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Investment confidence fragile in face of further policy change

The federal government’s latest energy policy statement has further raised anxiety among investors about the future appetite for clean energy investment in Australia, the industry’s peak body says.

Clean Energy Council Chief Executive Kane Thornton said that yesterday’s announcement foreshadows some substantial market interventions - including the prospect of government underwriting new generation – which he said threatens investor confidence.

“New investment in energy generation is critical to increasing competition and supply, and driving down wholesale power prices,” Mr Thornton said. “But providing debt or equity for specific new projects and technologies could be disastrous for investment confidence.”

He said government support for corporate offtake agreements was worthy of further consideration but warned it must be carefully designed to ensure it doesn’t undermine investment.

“Private investors have put a record $15 billion into large wind and solar in the last 12 months, which will help in bringing down wholesale power prices,” he said.

“These investments have been driven by the Renewable Energy Target, which has been achieved ahead of schedule. While new investment no longer requires subsidy, it does need policy certainty and stability to attract the ongoing capital investment necessary to replace coal generation and secure a reliable and affordable power supply.”

“While we recognise this is a politically challenging task, ignoring it – while also avoiding mechanisms which deliver emissions reduction - will simply see investment slow and drive power prices higher,” he said.

Mr Thornton welcomed confirmation from Minister Taylor that the Small-scale Renewable Energy Scheme (SRES) will remain unchanged.

“Rooftop solar, backed by the SRES, plays an important role in reducing household and business exposure to higher energy prices,” he said. “It has delivered many significant benefits, including more than $10 billion of consumer investment in the last five years, and it plays a vital contribution to safety and consumer protection by mandating product standards and installation practices.”

Please contact Clean Energy Council Digital & Communications Manager Andreas Wenzel on 03 9929 4114 for more information or to arrange an interview.