Taxpayers underwrite 19 new solar and wind developers’ revenue

Federal Energy Minister Chris Bowen is using taxpayers money to underwrite the revenue of 19 new solar and wind farms.

The Albanese government is offering contracts to underwrite wind, solar and battery developers revenue at taxpayers’ expense.

Wind, solar and battery developers are tapping into a federal subsidy scheme, which guarantees them a revenue “floor” that is fully funded by Australian taxpayers for the next 15 years.

The Albanese Government has already run five tenders under its capacity investment scheme this year, in which developers offer to build renewable energy projects in return for receiving a guaranteed minimum “floor” revenue.

The scheme’s website states “if a project earns below the revenue floor, the Australian Government will cover a portion (90 per cent) of the difference between the revenue floor and zero revenue”.

Five tenders have been run this year, with 202 developers lodging bids to gain contracts on the basis of delivering either dispatchable (battery-hydro) or renewable generation – mainly wind and solar.

The rush of bids explains why developers have swamped farmers with requests to lock in option agreements to build wind farms on their properties.

But just how many renewable projects get the go-ahead remains a mystery, given the government is yet to announce the results of four of the five tenders.

Two tenders are for a total of 12 gigawatts of renewable generation capacity – equating to five times the capacity of the Loy Yang A coal-fired power station.

A list of the first renewable generation developers to win contarcts was announced this week, which Energy Minister Chris Bowen said would deliver “lowest cost”.

List of projects that have won capacity investment scheme contracts under the 6GW first round tender for solar and wind generation

The scheme was launched by Mr Bowen in a bid to counter a renewables investment slump, which the Clean Energy Council found dropped by 43 per cent in recent years.

But Mr Bowen has refused to provide any costings of the scheme nor the risk taxpayers face in covering contracts, referring all questions to the Australian Energy Market Operator.

An AEMO spokesman said that while it administered the scheme on behalf of the government, the minister was “the ultimate decision-maker”.

Centre for Independent Studies senior policy analyst Michael Wu said the risk to taxpayers was that as more renewable generation came online, prices would decline to well below the revenue floor, leaving future governments and taxpayers locked into paying massive subsidies to developers.

The centre’s analysis shows the wholesale capture price for solar developers has steadily declined, from close to the average that all generators received in 2012, to just 40 per cent of the average today, while wind prices fell to 60 per cent of the average.

Meanwhile gas generators, who can supply the grid at any time, have been earning 200 to 300 per cent of the average wholesale price by supplying the market during peak periods.

Capture price of electricity.