09 October, 2017
Courtesy of the Australian
Bill Shorten would lower the benchmark rate of return for the Clean Energy Finance Corporation to help drive more “crucial investment” in green power generation as well as battery storage if he wins the next election.
In a speech to an energy summit in Sydney today, Mr Shorten will pledge to modernise the national electricity market rules to accommodate residents who contribute electricity to the grid. “The existing NEM rules are biased in favour of big generators, designed to help them recoup the money they spent on purchasing government assets — and they are stacked against householders and consumers,” Mr Shorten says in a draft version of his speech obtained by The Australian.
“Twenty years ago no one spoke about households selling power back to the grid — today, nearly one-in-four households could be doing just that.”
The CEFC — a statutory body given $10 billion in equity by the Gillard Labor government to channel investment into clean energy solutions — is directed to target a benchmark rate of return on its portfolio. In 2013 the benchmark was set by the then Labor government at a weighted average of the five-year Australian government bond rate under the body’s investment mandate. This was increased in 2015 to the five-year government bond rate plus 4 to 5 per cent per a year, and then decreased slightly in May last year to the five-year bond rate plus 3 to 4 per cent a year.
The CEFC board at the time called for the portfolio benchmark return to be lowered further, saying it was an “unrealistically high return target”.
“The board’s view remains that targeting such a high rate of return requires the CEFC to seek out-of-market returns, which will be difficult to achieve,” the board said in the 2016 annual report.
The report also noted the rate of return for the $1bn Clean Energy Innovation Fund — established in March 2016 to invest in the commercialisation of emerging clean energy technologies — had a benchmark rate of return at 1 per cent above the government bond rate.
Mr Shorten will warn the CEFC benchmark rate of return is “holding back” investment.
“Setting the return benchmark too high defeats the driving purpose of the CEFC and it holds back the crucial investment Australia needs — right now — in new generation and storage,’’ he will tell the summit, hosted by the Australian Financial Review.
“This is why a Labor government would restore the original benchmark return of the Clean Energy Finance Corporation, to invest in more generation, more storage and more jobs.”
After Labor announced in July the party would support all 50 of Chief Scientist Alan Finkel’s recommendations to help secure the future reliability of the energy market, Mr Shorten will today confirm he will campaign for Dr Finkel’s proposed renewable energy zones. “These zones would be based on both existing generation and storage in the area — and the potential for future development,” he said. “Identifying these zones, from eastern Queensland, northeast NSW, west Victoria, the Eyre Peninsula in South Australia and the entire state of Tasmania, will a plant a flag for investors, signalling future sites for job-creating projects.”
The Coalition partyroom has voted to implement 49 of Dr Finkel’s 50 recommendations, but there is disagreement over a clean energy target.
Labor originally backed an emissions intensity scheme but said it would support a CET if it was easier to achieve bipartisan policy on energy. Labor is under pressure over how it would reach its pledge to implement a 50 per cent renewables target by 2030.
Picture courtesy of the Australian, taken by Kym Smith.