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Wind farm ban will hurt solar, renewable industry says

The solar energy industry has accused the Abbott government of hypocrisy over a decision banning the $10 billion Clean Energy Finance Corporation from investing in wind power or roof-top solar panels.

Environment Minister Greg Hunt confirmed on Sunday Fairfax Media reports that the government had issued a directive changing the mandate of the corporation, which was established by the Gillard government to invest in innovative carbon emission reduction technology.

He said the government wanted to abolish the corporation but since this was blocked in the Senate it had decided to change the rules.

He said the corporation should steer clear of projects that could be handled by the private sector.

"I've been repeatedly critical of the CEFC investing taxpayer funds in projects such as existing wind farms, rather than focusing on solar and emerging technologies. Our policy is to abolish the CEFC but in the meantime it should focus on solar and emerging technologies as was originally intended," Mr Hunt said.

However, John Grimes, chief executive of the Australian Solar Council, said Mr Hunt was hypocritical to say that the government approach to the corporation would support solar.

He said the draft directive banned the corporation from investing in any "mature technologies" and this excluded not just wind power but also roof-top solar panels.

SIGNIFICANT BLOW

He said this would be a significant blow to the roof-top solar sector, which was hoping the corporation could invest in innovative financing options to allow low-income families, renters, small businesses and community groups such as churches to install solar panels, which are currently viable only for better-off owner-occupiers.

Mr Grimes said this confirmed the Abbott government was opposed to all renewable energy.

"This is revenge politics," he said.

It is understood the directive encourages investment in large-scale solar and energy efficiency.

Mr Grimes said a $100 million investment the CEFC announced last week in a roof-top solar project with Origin Energy would have been impossible under the new directive.

Mr Hunt said the mandate change was part of the complicated deal in June on the renewable energy target, which reduced the target for the share of electricity that must be sourced from renewable energy by 2020.

Despite the lower target, the renewable sector backed that deal because it gave some certainty that the RET would not be scrapped entirely, as the Abbott government had proposed. The roof-top solar sector was not affected by the reduction in the target.

CURRIED FAVOUR

As part of the deal the government curried favour with anti-wind farm crossbench senators by promising to establish a commissioner to hear complaints from residents who dislike wind farms and by allowing power generation from burning native forest timber to count towards the RET. The changes in the CEFC investment mandate were not disclosed at the time.

On Sunday Prime Minister Tony Abbott defended the change to the mandate.

"I think the changes to the RET should give certainty to the new sector," he said. "This is a government that supports renewables at the same time as reducing the upward pressure on power prices."

However, Opposition Leader Bill Shorten accused Mr Abbott of waging a "war on wind farms" and of interfering in the work of the independent corporation.

"We all know that Mr Abbott doesn't like wind farms. The guidelines now being proposed by Mr Abbott mean that basically the only thing the CEFC could invest in is flying saucers."

In its 2014 annual report, the corporation said it had invested $900 million. By last week it had invested 33 per cent of its funds in solar, 30 per cent energy efficiency, 21 per cent wind and 16 per cent other technologies.

The Clean Energy Council, which represents the entire renewable sector, said the corporation's primary focus had always been on financing new technology rather than more commercial renewable energy such as wind.

NOT WELCOME

But it said the directive preventing it from investing in wind "reinforces a growing perception that renewable energy investors are not welcome in Australia. In the midst of a global race to attract investment and jobs in renewable energy, Australia has just thrown another weight in its own saddle bag."

The draft directive was issued issued by Treasurer Joe Hockey and Finance Minister Mathias Cormann, the two shareholder ministers in the corporation.

The CEFC can comment but cannot alter the mandate and unlike some other regulations the mandate can not be overturned by the Senate.

In March 2015 the Abbott government issued a mandate raising the required rate of return for CEFC investments and reducing the risk it could take in individual projects.

Source: The Financial Review

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