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ACT moves to avoid risk - renewable energy providers could pull out for bigger profits

The ACT government has moved to stop large scale renewable energy suppliers pulling out of their 20-year deals without notice or penalty to seek bigger profits on the national market.

Climate change minister Shane Rattenbury on Thursday introduced changes to the territory's renewable energy feed-in tariff laws to ensure entitlement holders can no longer surrender their entitlements without notice.

It follows a review of the ACT's renewable energy target that found under the previous laws, some entitlement holders could pull out, without penalty, if prices for carbon credits rose enough to make a bigger profit on the national market.

Entitlement holders are large-scale renewable energy producers, wind and solar farms like the Hornsdale wind farm, who sell their power to the ACT under 20-year contracts that provide certainty while the national market fluctuates.

But the review found the territory's renewable energy target faced a risk if "a successful proponent decides that [it] can benefit more by participating in the broader market instead of keeping the feed-in tariff entitlement".

The review said it was reasonable to expect some would surrender their entitlements, particularly after the federal government's large scale renewable energy scheme ends in 2030, but that all of the suppliers pulling out at the same time was "only one credible scenario".

Mr Rattenbury said the government did not expect any holders would pull out in the near future, but the changes were a 'risk mitigation' move to allow the government to set a transition period to find new suppliers if any pulled out.

Under the changes, when an entitlement holder tries to surrender their entitlement, the minister will now need to consider how long it would take to replace that supply through an auction, direct grant, or by buying certificates on the open market.

It could mean the minister can accept the surrender on an entitlement, but also apply a later date when the surrender would occur, to allow time to replace it with new supply.

The legislation, which took effect immediately, also gives the government more oversight to ensure ActewAGL Distribution, which administers the payment system, to pass on savings to territory consumers.

The distributor will now have to report annually to the minister on the estimated cost of running the tariff scheme for the next financial year, and if unsatisfied by that estimate, the minister can order ActewAGL to have an independent audit completed.

"These changes will ensure consumers are protected against uncertainty and unexpected changes in the market and ensure that any beneficial payments are fully passed through to ACT electricity consumers," Mr Rattenbury said.

He also said there was also "no reason to doubt" the territory would meet its target of having 100 per cent renewable energy by 2020, as "all contracts are signed and all facilities are under construction".

Source: The Canberra Times

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