Peter Batchelor is the Minister for Energy and Resources in the Australian state of Victoria. To date, the Victorian State Government has committed more than AU$380 million to drive advances in pre-commercial clean energy technologies, with a further AU$100 million currently available to help build and operate a new commercial large-scale solar power station. Until 2009, Victoria was the only state in Australia with its own renewable energy target, set to grow the local renewable energy capacity to 10% by 2016, and designed to stimulate at least AU$2 billion in renewable investment and create over 2,000 new jobs. In this interview, Batchelor introduces renewable energy policies of Victoria and Australia and shares his thoughts on the renewable energy industry.

By Jeanny Lim

Could you please update us on the global trends in renewable energy investment? What are the future prospects for investment?

Concerns over climate change, higher energy prices and fuel security are boosting the development of renewable energy for electricity production in many parts of the world.

According to the IEA’s latest World Energy Outlook 2009, world renewables-based electricity generation (including hydropower) is projected to increase from 3,577 TWh in 2007 to 7,640 TWh in 2030.

It is predicted the proportion of renewable generation will rise from 18% in 2007 to 22% in 2030. These increases are largely driven by incentives to encourage new renewable technologies, particularly wind and solar power.

Wind power has grown rapidly in many countries, most notably in China and India. The IEA predicts wind power will contribute 4.5% of total electricity generation in 2030 worldwide, compared with less than 1% in 2007.

Electricity generation from solar Photovoltaics (PV) still remains small, but is growing fast, with the IEA predicting it will reach almost 280 TWh in 2030, up from just 4 TWh in 2007. Installed capacity has almost doubled over the past few years owing mostly to a dramatic increase in Spain.

In the past few years, there has also been a surge in projects using Concentrated Solar Power (CSP) technologies and this trend is set to continue, particularly in sunny areas, where CSP better competes with conventional technologies.

How much investment has been made into the renewable energy industry in Australia? And what are the future prospects?

In Victoria, in the south-east corner of Australia, about 90% of our power is generated by coal so the task of transforming our energy sector into a cleaner industry is massive.

While the task is large, our strong leadership and vision has placed Victoria as a nation leader in providing a strong investment climate and is helping transform our energy sector.

To date the Victorian State Government has committed more than AU$380 million to drive advances in pre-commercial clean energy technologies, with a further AU$100 million currently available to help build and operate a new commercial large-scale solar power station.

Until 2009, Victoria was the only state in Australia with its own renewable energy target, set to grow the local renewable energy capacity to 10% by 2016, and designed to stimulate at least AU$2 billion in renewable investment and create over 2000 new jobs.

The Australian Government has now introduced a national renewable energy target, which requires electricity retailers across the country to purchase 20% of their power from renewable sources by 2020. Victoria already produces 3,259 GWh of renewable energy each year which is enough green electricity for about 500,000 households. This level of investment has led to significant job creation to construct and operate the renewable energy facilities, as well as flow-on benefits to surrounding communities.

Victoria has excellent local renewable resources, including wind, wave, geothermal and solar. This is coupled with a strong, open economy with low barriers to entry, and governments at all levels working to establish lucrative renewable energy markets. Together, this makes Victoria an excellent renewable investment location, with a renewable sector ripe to grow rapidly.

How has the global economic crisis been affecting the renewable energy industry? Is there a specific technology sector that has been affected more severely? And is there a specific geographical region that has been affected more severely?

The three most important factors affecting investment in the renewables industry are the availability of finance, profitability and the need for capacity. Investment in energy, including renewable generation has fallen worldwide, in the face of a tougher financing environment, weakening final demand for energy and falling cash flows, mainly resulting from the global financial and economic crisis.

To date the Victorian State Government has committed more than AU$380 million to drive advances in pre-commercial clean energy technologies, with a further AU$100 million currently available to help build and operate a new commercial large-scale solar power station.

These local support measures are bolstered by strong financial support at the national level, with AU$2 billion available from the Australian Government to support renewable energy projects across the country, and grants of up to AU$1.5 billion now available for solar specifically, through its Solar Flagships program.

What kind of correlation is there between the price of raw materials, oil and electricity and the renewable energy industry?

A general increase in raw materials will impact all energy investments, whether it’s fossil fuels-based or renewable energy, since they all use raw materials for construction, maintenance, etc. An increase in oil prices may make the viability of renewable energy more attractive, however, this may be marginal given that oil and renewable energy are generally not substitute goods.

Currently, oil is used predominately for transport, whereas renewable energy is used predominately for electricity production and water heating. A general increase in electricity prices will increase the investment attractiveness of all types of energy generation. A general increase in peak electricity prices will favor peaking plants such as gas and hydro generation.

How much growth do you expect for the renewable energy industry?

Under the Australian Government’s expanded Renewable Energy Target, by 2020 Victoria can expect another AU$4 billion of new renewable energy investment to develop a renewable energy industry that generates approximately 9,900 GWh of green energy─enough to power more than 1.5 million homes each year.

The renewable energy mix in Victoria by 2020 is expected to be made up of wind, hydro, biomass and solar energy, with added potential for increasing use of wave and geothermal power.

Jeanny Lim is Editor-in-Chief of InterPV. Send your comments to swied@infothe.com.

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