovators.
Yet, the country’s renewable energy industry is at a standstill. A recent report released by Australia’s Climate Council stated that despite having enough renewable energy resources to provide 500 times the amount of energy the country needs, the industry is lagging due to the government’s shifting policies.
“The biggest weakness in these kinds of policies–and this is by far the most damaging–is [that] these policies come and go,” Peter Le Lievre, executive director of Renewable Technology Developments, told 1776 via Skype. “Just as you’re building momentum in the cleantech industry, suddenly that momentum gets taken away.”
According to Alan Jones, chief growth hacker at BlueChilli, these fluctuations in support and policy in Australia have created a toxic environment for renewable energy growth.
“We’ve seen successive Australian federal governments swing the levers by which they influence the renewables industry so rapidly between extremes of support and neglect,” he wrote in an email. “It’s a wonder there’s still an industry here at all.”
Without stability in its policies, which include grants and tax credits, local and international organizations are becoming increasingly hesitant about investing into Australia’s renewable energy companies. In addition, gridlock over Australia’s Renewable Energy Target is not helping.
Countries use renewable energy targets to set goals for the renewables industry, typically to promote growth. Initially, the Australian government wanted 20 percent of Australian energy to come from renewables by the year 2020. At the time, 20 percent of Australian energy was projected to be 41,000 gigawatt hours. But since then, Australians have cut back on the amount of electricity they consume, so 20 percent by 2020 no longer equals 41,000 gigawatt hours.
“Electricity used in Australia has reduced lots against those forecasts,” John O’Brien, managing director of Australian CleanTech said. “The government is saying, ‘Well, a real 20 percent is 26,000 gigawatt hours,’ whereas the current legislation says 41,000 gigawatt hours.”
So although the current government wants to reduce the RET, the industry actually is pushing for the larger target to remain. A bigger target leads to more renewable energy expansion, says O’Brien.
The conflict between the two views has led to an 18-month debate—as well as an investments stalemate. Even though renewable energy is thriving globally, investment in the country’s large-scale renewable energy providers fell 88 percent in 2014.
“There’s enough risk in investment anyway,” O’Brien says. “If you got a policy uncertainty, whether it’s renewable energy or anything else, it will always kill investment.”
Similarly, Jones says the industry needs to be more of a priority in Australia—otherwise the cleantech opportunity is going to disappear entirely. In the long run, renewable energy companies and investors could leave the country to do business in other areas where policies are stables and renewable energy is booming.
“This is a global marketplace and ideas that aren’t supported by strong policy in Australia will find the support they need in other markets,” he said.
That’s becoming true already: Over recent years, many government-funded grant and innovation programs have been discontinued, creating an already-unfavorable environment for clean energy startups.
“The impacts are potentially very long term not only on the efficiency of how Australia operates its energy grid, but actually on the innovators who might create the future jobs in Australia,” O’Brien said. “There’s some long term impacts that could be quite detrimental if it’s not settled now.”
Last August, Silex Systems halted plans to build what would’ve been one of Australia’s largest solar farms due to uncertainty over government policy and support. Then, just this week, Banco Santander, a leading renewable-energy investor, announced plans to sell its stake in the only Australian wind farm in which it has invested.
Le Lievre is another example: He moved his solar company from Australia to the United States in 2006 because it was easier to raise capital in Silicon Valley than in Australia. Since then, though, he has stayed in California because, almost a decade later, Australia continues to make it difficult for renewable energy companies to obtain critical funding and investments.
“What’s required is stability,” Le Lievre said. “It would be better to have no policies that support the industry and just keep it as a stable situation than it is to have generous policies one minute and then nothing the next.”