Crashing Renewable Energy Certificate (REC) prices are threatening major wind and solar power projects in Victoria according to Energy and Resources Minister Peter Batchelor.
Mr Batchelor said an influx of RECs in the market generated by heat pumps and solar hot water systems along with the new Solar Credits multiplier scheme has greatly reduced REC prices, and a reasonable REC value is essential to ensure that the large scale renewable investments can occur.
"We’ve seen the value of Renewable Energy Certificates fall from over $50 in May this year to less than $35 now," Mr Batchelor said.
While stating that heat pumps and solar hot water systems deserve Federal Government support, Mr Batchelor believes they do not belong in the Renewable Energy Target (RET) and should instead be incorporated in the new Energy Efficiency Mechanism being developed by the Federal Government.
A recent example of the impact of falling REC prices in Victoria was the news the southern hemisphere’s largest wind farm project may not proceed as AGL Energy is considering dumping its $800 million investment in the wind power facility. According to AGL, up to eight wind farms being considered by the company were under threat due to renewable energy certificate prices.
Falling REC prices are not only affecting large renewable energy projects nationwide, but also home-owners purchasing solar hot water and solar power systems as Renewable Energy Certificates play a major role in offsetting the cost of acquiring a system.
While system providers who hedged against a REC price drop can offer more generous solar rebates, once their hedging arrangements are exhausted they will face the same issue as the many providers who didn’t.
A COAG review into the Federal Government’s Renewable Energy Target is currently considering factors that may be impacting upon the Renewable Energy Certificate (REC) market in the short and long term.
