CPRS holds up Energy Investment

Monday, 29 March 2010 00:45 |

“Australia won’t get $100bn investment in energy infrastructure with a CPRS still in the wings and mixed messages for investors on renewable energy,” said The Nationals’ Senator Ron Boswell today.

Senator Boswell was responding to calls by the Minister for Resources and Energy, Martin Ferguson, for investment of ‘at least $100bn in electricity infrastructure over the next decade just to meet growing demand and replace ageing infrastructure’.

“Minister Ferguson says the energy market policy agenda needs re-focussing to guarantee supply reliability. The first thing the government should do is withdraw the CPRS which has stalled investment in networks and generation.”

“The energy sector has repeatedly warned the government that the CPRS was hurting investment and the maintenance of existing infrastructure.”

“Industry statements made a year ago to the Senate Select Committee on Climate Policy said that there was a higher sovereign risk to investing in energy in Australia than Mexico.”

Mr Brent Gunther , Managing Director, InterGen (Australia) Pty Ltd told the Committee (30/4/09):- As we look across the globe and look to invest in countries like Mexico, the Philippines and the UK et cetera, we see right now a higher level of regulatory or sovereign risk in Australia than in any of those other markets, given the difficulty around the CPRS.

Mr Tony Concannon, Executive Director, International Power Australia (the largest privately owned generator in Australia), National Generators Forum, told the Committee (30/4/09):-

Even if you get the terms of the debt, we are finding that the banks are not prepared to offer loans for as long a duration as they have offered loans historically. In the past you may have been able to get a debt facility over an eight-, 10- or maybe 15-year term; but now, across the industry, we are seeing a maximum term of around five years. It is very easy to pin the badge of ‘global financial crisis’ on having caused that. International Power Australia is not getting that feedback. The feedback we are getting is regulatory risk in Australia has increased significantly.

“The catch-up in investment required is enormous and today’s government will be responsible for failures of supply reliability in the future unless they withdraw from the CPRS field and concentrate on providing real incentives for energy infrastructure investment.”

“The threat of the CPRS has devalued the assets of existing energy infrastructure and scared away investors from new infrastructure.”

“The second thing the government should do is to go back to the drawing board on renewable energy. Large scale renewable energy projects are failing because the government moved the goalposts and reduced returns on investment. In order to correct that, the government has made yet another mistake that risks even higher energy costs for business.”

“Martin Ferguson told Lateline earlier this month that ‘we are very quickly approaching maxing out our energy system in Australia’.”

“The solution lies with the government. Drop the CPRS and restore investor certainty.”

“No one will invest in Australian electricity generation if we pursue an ETS in isolation from major trading partners and competitors.”

ENDS

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