Saudi solar tycoon’s $300m handout

Australians are set to pay $300 million in subsidies to an outback solar farm owned by a Saudi Arabian billionaire in a new test of the federal government’s looming energy reforms, escalating a dispute over whether to cut the handouts to keep coal-fired power stations alive.

AGL’s controversial Liddell coal power station in the NSW Hunter Valley generates 50 times as much electricity as the Moree solar farm in the state’s north, which stands to gain big subsidies from households from higher electricity bills until 2030, as the government vows to ease the pressure on prices.

The project’s owner, Mohammed Abdul Latif Jameel, is ­expanding into new solar farms across Australia after the federal government backed the first ­development with grants and concessional loans as well as guaranteed credits for more than a decade.

The scale of the financial aid has triggered calls to scale back the subsidies as Nationals MPs warn that jobs will be sent overseas if Australia does not find a way to drive down energy costs.

Scott Morrison challenged Labor late yesterday to drop its “coal veto” when the energy plan goes to parliament, arguing new measures will be needed to extend the life of Liddell and other power stations to bring stability to the electricity grid. The Treasurer said the government wanted a “durable” outcome in parliament on the investment rules for the ­energy sector but did not say this would be a clean ­energy target, the proposal put forward by Chief Scientist Alan Finkel.

“What is concerning is that the Labor Party are putting, effect­ively, a coal veto on being able to land that agreement in a bipartisan fashion. Now I don’t think that is very constructive or helpful,” Mr Morrison said. “What we have to get to is a durable and agreed framework but it’s got to have an all-of-the-above approach, and Labor can’t insist on a sort-of coal veto to arrive at one — I don’t think that’s constructive at all.”

The company that owns the Moree generator, Abdul Latif Jameel Group, is building a solar empire on the profits from its long history as the sole distributor of Toyota vehicles in Saudi Arabia.

The owner’s son, Hassan Jameel, runs a charity tied to the conglomerate and has been ­romantically linked in recent months with singer Rihanna.

The Moree solar farm generates 150,000 megawatt hours of electricity a year, about 0.08 per cent of the 200 terawatt hours produced on the national electricity market every year. The project is forecast to collect about $50m in payments over the next four years and $90m in the following decade under the existing RET.

These subsidies, funded by electricity customers, will add to taxpayer aid including a $101.7m direct grant from the Australian Renewable Energy Agency and a $60m concessional loan from the Clean Energy Finance Corporation.

The Australian yesterday reported that AGL stood to receive $589m from the grants and subsidies for two solar projects over the period to 2030, although the company questioned the forecasts on the grounds that the renewable subsidies would fall in the next decade.

Malcolm Turnbull and his cabinet ministers are yet to decide whether to continue the assistance for solar and wind projects after 2020, when the existing ­renewable energy target is closed to new generators after years of controversy over the size of its subsidies.

The Abdul Latif Jameel Group bought the initial Spanish owner of the Moree solar farm, Foto­watio Renewable Ventures (or FRV), in 2015 and is now expanding with the Clare project near Ayr in Queensland and two developments at Tieri and Baralaba in the same state.

FRV Australia declined to respond to questions about the level of the subsidies and whether it supported a clean energy target.

The Australian’s analysis of the payments to the Moree project are based on an $80 value for renewable energy certificates until 2020, in line with current market prices, and a $60 value over the decade to 2030.

The total amount handed to the company falls to about $250m if the value of the RET certificates drops to $30 over the next decade. It falls to $200m in the unlikely event the certificates fall to zero from a glut of renewable power.

Peta Credlin, a former chief of staff to Tony Abbott as prime minister, called on Mr Turnbull last night to suspend the RET immediately, but the Senate has refused to agree to this option in the past and the payments to Moree and AGL are set in law.

The 150,000 megawatt hours of electricity from the Moree solar farm are about 2 per cent of the 8000 gigawatt hours from Liddell, highlighting the difficulty in replacing the coal power station when it is due to close in 2022.

Australian Conservation Foundation chief executive Kelly O’Shannassy is calling for a government commitment to a clean energy target to ensure investment in new generation. The ACF cites advice from the Australian Electricity Market Operator from January last year showing that coal power stations will have to close by 2030 to meet Australia’s commitments to reduce greenhouse gas emissions.

Dr Finkel yesterday repeated his call for a clean energy target, saying the states would go ahead with separate plans unless there was action by Canberra.

AGL chief financial officer Brett Redman said solar costs were falling so quickly that the company would build solar rather than coal even if there was no emission reduction target.

The government has prioritised reliable power supply with a framework that could offer incentives for gas and possibly coal power that can be delivered at any time, rather than expanding the subsidies for renewables.

NSW Nationals senator John Williams said the payments to the Moree project showed that ­renewables had to “stand on their own two feet” in the future.

The Nationals MP whose electorate includes the Moree farm, Mark Coulton, said the subsidies highlighted the argument the ­Coalition was now having over energy policy.

Former Queensland Nationals senator Ron Boswell has named the Moree project as an example of the “staggering” amount of the subsidies.

Originally posted to the Australian.  Written by David Crowe.  See original article here: Source


Leave A Comment