Antinuclear

International law group Baker & McKenzie, which has provided legal services to clean energy projects such as wind farms, said any reduction in the goal would increase the cost of capital “to make many existing and future projects financially unviable”.

Financing arrangements would be reviewed following any change in the target because the industry’s currency – renewable energy certificates – would fall by between 10 and 30 per cent, affecting the viability of even established ventures. “The vast majority of existing projects will be up for refinancing over the period 2016-2018,” Baker & McKenzie said in the report. “Existing projects might not be able to meet the minimum financing requirements based on the revised set of risks and parameters.”Kane Thornton, acting head of industry lobby group Clean Energy Council, said the report shows the risks of cutting the renewable energy target or RET.

“This report shows that a cut in the target of the scale proposed by the government would have far reaching and damaging consequences, and also that ensuring adequate compensation would be an extraordinarily complex and expensive task,” he said.

“The legislated policy provides the revenue to underpin the investments in renewable energy projects out to 2030, but this revenue would collapse if the RET is cut, smashing the companies which invested behind the policy based on its long-standing bipartisan support,” Mr Thornton said, adding that large-scale renewable investments already total more than $10 billion………

The Baker & McKenzie report, though, notes that any change to the rules would create sovereign risk as investors would weigh up whether any revised target might be subject to future cuts……..

Company view

“Using the government’s own modelling, slashing the RET to a real 20 per cent as proposed by Ministers Macfarlane and Hunt would reduce Infigen’s future revenues by around $170 million,” according to a spokesman for wind farm developer, Infigen.

“This would have dire effects on our business given this potential lost revenue is almost the same as Infigen’s current market capitalisation,” he said.

The Infigen spokesman said it was “disingenuous and a misrepresentation of the facts” to say the Coalition had only supported an 20 per cent goal rather than the fixed number of terawatt-hours.

“Fixed targets were legislated with the support of Minister Macfarlane and the Coalition when he was in opposition,” the spokesman said. “He knows that a floating target would not have been investible.”……..

Greens leader Christine Milne said on Tuesday the prospect of “massive claims for compensation” from companies hit by any RET change should prompt Prime Minister Tony Abbott to “end the farce”.

“There is absolutely no reason, and no excuse, for weakening the renewable energy target,” Senator Milne said.

Senator Milne also said Tasmanians “should be under no illusion the Abbott government’s ruthless attack on the RET has undermined investment certainty”, contributing to Hydro Tasmania’s decision to ditch its 600 megawatt King Island wind farm. ……….http://www.smh.com.au/federal-politics/political-news/compensation-action-shadows-government-proposal-to-cut-renewable-energy-target-law-report-20141028-11ctsd.html