Who would invest in renewable energy?

Nic Crowther
Mon 13 Jul

After a Sunday evening of watching television filled with ads encouraging the use of solar power, it was interesting to awaken to the debate around investment in clean energy. For those moving too fast to catch the news this morning, the Clean Energy Finance Corporation (CEFC) has been instructed not to invest in small-scale solar projects or wind power.

The Abbott Government is not a fan of the CEFC. Of this fact, it has made no secret, and upon being elected aimed to have the entire organisation dismantled until Clive Palmer’s spectacular piece of political theatre alongside Al Gore.

So, the CEFC was thrown a lifeline.


Source: cleanenergycouncil


This wasn’t the only signal in what is perceived as a war on renewables. The move by the Government to change the aims of the Renewable Energy Target was another clear signal. However, in case you missed the subtlety of that policy shift statements by the Prime Minister and Treasurer stating that “Coal is good for humanity,” and that wind farms in the landscape are “utterly appalling,” might add further fuel to the non-renewable fires.

Taken in isolation, these points are perhaps not totally unreasonable, but the previous attempts to shut down the CEFC along with the quantum of these policies and statements shows there is a huge amount of sovereign risk in regard to investment around renewable energy in a country which is perfectly suited to it.

Nascent technologies such as large scale solar, geothermal, tidal and molten salts do need the assistance of government to get of the ground – much more than wind or solar. For more mature industries (including wind and small-scale solar) free market economics would suggest that all options in the energy mix are available to investors. Any statements to the contrary bring in to play sovereign risk.

The problem with the current situation is that the Government certainly appears to be the champion of non-renewables, while doing all it can to make investment in renewables seem utterly unattractive. It looks ideological and brattish, and definitely flies in the face of the our national slogan that “Australia is Open for Business.”